Disney CEO Bob Iger was previously clear that his company wouldn’t enter the market. You can see his exact words in his choice words about about the gambling industry. To summarize, he presented the idea that a company like Disney would not be directly involved in the gambling industry. They may not have planned on entering the gambling world, but when they paid $71 billion to acquire 21st Century Fox, they did just that. With their acquisition of 21st Century Fox, Disney got a stake in DraftKings. So, Disney, you just bought a stake in DraftKings, what are you going to do now?
Disney Openely Against Gambling
Disney has spent millions of dollars to try and keep sports betting out of Florida. However, they recently partnered with Caesars Entertainment to produce more sports betting content. Disney has been working with the Seminole Tribe in Florida to prevent gambling expansion in the Sunshine State. This includes preventing the legalization of sports betting. It was reported that Disney has spent $20 million to support an amendment of the Florida ballot back in 2018 that would make it harder for casinos to be built in the state.
Now with their hands in the sports betting cookie jar with DraftKings, it is a wonder exactly what Disney’s plan is. Was Iger truthful in his statement that Disney would just “provide programming” for sports betting and not directly “go into the gambling business”?
What Is Disney Going to Do With DK Stake?
The truth is, right now nobody outside of Disney knows exactly what their plans are. Maybe they are a full go on the booming sports betting market? Or, perhaps Disney was just focused on the bigger picture, the mega-deal to acquire 21st Century Fox. The DraftKings stake was just an added bonus. That seems to be like the more logical assumption.
Disney and ESPN were interested in DraftKings back in 2015, back when DraftKings was just a daily fantasy sports operator. The deal where Disney acquired 21st Century Fox was in talks long before the removal of the federal ban on sports betting. DraftKings didn’t become a sportsbook until after the Disney and 21st Century Fox deal had begun.
Predicting Disney’s Next Move
Disney really has three options at this point in regards to DraftKings. They can either go for a total buyout, hold onto their shares as is, or sell them off completely. Realistically, it will probably be either be a total buyout or a sell-off. A company as big as Disney is either going to go all in on the gambling front or completely wash their hands of it.
I believe Iger was truthful in saying that Disney has no plans to directly enter the gambling market. They will instead sit on the sidelines and just offer programming aimed at informing and entertaining bettors in the sports betting world. I’m sure Disney will have no trouble finding suitors to sell their stake in DraftKings to.
This mega-deal was in the works long-before DraftKings became the gambling entity that they are today. Back when they were just DFS and not a casino and sportsbook as well. This is another reason I think Disney’s stake in DraftKings was just a side effect of the mega-deal, not the main goal.
However, Disney is a business. Their goal is to make money. Not too many industries are booming like the sports betting industry currently is. Maybe Disney and Iger himself are seeing the potential in this market. Perhaps they will become a big player in the industry after all. We have seen from a number of other mainstream media companies that they believe in the growth of sports betting.
Fox Sports teamed up with The Stars Group last month and are unleashing their own sports betting app. I don’t expect to see a Disney sportsbook anytime soon. Although, the possibility of Disney continuing to be a major player in the industry, even from behind closed doors, is not too far-fetched. The sports betting industry in America is still young and growing. Disney has an ace up their sleeves in DraftKings. Perhaps they will hold on to that valuable card until it reaches maximum potential. They sure don’t want to be looking back in five years at a missed opportunity on something as valuable as what DraftKings could become.