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Reports that The Walt Disney Co.’s ESPN is close to forming a sports-betting partnership with DraftKings looks like a bad beat for other betting companies on Wall Street.
The deal would create an ESPN-branded sports book and increase the amount of odd and other betting information carried during ESPN programming,
Disney has been looking to find a way to capitalize on the growth of legalized sports betting and has been seeking as much as $3 billion in a long-term deal with a sports-betting partner, according to Bloomberg.
Disney already owns a stake in DraftKings, which it acquired when it bought 21st Century Fox’s assets.
ESPN declined to comment. DraftKings said it has “a great, long standing relationship with ESPN” but wouldn’t comment on potential negotiations.
As the biggest player in TV sports, ESPN could give a big boost to sports books, especially if it were made easy to move from watching a game to placing a wager.
The report drove DraftKings shares up more than 2% in Friday trading. Meanwhile, shares of other gambling stocks were not so lucky.
Rush Street Interactive, which operates the BetRivers sportsbook, dropped almost 5%; Caesars Entertainment fell more than 4%; Flutter Entertainment, which owns FanDuel, was down more than 2%; MGM Resorts slid about 2%; and Bally’s Corp. was off 2%.
Disney shares were down 3%.
With its squeaky-clean image gambling has posed a dilemma for Disney and ESPN. But a year ago Disney CEO Bob Chapek said on an earnings call that some research indicated that betting might not damage his company’s brands.
“We’ve done substantial research in terms of the impact not only to the ESPN brand, but to the Disney brand in terms of consumers changing perceptions of the acceptability of gambling,” Chapek said. “What we’re finding is there’s a very significant insulation. Gambling does not have the cache now that it had say 10 or 20 year ago.”
He noted that the younger sports fans that ESPN needs to replace aging fans want gambling as part of their sports experience. On TV, that’s more of a lean forward type of experience, he said.
“As we follow the consumer, we necessarily have to seriously consider getting into gambling in a bigger and bigger way and ESPN’s the perfect platform for this,” Chapek said. ■