DraftKings and Disney’s ESPN are getting close to securing a massive partnership, according to industry insiders. The deal would allow ESPN and Disney to capitalize on the growing sports betting market.
In 2022, five more states legalized sports betting, bringing the total to 32. Just two years ago, sports betting was legal in just 19 US states.
Sports betting and Disney?
When you think of Disney, it’s safe to say you’re probably not thinking about wagering on sporting events. But the news of the DraftKings and Disney partnership isn’t much of a surprise for those following the brand for the past couple of years.
For years, Disney was clear it was anti-gambling. When Disney created its cruise ship line, the company didn’t include a single casino on its cruise ships (and still doesn’t to this day). The closest guests can get to gambling while on a Disney cruise is bingo. With the rapid development of sports wagering in the US, Disney is perking up at the opportunity to get in on the action.
Disney and ESPN
ESPN was bought by Capital Cities/ABC back in 1984. Disney got involved over ten years later in 1996 when the company purchased Capital Cities/ABC for $19 billion ($32.6 billion in 2020 value). Disney wasn’t specifically after ESPN in 1996, as the network was a part of a cluster of TV stations and content purchased by Disney. Since then, however, ESPN has become one of the largest contributors in revenue and operating income for Disney.
During a Q3 earnings call, Disney CEO Bob Chapek spoke about the possibility of a sportsbook partnership coming soon. “We think sports betting is important. We’re working hard on it, and we hope to have something to announce in the future in terms of a partnership there that will allow us to access that revenue stream and also make sure that our guests are being – having their needs met.”
It’s clear Disney has seen rapid growth in the sports betting industry and wants its slice of the pie. The $203.6 billion company has been seeking a sports betting partnership for the past several years.
ESPN Chairman Jimmy Pitaro told Bloomberg that the company wants to make it easier for sports fans to wager on their favorite teams. “We know that sports fans are craving not just more sports betting content, but they’re craving the ability to actually place bets in a seamless fashion from their online digital sports experiences,” said Pitaro.
It makes sense then that the company eventually decided DraftKings would make a good fit. When Disney purchased Twenty-First Century Fox in March 2019, 18.2 million DraftKings shares were included with the purchase. Disney effectively owns 6% of DraftKings.
DraftKings is also the second-largest online sports betting company in the US. The sports wagering brand has an overall market share between 25% – 30% depending on the month.
Bloomberg Intelligence analysts Brian Egger and Geetha Ranganathan said a partnership between the two companies would make strategic sense. “Licensing ESPN’s brand to a sportsbook and integrating bet odds in broadcasts could help both companies widen their audiences.”
DraftKings stock jumps amid partnership rumor
According to Yahoo! Finance, DraftKings shares rose as much as 8.8% last Friday. DraftKings, (DKNG) closed at around 3.3% on Friday.
What a partnership with ESPN would mean for DraftKings
According to Disney’s CEO Bob Chapek, Disney is hard at work creating its own sports betting app despite the rumors of a partnership with DraftKings. The partnership between ESPN and DraftKings would allow ESPN (and Disney) to capitalize on the DraftKings experience in the online wagering landscape and give ESPN access to DraftKings’ massive customer base.
In a Twitter post, Chapek wrote, “We have a better understanding of ESPN’s potential as a standalone business and another vertical for Disney to reach a global audience to generate ad and subscriber revenues.”
Should the two companies come to an agreement, we likely will see a record-breaking deal transpire. Back in 2021, Wall Street Journal writers Cara Lombardo and Benjamin Mullin reported that ESPN was looking for $3 billion for the brand-licensing deal. With Disney owning part of DraftKings, we could see some sort of “family” discount, for a lack of better words. DraftKings could alternatively make Disney a bigger shareholder to make up some of the funds.
When DraftKings or ESPN release more information about their partnership, we’ll be sure to cover it here at playonlinemichigan.com.
Mac Daniel is a Michigan native and freelance writer for PlayOnlineCasino and PlayOnlineSportsBetting. He has experience writing about a wide variety of topics, including healthcare, tourism, non-profit organizations, and most recently casino and sportsbetting news. To check out more of his work, visit: playonlinemichigan.com