Posted on: October 13, 2023, 03:48h.
Last updated on: October 13, 2023, 03:48h.
The Launch of ESPN Bet: Disney’s Move into Sports Betting
A recent article by the Wall Street Journal reveals Disney’s journey into the sports wagering industry, with the upcoming launch of ESPN Bet in November. This marks Disney’s entrance into the consumer-facing side of sports betting, a move that was previously cautioned against by high-ranking executives and major investors.
During Bob Iger’s tenure as CEO, Disney was initially hesitant to embrace sports wagering due to concerns that it could harm the family-friendly image of the brand. However, this perspective shifted when Bob Chapek took over as CEO in 2020, and Iger returned to the position last year.
In mid-2022, Jenny Cohen, then Disney’s head of corporate social responsibility, expressed concerns to Chapek and other Disney and ESPN executives about the potential partnership between ESPN and a sportsbook operator.
According to unidentified sources, she warned that sports betting could tarnish the Disney brand and lead consumers to associate Disney with gambling addiction.
BlackRock, a major investor applying environmental, social, and governance (ESG) principles to its investment selections, reportedly told Disney that a sportsbook deal could prompt some of its Europe-listed ESG funds to sell Disney stock. However, it’s unclear why the same concern wasn’t raised for US-listed ESG funds holding Disney shares.
Evolution of Iger’s View on Sports Betting
During Iger’s first term as CEO, Disney acquired 21st Century Fox and inherited a 6% stake in DraftKings. Despite recommendations from insiders to increase that stake, Iger declined, and Disney recently sold its investment in DraftKings.
Under Chapek’s leadership, Disney became a focal point of sports betting rumors, including potential partnerships with sportsbook operators and the acquisition of a gaming company to strengthen ESPN’s presence in the wagering industry. However, no transactions materialized during Chapek’s tenure.
Upon returning as Disney CEO, Iger maintained a cautious stance on sports wagering. However, earlier this year, he indicated a softening of his views after witnessing his adult sons actively engaging in betting via smartphones.
For ESPN, a broader sports wagering presence is seen as crucial for better engagement with millennial and Gen Z males – key demographics for both the network and sportsbook operators.
Penn Entertainment: ESPN’s Rescue?
In August, Penn Entertainment and Disney announced a $1.5 billion deal over a decade, allowing Penn to use the ESPN Bet brand. The agreement includes an opt-out clause for both parties if certain market share objectives are not met within three years.
Penn is also granting ESPN $500 million in warrants that enable the network to purchase approximately 31.8 shares in the casino company over 10 years. Penn Entertainment terminated its partnership with Barstool Sports to execute this transaction with ESPN.
Rumors suggest that Penn was ESPN’s third choice for a partnership, following DraftKings and FanDuel, but discussions with those operators failed to progress, according to the Journal.