Lachlan Murdoch’s high-stakes gamble: Fox Bet hangs in the balance

Lachlan Murdoch’s family has a gambling background, thanks to his great-grandfather, Rupert Greene. However, Lachlan’s own success as a punter remains uncertain. He and his father, Rupert, are facing a crucial choice regarding Fox Bet, Lachlan’s venture into the profitable online betting industry.

A year ago, News Corp invested in Betr, a start-up co-founded with gaming entrepreneur Matthew Tripp. Lachlan strongly advocated for merging News Corp and Fox Corp, with Betr becoming the Australian counterpart of Fox Bet, showcasing Fox/News synergy. Initial investment by Nationwide News was modest at $2.9 million, but subsequent capital raisings raised the total investment to $65 million by late December.

However, in January, Lachlan had to abandon the Fox-News merger plan, which effectively ended the international Fox Bet project. News Corp’s interest in Betr vanished overnight. News Corp reported a $US33 million equity loss from affiliates in the previous half-year, mainly due to the investment in Betr, resulting in a pre-tax loss of approximately $70 million in Australian dollars. Additionally, there was a $US10 million loss from equity affiliates in the following quarter. News Corp incurred substantial losses from its involvement in betting.

Despite financial setbacks, it doesn’t mean that betting platforms have no value. Fox managed to secure a 10-year option to purchase 18.6% of Flutter Entertainment’s FanDuel, a prominent UK-based betting company with a significant share of the US online betting market. Although FanDuel is yet to break even, its current valuation under the option deal stands at $US22 billion.

Nevertheless, Fox Bet was Lachlan’s major endeavour. While he aimed to leverage Fox Sports coverage to establish a sports betting platform, he didn’t intend for Fox to oversee its operations. In 2018, Lachlan entered a joint venture agreement with The Stars Group (TSG) to operate Fox Bet. However, months later, Flutter acquired TSG and gained control over Fox Bet. Fox claimed that Flutter neglected Fox Bet in favour of FanDuel, but the Judicial Arbitration and Mediation Services ruling in November rejected this claim.

Critics argue that Fox Bet’s technology is subpar, and it is only available in four states with less than 1% of the US market share. Now, a decision must be made. In August, Flutter can withdraw from the joint venture, leaving Fox with the choice to provide funding and management or shut down Fox Bet. It’s a challenging dilemma, considering the personal investment Lachlan has made in building a betting empire. Unless he takes a calculated risk, his aspirations may crumble.

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