Could the Family-Centric Walt Disney Corporation Endorse an ESPN Sportsbook?

ESPN is known as the worldwide leader in sports as arguably the most successful sports network in the United States and worldwide. The Walt Disney Company now owns 80% of ESPN as yet another example of the prestigious company seeking ways to be involved in several industries. Disney and ESPN have the potential to be at the forefront of the rapidly expanding sports betting industry in the United States. Still, with Disney’s deep-rooted family values, it’s unclear what type of integration makes sense in the long run for these companies.

Other Sports Media Companies Have Taken the Plunge

While ESPN has been testing the waters in sports gambling, other sports media companies have fully dove into the pool of sports betting. theScore, the Canadian equivalent to the United States’ ESPN, has launched theScore Bet in partnership with Penn National Gaming. In addition, Penn National Gaming acquired a 36% share of Barstool Sports for $163 million and launched the Barstool Sportsbook App. Fox Sports, one of the leading national sports networks, has launched FoxBet in partnership with the StarsGroup.

CBS Sports has partnered with William Hill Sportsbook, which Caesars recently acquired. Bally’s Corporation has rebranded 19 regional sports networks owned by Sinclair Broadcast Group as “Bally’s Sports.” Sports Illustrated has also signed a partnership with 888, a leading betting and gaming company, to create SI Sportsbook, launching later in 2021.

Additionally, DraftKings and FanDuel are making an effort to sign more on-air and content talent. DraftKings signed a $50 million deal with Meadowlark Media for distribution rights to Dan Le Batard’s radio show and the Le Batard and Friends network. FanDuel, meanwhile, has a partnership with the popular sports media personality and former NFL player Pat McAfee.

ESPN Recognizes the Opportunity in Sports Betting

While ESPN is still one of the only sports media giants to not directly get involved in sports betting, that may soon change. On an April earnings call, Disney CEO Bob Chapek was asked how he feels about sports betting. He said that the company sees it “as an opportunity” that represents “very little risk to the company and very little risk to ESPN” and that they have “a greater appetite to do more and more in that area.”

Front Office Sports, a media brand covering sports business, reported that ESPN was going “all-in” on sports betting and was “exploring the possible launch of its own branded sportsbook.” This falls in line with recent developments from ESPN, including the recent partnerships with DraftKings and Caesars/William Hill. Disney actually holds a 6% stake in DraftKings following its purchase of 21st Century Fox. In partnership with Caesars, ESPN opened a new studio at the LINQ Hotel + Experience in Las Vegas for the studio home to “Daily Wager,” its ESPN2 show.

ESPN has also been in the midst of a bit of a hiring spree in betting talent. On-air sports betting analysts Tyler Fulghum and Joe Fortenbaugh were hired to join Doug Kezirian on ESPN2’s “Daily Wager” sports betting show. “Daily Wager” presented an alternate broadcast of an NBA game in April that was entirely sports betting-focused, and this could become more common in the future. ESPN also promoted executive Mike Morrison, previously the VP of business development and innovation, to the new VP of sports betting and gaming. ESPN’s biggest on-air talent has been covering sports betting, such as Mike Greenberg’s “Bettor Days” on ESPN+ and Scott Van Pelt’s “Bad Beats” on SportsCenter.

Walt Disney Company Family Image

While ESPN certainly sees the opportunity in sports betting, it’s walking a bit of a tightrope with the Walt Disney Company having such strong family values. Walt Disney once said, “the important thing is the family. If you can keep the family together – and that’s the backbone of our whole business, catering to families – that’s what we hope to do.” Gambling can be a damaging presence in families, especially with the prevalence of gambling addictions in the United States.

Despite the significant revenue opportunity, Disney has never considered providing casinos in the parks, restaurants, hotels, and cruise lines. In 2018, Disney spent $15 million to endorse Amendment 3 in Florida, an anti-casino initiative. Disney had a vested interest in maintaining Florida as a family-friendly vacation destination free of the vice of gambling.

However, later in 2018, the Supreme Court overturned the Professional and Amateur Sports Protection Act of 1992, which paved the way for the United States to legalize sports betting on a state-by-state basis. The overturning of the PASPA brings us to this critical inflection point today, where Disney has an important decision to make regarding its involvement in sports betting.

Back in 2019, soon after the PASPA was overturned, former CEO Bob Iger was asked on a first-quarter earnings call whether or not sports betting could coexist with the family-friendly Disney brand. Iger said that he doesn’t “see the Walt Disney Company, certainly in the near term, getting involved in the business of gambling, in effect, by facilitating gambling in any way.” However, he did say he believes there’s “plenty of room” for ESPN to “provide information in coverage of sports that would be relevant to and of particular interest to gambling.”

Disney Could Change Its Tune With the Revenue Potential

In 2020, Disney World in Orlando hosted the NBA Playoff bubble, which was necessary due to the COVID-19 pandemic. While the bubble was isolated from fan experience, something Disney certainly would have known how to leverage, it did provide an interesting opportunity for Disney to witness first-hand how much revenue could be generated by NBA bets. In addition to Disney’s DraftKings stake, that could lead to a changing of management’s approach moving forward.

John J. English, the partner and managing director of sports and technology for Global Market Advisors, said that “four years ago, I would have been stunned for sure” about potential Disney involvement in sports betting. “They don’t even have casinos on their ships.” However, in “the last three years, we’ve seen multiple sports teams and sports betting companies that have global brand recognition and have a large audience or active databases. The perception of sports betting in America has evolved; it’s now a very acceptable, extremely popular, and growing industry.”

Richard Schuetz, a veteran casino executive and CEO of Schuetz LLC, spoke about Disney’s efforts against the legalization of gambling in Florida, saying it was to “protect the brand and market of the theme parks.” Disney components that target adult demographics should continue to embrace sports betting, while “divisions that target a young or family demographic will not.”

Pros and Cons of ESPN’s Own Sportsbook

ESPN’s expansion into sports betting could help with talent retention. ESPN will begin seeing a direct threat from sportsbooks such as FanDuel and DraftKings, both of whom have the resources and brand equity to steal such ESPN talents as NFL Insider Adam Schefter and NBA Insider Adrian Wojnarowski. In addition, adding sports betting content to ESPN+ is expected to add at least another 500,000 regular viewers to a subscription base of over 11.5 million.

Robert Davidman, a partner at gambling marketing agency Fearless, said that Disney/ESPN has “the perfect audience,” and there’s “much bigger upside if they put some skin in the game” in trying to cultivate that audience. Bet365 could be a potential partner for ESPN; Nigel Eccles, the co-founder of FanDuel, said that “if those two pair up, they could be the number one player” in sports betting. DraftKings is also a potential partner, but they maintain more interest in business-to-consumer offerings, not business-to-business for now.

There are also reasons to think an ESPN Sportsbook may not make much economic sense, in addition to the complications with Disney’s family-centric brand. For an ESPN Sportsbook to make financial sense, they would need to be a market leader as they would compete with 20 other sportsbooks rather than taking checks from all of them. Barstool Sportsbook has seen a declining market share in recent months, FoxBet has struggled to be more than a second-tier sportsbook, and 888 has seen its share price fall since announcing the partnership with Sports Illustrated.

ESPN has impressive content and a strong brand with millions of subscribers around the world. However, it lacks the embedded user base and funded wallet that have made FanDuel and DraftKings successful. The vertical integration of sports media and sports betting companies is still a questionable venture based on early results. It may be smarter for ESPN to continue cultivating its own sports betting content without establishing a direct business-to-consumer sports gambling service.