Disney announced all bets are on, as the company struck a massive 10-year sports betting deal with Penn Entertainment to its ESPN sports network.
Over the weekend, Penn Entertainment agreed to pay Disney $1.5 billion in cash, while ESPN received warrants worth roughly $500 million to buy shares in Penn. The deal creates groundbreaking opportunities, including an all new “ESPN Bet” app, which lets sports fans place bets on their mobile phones using Penn’s sportsbook. Penn will manage the app while Disney assists in the app’s promotions.
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When asked if Disney and sports betting could coexist, CEO Bob Iger said he didn't see the company facilitating gambling.
Now, the House of Mouse is going all in. https://t.co/QqrxGVY3lq pic.twitter.com/2isPMkeEOV
— The Wall Street Journal (@WSJ) October 13, 2023
Sports fans around the world will now be able to place bets on their favorite sports teams – they can wage in on how many 3-pointers a basketball player will make, or how many homeruns their favorite baseball all-star will score. Sports betting has become particularly popular on college campuses.
Some company executives shared their concerns on the idea of Disney living under the same roof as sports betting, feeling it would damage the overall brand. One investor shared concern of possibly needing to sell some of its Disney stake if the company “embraced betting.”
ESPN has been struggling to get more viewers since the rise of streaming services changed the entire entertainment dynamic. Sports leagues and startup businesses have embraced gambling, while other media companies have welcomed betting as one of the best ways to expand.
Around the same time, BlackRock warned Disney that if the company made a deal with a sportsbook, ESG rules might require some of its European funds to reduce their Disney stakes, according to sources close to the matter.
ESPN and Penn have the option to “walk away from the partnership in three years” if the venture “hasn’t captured a minimum market share target.” Penn Entertainment CEO Jay Snowden declined to reveal the “exact target,” but said that it was “around 10%.” Snowden added that ESPN sports programming “won’t be pushed into the betting app when it launches in November” so as not to “slow down the betting experience.”
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