Wagering giant Tabcorp has embarked on its first major international deal, partnering with Rupert Murdoch's News Corporation in a bid to crack the UK's $7 billion online betting market for sports and horse racing.

The Melbourne-based company, which last month failed to agree a $9 billion merger with rival Tatts Group, has signed a deal with red-top tabloid The Sun. The new business will be known as Sun Bets and launch in 2016.

The Sun's partnership with Tabcorp represents its first push into the broader online gambling market.

Tabcorp's CEO David Attenborough signed the deal with Rebekah Brooks, who returned to New Corp as chief executive of its UK operations in September following her 2011 resignation during the height of the hacking scandal at the now defunct Sunday tabloid, News of the World.

The decade-long agreement, which can be extended depending on its performance, will see Tabcorp provide News UK with a share of the new venture's revenue each year. It is not thought Tabcorp made any upfront payments to secure the deal.