Disney Investing in Sports Betting

Disney Investing in Sports Betting

The Hollywood entertainment giant Disney has started taking its first baby steps into the fast-growing sports betting market. This information became public worldwide on November 10, 2021, and was announced by the CEO of Disney, Bob Chapek. He said, “Given our scale and reach, we can partner with 3rd parties in a very significant way.” As of now, Disney has only disclosed ESPN as a licensing partner in this multi-billion-dollar betting venture. 

Some may remember that both partners, ESPN and Disney, have always been very vocal with skeptical attitudes towards venturing into the sports betting industry in the US. These opinions were formed following the decision of the US Supreme Court on May 14, 2018, in the court case Murphy v. National Collegiate Athletic Association. President of ESPN, Jimmy Pataro, was recorded at the New York’s Minskoff Theatre being very dismissive about any business attempts by ESPN to play any major role in the then newly legalized sports betting industry. ESPN’s interest would only extend to gambling-focused segments or programming on ESPN TV shows. 

President Pataro’s uncertainty was echoed by the then Head of Content ESPN, Connor Schell. He said, “It is something that we will be thoughtful about”. Similarly, the CEO of the Disney Company at the time, Bob Iger, made assured claims during a  Disney Company’s earnings call in February 2019. “I do think that there’s plenty of room, and ESPN has done some of this already and they may do more to provide information in coverage of sports. … But getting into the business of gambling, I rather doubt it.” This makes it more interesting that the company’s outlook on the US sports betting industry has changed only a couple of years later. Current Disney CEO, Bob Chapek now confirms that the company sees the US sports betting market as a significant opportunity for Disney. 

Notably, Disney has chosen a different path into the sports betting industry than its Hollywood entertainment industry rivals. For example, the Fox Corporation plays an active role in the sports betting market through its dedicated betting site, Fox Bet. It’s worth remembering that Disney purchased holds a stake in DraftKings after its purchase of 21st Century Fox. However, Disney is looking for a sportsbook partner and has had different negotiations with operators, including Caesars, DraftKings, and BetMGM.

The news of Disney’s potential multi-billion-dollar ventures into sports betting has been the subject of a lot of conversation. Analysts and financial commentators have had plenty about the deal. A gambling historian at the University of Nevada, David Schwartz, had this to say: “The market has shifted. When you have the leagues on board, when you have state governments on board, it is hard to take a moral stance against being involved with gambling.” 

Neil Begley, an analyst on Moody, also shared his thoughts: “It is an opportunity that many companies are spying… Disney’s brand in ESPN will certainly have strong advantages given its broad distribution and rights holdings. But I think that it could be a free-for-all among several of the big media groups, and there is risk of oversaturation, which could dilute the opportunity.” Analysts of the industry have spotted a potential problem in Disney’s sports betting deal. They are more likely to fall through due to other big media companies following suit in a bid to share in the spoil of the lucrative business move.

There are also concerns that Disney’s venture into the US sports betting market could mar its brand as a company dedicated to entertaining family and kids. Disney had been very strongly against this association until finally accepting broadcast adverts from sports betting companies. To date, Disney has refused to emulate its rivals, NBC Sports and Fox Sports, by broadcasting adverts from crypto trading firms.

Regardless of the apprehensions surrounding Disney’s potential sports betting venture, the market’s current situation keeps getting more favorable for those looking to invest. In April 2021, the President of the American National Football League, Roger Goodwell, announced a new deal including data rights and IP with three new sportsbook partners for the NFL. These were Caesars, DraftKings, and Fan Duel. Later in August 2021, President Goodwell unveiled WynnBET, PointsBet, and BetMGM as the NFL authorized sportsbook partners for the 2021-2022 season. Similarly, President Adam Silver of the American National Basketball Association announced new deals in November involving FanDuel and DraftKings. It is not surprising that other sports associations in America, including the National Hockey League, Universal Fighting Champion, and Major League Baseball, have entered into different sports betting deals for the new season. 

As a result, Disney is very confident about the potential success of the deal. Disney’s CEO has been quick to assure people that the company has done its homework on the deal. On the last earnings call, he said, “We have done substantial research in terms of the impact not only on the ESPN brand, but the Disney brand in terms of consumers’ changing perceptions of the acceptability of gambling. And what we’re finding is that there is very significant insulation… It actually strengthens the brand of ESPN when you have a betting component, and it has no impact on the Disney brand.” 

However, no amount of optimism can discredit the risks of the sports betting markets, which some analysts have very clearly pointed out. Hal Vogel of Vogel Capital Management and also a former analyst at Wall Street explained: “Sports betting might be a significant opportunity, but also a potentially big headache… This is already an area of tremendous competition, and Disney is already starting from behind many others. Also, mixing reporting at ESPN with betting operations might eventually lead to conflicts of interest.” Voices in the sports betting industry suggest exclusivity for the Disney sports-betting deal to be a success. 

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