ESPN Sports Betting Remains Possible But Stuck In Neutral

Written By Pat Evans on August 16, 2022
ESPN sports betting

The Walt Disney Company is fully committed to jumping into sports betting in the near future to help bolster its ESPN offerings, but there is still no clear move forward.

During Disney’s recent Q3 earnings call, CEO Bob Chapek said the company has been in “conversations for quite a long time” with multiple sportsbook platforms. Chapek said adding a sports betting function to ESPN would help ease friction for consumers.

“We have found that basically our sports fans that are under 30 absolutely require this type of utility in the overall portfolio of what ESPN offers,” Chapek said. “So we think it’s 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.”

ESPN likes sports betting potential

In a recent interview with LSR, ESPN VP of Sports Betting & Fantasy Mike Morrison remained quiet about potential sports betting integration into the network. Still, Morrison was bullish about what sports betting means to ESPN.

“We have long felt that mobile was a primary screen, but don’t think about multi-screen dynamics as a universal hierarchy because we know fans engage in many screens simultaneously, and each fan has their own habits,” Morrison said. “We try to instead think about the experience on each screen, and how we can optimize it the way a majority of people will use it.

“Industry research supports that a majority of bettors are more likely to watch a game if they have a bet on it. For us, it’s another form of engagement. The betting experience compliments the fan viewing experience by keeping them focused on the game.”

Disney sports betting evolution

This week’s earnings call only touched on sports betting after an analyst question. But it is far from the only time Disney executives have broached the subject. Back in 2019, then-Disney CEO Bob Iger said Disney would not be getting into gambling “in the near term.”

Soon after, however, Disney took a small stake in DraftKings. That stake turned out to be 18.2 million shares, or 6%, once DraftKings went public in 2020.

During a November 2021 earnings call, however, Chapek revealed in-house research found sports betting would strengthen ESPN without damaging the overall Disney brand. Earlier this summer, ESPN President Jimmy Pitaro said sports betting is a “must-have.”

ESPN already helps Disney overall

Disney beat Q2 revenue and profit projections, generating $21.5 billion in revenue, a 26% year-over-year increase. Operating profit hit $4.6 billion, up 50%.

That was largely driven by the success of the company’s theme park operations. 

However, live sports were also key, according to the call, as ESPN+ subscribers rose 53% to 22.8 million. With ESPN+, Hulu and Disney+, Disney passed streaming giant Netflix in overall subscribers, 221 million to 220.7 million, respectively.

Disney sports betting options 

ESPN already has partnerships with DraftKings and Caesars. The question that remains for executives is how to get a piece of the sports betting revenue.

In the past, the Wall Street Journal reported the potential of a multi-billion dollar licensing deal with a sportsbook, similar to Sports Illustrated’s deal with 888. Perhaps most interesting for that route would be international betting giant bet365.

Disney could also potentially acquire a sports betting company with its massive financial capabilities. There are plenty of sports betting operators contemplating their way forward in a crowded industry.

ESPN spinoff for sports betting?

An option would also be to spin off ESPN to merge with a sportsbook operator or technology provider. LightShed Partners argued for that strategy in the past.

Recently, the idea gained another supporter: activist investor Daniel Loeb, who sent a letter to Chapek that touched on the topic. However, Disney has hinted against that concept and the company already generates revenue from sports betting.

“ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting,” Loeb wrote, per CNBC. “We believe that most arrangements between the two companies can be replicated contractually, in the way eBay spun PayPal while continuing to utilize the product to process payments.”

Worldwide leader in sports betting?

Few sports media companies offer the reach and brand recognition of ESPN. The massive viewer database, along with a large fantasy sports community, provides significant built-in customer potential for the business.

Sports media companies entering the sports betting space, however, is not new. Fox Bet has struggled to secure much market share as it stays in FanDuel’s shadow at Flutter. 

Canada-based theScore might be the most comparable situation. TheScore struggled to gain market share in US sports betting before focusing on Ontario sports betting while splitting duties with fellow Penn Entertainment brand Barstool Sportsbook, another media sports betting exploration.

Earlier this year, LSR explored the idea ESPN might have missed the sports betting boat.

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Pat Evans

Pat Evans is a Grand Rapids, Michigan-based reporter covering sports business. Evans previously worked at Front Office Sports and the Grand Rapids Business Journal. He has authored two books: Grand Rapids Beer and Nevada Beer.

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