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Murdoch's Fox launches sports betting with FOX Bet
2nd September, 15:00NEW YORK (Reuters) - When Rupert Murdoch's Fox Corp (FOXA.O) launches the FOX Bet sports betting platform on Monday, it will do what no other major media company has done in North America: become the face of a sports gambling platform.
FOX Bet, which launches in New Jersey, is operated through a partnership with gaming provider The Stars Group (TSG) (TSGI.TO). It lent its splashy national name brand recognition, stars, expert commentary and news to attract casual betters.
Entertainment giants from Walt Disney Co (DIS.N) to AT&T Inc's (T.N) WarnerMedia have waded into the red hot sports betting arena, which experts project could generate $9 billion of revenue over the next few years in gambling revenue.
But most have relied on creating new shows and providing commentary and have kept an arms-length distance from actual gambling.
Big media companies are worried that crossing the line into letting its viewers place bets could damage their brands if it comes off as disreputable, experts said.
"Those are pretty heavy questions, especially for multibillion-dollar media behemoths that aren't accustomed to turning on a dime," said Chris Grove, a managing director at analytics firm Eilers & Krejcik Gaming LLC.
Fox comes to the field with experience. It is Murdoch's third foray with fronting a sports betting service. Murdoch's Sky, now owned by Comcast Corp (CMCSA.O), struck a similar deal with TSG to create Sky Bet, a U.K. sports betting partnership.
"They can point to that model and say, this looks successful in the U.K.," Grove said.
FOX bet will target casual betters and smaller wagers, similar to Sky Bet, and be a tool for Fox Sports to engage fans, FOX Bet Chief Executive Officer Robin Chhabra told Reuters ahead of the launch.
Another quality the apps will share: users can request a bet through social media platforms with the hashtag #CustomBet.
But there are risks for media companies diving into sports betting.
Sun Bets, another partnership between the Murdoch-owned newspaper The Sun, a unit of News Corp (NWSA.O), and Australian gambling group Tabcorp Holdings (TAH.AX), closed in 2018 after disappointing financial performance.
However, the lure of ad revenue and a potential to engage fans more deeply in live sports broadcasts inspired another go at it for media companies.
Another media company is also racing to launch a new sports betting platform in time for the start of the U.S. football season. The National Football League starts regular season play on Thursday.
TheScore Inc (SCR.V), a small Toronto-based sports news app, plans to launch and run its own sportsbook, blurring the line even more between media company and gambling operator.
The activity comes after a U.S. Supreme Court decision in May 2018 that overturned a federal ban on sports wagering outside of Nevada, and 13 states now offer it.
FOX Bet launched its app on Apple Inc's iOS platform and on Google's Android operating system in New Jersey and is expected to later roll out in other states.
FOX Sports Chief Executive Officer and Executive Producer Eric Shanks spearheaded the TSG partnership.
Fox employees have been working closely with TSG developers on the app, joining daily production meetings and integrating branding and talent, Chhabra said.
Fox in May invested $236 million for a 4.99% stake in TSG.
TSG expects to break even in 2022 on FOX Bet, with $40 million invested this year, including $10 million licensing fees in each New Jersey and Pennsylvania, Chhabra said.
Separately, FOX Sports is also expected to offer a free-to-play predictive game nationally.