In 2019, Walt Disney CEO Bob Iger said he did not see his company becoming directly involved in the fast-growing online sports betting business, despite clear opportunities for Disney-owned ESPN.
However, the growing acceptance of online sports gambling has changed the odds of Disney sticking to that stance.
ESPN and gambling company Penn Entertainment announced this week an agreement that will put the network’s famous red logo on online sports betting mobile app and website to be called ESPN Bet.
Details of the ESPN and Penn Entertainment agreement
Penn will pay $1.5 billion in cash over the next 10 years for the rights to use the ESPN name. As part of the deal, ESPN will promote the product across its programming and provide access to on-air talent. The agreement also gives ESPN the right to purchase up to 31.8 million shares of Penn stock for $500 million over the next 10 years.
The partnership represents a complete about-face for ESPN, which until now has only supplied gambling information and data on its programs and digital properties. However, the surge in legalized sports betting — widely accepted by the sports leagues ESPN carries — has made the gaming business hard for media companies to resist.
As recent as August 2020, ESPN and Caesars Entertainment opened a 6,000-square-foot studio facility at the Linq Hotel + Experience in Las Vegas to serve as the home of the company’s sports betting programming, including “The Daily Wager.”
One of the best-known brands in the Disney portfolio, ESPN is considered by Wall Street to be a drag on Disney’s stock.
Mr. Iger said in an interview last month on financial news networks CNBC that he is open to a spinoff of ESPN, or finding a partner to take a minority stake.
Penn will put ESPN on the online sportsbook products that currently use the Barstool Sports brand name in the 16 states where it operates.
As Penn and ESPN get into business together, Penn will sell the renegade digital media company Barstool Sports back to its founder, Dave Portnoy.
The announcement of ESPN’s deal comes a short time after Fox Corp. announced it will shutter its sports betting platform, which launched in 2019. The service called Fox Bet, failed to make much of a dent in the market.
Disney gets into betting: Excited or Concerned? Your thoughts on ESPN’s online betting move?