Betting On The Mouse: Bob Chapek, the CEO of Disney Co., says the company has decided to focus on building out partnerships in the sports betting industry.
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The company known for creating “The Happiest Place On Earth” is looking to place a wager.
Bob Chapek, the CEO of Walt Disney Company, said the company will expand into sports betting through ESPN.
“We’re also moving towards a greater presence in online sports betting, and given our reach and scale, we have the potential to partner with third-parties in this space in a very meaningful way,” Chapek said on Wednesday during the company’s fourth quarter earnings call.
The company had a soft year, reporting earnings under Wall Street’s expectations. But a bright spot is sports. Streaming service ESPN+ increased subscribers by 66% over the fiscal year, 90% of the most-watched broadcasts on Disney’s owned TV networks last year were sports events, and Disney inked a 10-year NFL rights deal that begins in 2023. However, ESPN advertising revenue was flat during the fourth quarter compared with the same time period last year.
Chapek said that gambling could help the company by creating new revenue streams and attracting and keeping a younger audience.
“We do believe that sports betting is a very significant opportunity for the company, and it’s all driven by the consumer,” says Chapek. “It’s driven by the consumer, particularly the younger consumer that will replenish the sports fans over time and their desire to have gambling as part of their sports experience.”
In order to attract a younger audience, Chapek said, Disney must “seriously consider getting into gambling in a bigger way, and ESPN is a perfect platform for this.”
The company has already tested the waters. Last year, ESPN cut deals with Caesars Entertainment and DraftKings to link to their sportsbooks from ESPN.com. In August, Wall Street Journal reported that ESPN was in discussions to explore a potential brand licensing deal with Caesars Entertainment or DraftKings that could be worth $3 billion.
A big question is how exactly Disney, through ESPN, will get in on the gambling action.
In September during an investor conference, Chapek was asked if ESPN would move beyond licensing and host wagers directly.
“There’s a long way between imbedding into ESPN as a business model and licensing out.” Chapek said. “Let’s just say that our fans are really interested in sports betting. Let’s say that our partners with the leagues are interested in sports betting, so we’re interested in sports betting.”
Since the U.S. Supreme Court struck down a ban on sports betting in 2018, 32 states and Washington, D.C. have launched legal markets and the industry is on fire and flush with cash. Americans bet $24 billion with legal sportsbooks in the first half of 2021, according to data from the American Gaming Association, which translates into roughly $2 billion in gross gaming revenue. By 2030, the industry is expected to produce $30 billion in revenues off an estimated $400 billion in total wagers, according to Macquarie Research. Media companies—from Fox to Sports Illustrated—have already cut deals with sports betting companies.
Daniel Dienst, executive vice chairman of Authentic Brands Group, which owns Sports Illustrated, told Forbes in September that the company cut a deal with a sports gambling company because it sees a promising new revenue stream in sports betting and an opportunity to own an equity stake in a growing business in a growing industry. When asked if he thinks there’s still a stigma to gambling, Dienst said “no.”
“Gambling, sports wagering in particular, has moved out of [the vices] world,” Dienst told Forbes. “I think it’s part and parcel to the culture of how people engage with sports.”
During Wednesday’s earnings call, Chapek held his cards close to his chest and would not elaborate on how Disney will enter the sports betting market. But he did say that he’s not worried about sullying Disney’s nor ESPN’s reputation by getting into sports betting.
“Gambling does not have the cachet now that it had, say 10 or 20 years ago, and we have some concerns as a company about our ability to get in it without having a brand withdrawal,” said Chapek. “But I can tell you that given all the research that we’ve done recently, that that is not the case. It actually strengthens the brand of ESPN when you have a betting component, and it has no impact on the Disney brand. Therefore, to go after that demographic opportunity plus the, of course, not insignificant revenue implications, that is something that we’re keenly interested in and are pursuing aggressively.”