Betting a side or a total may no longer get you side-eye from Mickey Mouse or Donald Duck.
And there may even be a sportsbook wearing mouse ears soon enough.
Although Disney’s ESPN media properties have discussed and embraced sports betting for some time, what is different now, based on a Nov. 10 earnings call, is the parent company has come to the conclusion that fully opening the door to sports betting is in its best interest and will not harm its brand.
“We have done substantial research in of the impact to, not only the ESPN brand, but the Disney brand in of consumers’ changing perceptions of the acceptability of gambling,” Disney CEO Bob Chapek said on the earnings call, in response to a question from Bank of America’s Jessica Reif Ehrlich about sports gambling. “And what we’re finding is that there is a very significant installation. Gambling does not have the cachet now that it had, say, 10 or 20 years ago. … It actually strengthens the brand of ESPN, when you have a betting component, and it has no impact on the Disney brand.
“Therefore, to go after that demographic opportunity plus the, of course, not insignificant revenue implications — that is something that we’re keenly interested in and are pursuing aggressively.”
Reif Ehrlich did not respond to multiple requests for comment, but the remarks from Chapek resulted in swirls of speculation among media and financial analysts that continue.
Embracing sports betting a total change 5d5c16
Disney’s public statement of interest and intent in sports betting runs counter to its actions in recent years, and its positioning as a family-friendly, anti-gaming entity. In 2018, Disney donated $5 million to Voters In Charge, a nonprofit group that pushed for a Florida constitutional amendment that gave voters the exclusive right to decide whether to authorize casino gaming measures statewide. The referendum, Amendment 3, ed by an overwhelming margin.
ing the measure was Disney’s way of trying to reduce competition for the tourist’s wallet by making it tougher for the state to approve any measure on gambling expansion. Since then, the landscape in Florida has changed. Last spring, the Seminole Tribe, which has long offered casino gaming on tribal lands, legal challenge.
Not sure why Disney fans are so upset over ESPN doing sports betting. Since Eisner, Disney has used other brands to cater to more adult content. From Miramax, Touchstone etc…everyone knows these are were/are owned by Disney, but they weren't under the Disney name officially.
— OrangeGrove55 (@OrangeGrove55) November 23, 2021
It has been assumed and reported that deals with Caesars and DraftKings for link integration and displayed odds for sports betting and fantasy sports.
“It’s reinforcing that it’s not some rumor,” Will Hershey, CEO of Roundhill Investments, told Sports Handle. “That they’re closely looking at getting involved in sports betting, for investors, still takes some getting used to. You don’t think of Disney and gambling.”
Envisioning an ESPN sportsbook partnership 1t6m70
In August, the Wall Street Journal worth in the neighborhood of $3 billion.
“That amount, for a branding deal, didn’t make a ton of sense,” Hershey said. “From a branding perspective, those who can afford Disney don’t need ESPN. Caesars and DraftKings already have established brands. And those who need Disney can’t afford them.”
Hershey isn’t alone. One sports betting industry analyst told Sports Handle that ESPN licensing its name to DraftKings “never made an iota of sense,” and that the “licensing angle was wild and completely outlandish.”
While DraftKings typically does not comment on deal speculation, an unexpected media leak forced the company to disclose a proposed acquisition of Entain in September. Behind the scenes, there are indications DraftKings might have shot down rumors surrounding its interest in ESPN right away.
“[DraftKings] management was quick to deny the speculation [about the ESPN licensing deal],” said Chad Beynon, a gaming analyst with Macquarie. “During the last few years, DraftKings’ brand has landed well with sports-first bettors. Moreover, their customer acquisition formula has resulted in a top-three U.S. brand.”
Disney and ESPN splitting up? 2x633t
If an ESPN name-licensing deal is not a possibility, analysts believe that an acquisition would be the best play for Disney to get into the space, in the mold of NBC’s deal with PointsBet.
“The meatiest part of this is the potential to do an acquisition, and I hate to throw that out there, because it’s super speculative,” Hershey said. “With the roap of NBC, ESPN can make an initial investment and retain optionality.”
FOX Sports received a 4.99% equity stake in The Stars Group in exchange for an investment of $236 million. If a media company purchases a minority stake in a sportsbook under 5%, the company can maintain a ive investment in the sportsbook operator without applying for a sports betting license.
After Disney shares jumped to session high on a report that said the company is looking into potentially exploring an ESPN spinoff, a source tells CNBC the report is inaccurate. The source tells CNBC the company aims to pursue further value through ESPN+ and sports betting. pic.twitter.com/biW2REmpqc
— CNBC Now (@CNBCnow) October 15, 2021
Another option for Disney is spinning off ESPN, though that is not as easily done as said. ESPN is currently tied to a number of long-term agreements with leagues and conferences that will require the network to keep live sports programming on linear TV rather than move it to ESPN+. But Disney could retain its position as a “family-friendly entertainment conglomerate” while allowing ESPN to pivot into sports betting. In addition, ESPN is potentially an attractive asset to companies like Amazon or WarnerMedia, as both look to add live sports.
