The CEO of Disney has confirmed the company is looking for a greater presence in the sports-betting business, a reversal from its long-held position of avoiding any association with gambling.
“We do believe that sports betting is a very significant opportunity for the company,” Walt Disney Company CEO Bob Chapek told analysts during an earnings conference call on Wednesday.
“Given our reach and scale, we have the potential to partner with third parties in this space in a very meaningful way.”
Disney spent millions of dollars three years ago on a successful campaign with fellow Florida juggernaut the Seminole Tribe to pass a state constitutional change which stripped the Florida legislature of its authority to expand commercial casino gaming.
But the company also owns ESPN, the largest U.S. sports broadcasting network and a unique asset in terms of exploring a broader role in the legal sports-betting market.
Chapek told analysts that growth in the number of subscribers to its streaming service, ESPN+, was a key factor in Disney exploring an opportunity in sports betting, as sports presents an enormous opportunity for engagement. As of September 30, ESPN Plus had 17.1m subscribers.
“It’s all driven by the consumer,” Chapek said. “Particularly the younger consumer that will replenish the sports fan over time and their desire to have gambling as part of their sports experience.”
“And as we follow the consumer, we necessarily have to seriously consider getting into gambling in [a] bigger way,” he added.
In August, the Wall Street Journal reported that ESPN was exploring a potential deal to license its brand to a sports-betting operator such as DraftKings or Caesars Entertainment for as much as $3bn, a report that was dismissed by Caesars CEO Tom Reeg last month at East Coast Gaming Congress in Atlantic City.
“I think it’s extraordinary that you can read an article in the Wall Street Journal that doesn’t have any bit of truth that ESPN is getting $3bn from Caesars for its sports-betting brand,” Reeg told attendees.
“The idea that ESPN sees sports betting as a key piece of their future is extraordinary versus where that particular company was even 18 or 24 months ago,” Reeg noted, referencing Disney's historical opposition to legalized gambling.
ESPN recently signed a ten-year National Football League (NFL) rights agreement, which begins in 2023, and signed a five-year deal with the NFL for the Monday night wild card game, which runs through 2025.
The sports network is also in the first year of a seven-year deal with the National Hockey League (NHL) to stream games exclusively through its ESPN+ and Hulu offerings.
“ESPN is a perfect platform for this,” Chapek told analysts of sports betting.
“We have done substantial research in terms of the impact to, not only the ESPN brand, but the Disney brand in terms of consumers' changing perceptions of the acceptability of gambling. And what we're finding is that there is a very significant installation.”
Chapek’s increased interest in sports betting comes as fuboTV, a streaming platform service like ESPN+, last week launched its Fubo Sportsbook product in Iowa, with plans to launch soon in Arizona.
The online sportsbook allows players to sync their sports-betting experience with the live sports they are streaming on TV.
In addition to its licenses and market-access agreements in Arizona and Iowa, Fubo Gaming has entered into market access agreements in Pennsylvania in partnership with The Cordish Companies, as well as Indiana and New Jersey though Caesars.
David Gandler, co-founder and CEO of fuboTV, said the company's wagering business continues to evolve.
“We are transforming how consumers watch and engage with live television with our first-generation integrated Fubo Sportsbook, which launched November 3 in our first state, Iowa,” Gandler told analysts on Tuesday during a conference call to discuss the company's own third-quarter earnings.
Gandler said the company’s launch in Iowa was not an easy task.
“It was not an easy lift to launch a sportsbook in less than 12 months. And so, we've been working with regulators. So far, it's very early.”
“But so far, I think what's interesting is that there is interest from our subscribers to play,” he added. “That's a very important piece here if you think about the reason why we did this.”
Since the closing of the third quarter, fuboTV has passed the 1m subscriber mark, the company announced on Tuesday. Gandler said the company in 2022 will focus on securing additional market-access agreements to take advantage of its growing subscriber base.
“When you have 1m people that you can talk to every day … we're very comfortable in our ability to actually create a new revenue stream and upsell existing customers,” he said.
Disney’s interest in sports betting comes after the company conducted research that found gambling no longer has the same negative reputation as it did 10 or 20 years ago.
Chapek believes sports betting will strengthen the ESPN brand, without affecting the Disney brand.
“To go after that demographic opportunity plus the, of course, not insignificant revenue implications ... is something that we're keenly interested in and are pursuing aggressively,” Chapek said.