When it comes to pushing the boundaries, you can always rely on Sportsbet to do the wrong thing, drumming up precious publicity for itself as the cheeky challenger brand.
Offering bets on Sunday’s Masterchef, when dozens of people already know the winner of a pre-recorded program, should be an obvious no no given the scope for corruption and insider trading.
Between the free-to-air TV regulator ACMA and the NT government, which licences Sportsbet, you’d think one of them could have prevented this from happening. Then again, Tabcorp is doing the same thing and it is regulated by all the state gambling authorities.
Sportsbet has a long and interesting history. As of the past few weeks, it has become the biggest online gambling company in Australia with an estimated market share of 52% after including the recently merged BetEasy business. It will extract almost $2 billion from Australian gamblers in 2020-21, which is not surprising given its parent company, Flutter Entertainment, is now the world’s biggest online gambling company with a market capitalisation of US$20.7 billion (A$30.2 billion).
Flutter might be run out of Dublin but it has a big Australian connection. Fund manager Caledonia Investments, which is run by Sydney billionaire Will Vicars, is the largest single shareholder in Flutter, with the Murdoch interests also in the top five with a stake worth at least $500 million.
The corporate history which saw Sportsbet and the Murdochs eventually come together is complicated but worth detailing.
Sportsbet was established in May 1993 as one of Australia’s first off-track licensed bookmakers besides the state-based TABs. Entrepreneur Matthew Tripp, whose Vanuatu-based father Alan Tripp was one of Australia’s most successful and controversial SP bookies, then bought it for $250,000 in 2005.
After UK-based betting exchange Betfair had a famous 2008 High Court victory which cleared the way for NT-licensed online bookmakers to freely advertise their gambling products nationally, Sportsbet prospered and Ireland’s Paddy Power progressively bought 100% of the business between 2009 and 2011, paying around $200 million. Paddy Power and Betfair then later merged in 2015 giving Sportsbet the horse power to keep growing its Australian business.
After lobbying Tony Blair to deregulate the gambling industry in 2005, Rupert Murdoch’s Sky Plc competed vigorously with Paddy Power and Betfair in the UK by building up Sky Betting & Gaming which was eventually sold to Canada’s The Stars Group for $US4.7 billion in April 2018, generating around $2 billion in clear profits for the Murdoch interests.
The Murdochs shortly after relinquished control of Sky Plc as part of their circa $100 billion sale of 21st Century Fox’s entertainment assets to Disney and Comcast last year. This left them with News Corp and a slimmed down Fox Corp which Lachlan Murdoch took charge of in March last year when his brother James Murdoch quit the Fox board.
Lachlan had nothing to do with the family’s gambling successes in the UK, but clearly wants to replicate it in the US after the US Supreme Court legalised sports gambling in May 2018.
In May last year, Lachlan drove the establishment of Fox Bet in the US, a 50-50 joint venture between Fox Corp and The Stars Group focused on sports gambling in the US. As part of this deal, Fox Corp laid out $US236 million buying 14.35 million shares or a 5% stake in The Stars Group.
Caledonia’s Will Vicars and Lachlan were then intimately involved in the negotiations which drove the merger of The Stars Group with Paddy Power Betfair (already renamed Flutter Entertainment last year), which was announced last October and came into effect only a few weeks ago on May 5.
Fox Corp received 3.233 million shares in Flutter through the merger process which are currently worth $US225 million, however it also recently participated in a $US1 billion Flutter placement.
One of the surprising moves of the merger process has been the decision to ditch the Beteasy brand and run the combined Stars-Flutter Australian operation through the Sportsbet brand.
This will make Sportsbet bigger than Tabcorp when it comes to online gambling but smaller when you consider Tabcorp’s land-based operations through TAB outlets, pubs, clubs and gambling at race tracks.
COVID-19 has been a bonanza for Flutter with land-based gambling operations largely closed around the world. Flutter released an update on May 17 which claimed its Australian revenue was up 56% for the quarter and included this commentary about its Sportsbet business in Australia:
Revenue in Australia … has benefitted from the continuation of horse-racing (behind closed doors) and retail remaining shut. This has led to an acceleration in the migration of retail customers to online, with our products and promotions proving attractive to a new cohort of online customers.
Masterchef gambling gimmicks are exactly the sort of tactic which has driven this growth and if Australian regulators were serious, gambling companies would not be allowed to advertise during Masterchef.
And if the Murdochs weren’t conflicted by being up to their eyeballs in the gambling industry, you’d hope their tabloid newspapers would also be campaigning against obviously dodgy practices such as allowing bets to be taken on a pre-recorded program.