Yet another possibility could be Fanatics, which is attempting to make inroads into sports betting. The company ed six sports betting operators in backing a New York. While Fanatics was not among the winning New York bids, the company could acquire one of the smaller operators that was awarded access in New York, and following that, make another deal with ESPN that ultimately results in New York market access for all.
“[Disney’s move into sports betting] would have to be on the [mergers and acquisitions] side, otherwise it doesn’t make sense for an operator,” said an industry analyst. “To an ESPN or a Fanatics — the other 800-pound gorilla in the room — I find it hard to see the long-game appeal without equity.”
New York has to be in play 631p5q
So, what sportsbook operators are ripe for an acquisition deal with Disney? It all seems to start with New York.
With a mobile betting launch date expected in early 2022 for the Empire State, it’s hard to envision a Disney/ESPN deal that doesn’t include New York.
“If you’re ESPN, you have to be in New York, so that limits the pool of who they can do a deal with,” Hershey said.
NEW YORK:
Who's in (lot of usual suspects), who's out (Barstool, among others), and what's what for online sports betting in New York.@MattRybaltowski breaks it down. https://t.co/v7GsBdT5fn
— Sports Handle (@sports_handle) November 8, 2021
Earlier this month, the New York Gaming Commission Wynn Resorts, and Genting (Resorts World).
Of the nine authorized sportsbooks in New York, analysts disagree on which could be the best fit for a Disney or ESPN deal, although consensus seems to be that the bigger players are not feasible. Major companies like DraftKings, Caesars, or BetMGM are recognizable brands and don’t need the ESPN imprimatur. They are companies with deep pockets, a national advertising platform on Sunday Night Football, and a market capitalization in excess of $10 billion.
With a market cap a shade above $1 billion, a company like Rush Street Interactive arguably has more to gain from a partnership with The Worldwide Leader in Sports. Rush Street (BetRivers) gets mixed reviews on the acquisition front, but “would benefit a ton from the ESPN brand,” according to Hershey.
One industry consultant said Disney should favor “operators that have the soup-to-nuts operations in house. To me, that cancels out an RSI,” which contracts out its sports betting platform operations to Kambi.
“Based on the nine operations in New York, it’s really tough to see,” the consultant said. “Even a Bally Bet, for instance, does not have the brand recognition of Caesars or MGM, but they’ve already done their M&A.”
In the last year, Bally’s has acquired Gamesys, which will provide front-end technology, including a digital wallet, and Bet.Works, which will power its sportsbooks. The company is aiming to create a unique sports betting platform that integrates chat, trivia, and other interactive features, so a deal with Disney doesn’t appear to make sense.
PointsBet should also be out of the equation, because of the NBC deal, but a potential outside-the-box idea could include a European operator, like bet365. However, bet365 had its mobile sports betting bid rejected in New York, and it is unclear, at least at this point, how it would enter that market.
“Nobody really knows what bet365 is going to do here,” Beynon said. “People just know they have the ability to go big, when they put in their sole bid in New York.”
That Britain-based bet365 opted to fly solo on its New York bid offers some insight — the company clearly believes it has the capitalization and technology in place to compete in what will be one of the biggest U.S. wagering markets. While players can only currently get New Jersey — with both a digital sportsbook and iCasino, it has long offered wagering in the United Kingdom and throughout Europe.
According to industry sources and analysts, the European book’s infrastructure and experience would be desirable for a company like Disney, which would want a stable, established partner.
“ESPN providing its engine to bet365 is more feasible and realistic than an MGM or Caesars or a DraftKings,” an industry source said. “To me, it’s a splinter in my brain to try to parse and read in between the lines of what Chapek was saying, because on the surface, it’s a massive, transformational statement and intention that he was putting out there, but if you look under the hood a little bit, it becomes really difficult to see how it all comes together. Unless you’re talking about a PointsBet, which checks boxes, but they’re tied up with NBC.”
Those boxes could include partnering with a company that:
- Already has a large player database.
- Has official sports betting data partnerships with most, if not all, of the pro sports leagues.
- Offers creative, innovative ideas to convert sports fans into recreational sports bettors.
- Has omni-channel solutions that can fuse live sports, sports betting, online gambling, and eSports into one interactive experience.
Timeline for a Disney sportsbook? 411o3s
While the “how” remains mired in speculation and innuendo, it’s likely that since the decision has been made and shared publicly, Disney and ESPN will enter the sports betting sphere sooner rather than later.
But just how quickly could it happen?
“The Super Bowl,” Hershey said. “We’re not that far away. That feels like a reasonable target, with New York going live in two months here.”
Many are attempting to read the tea leaves, so many questions remain, but the answers are unlikely to be revealed until Disney is good and ready.
“If I did have the answer, I’d be trying to make money off it,” an industry source said. “Ultimately, it will come down to billionaires making decisions that will be made behind closed doors, and we’ll find out eventually.”
Matt Rybaltowski contributed to this report
