Disney is entering the US sports betting industry, linking its sports network ESPN to the online gambling and casino company Penn Entertainment, in a $2 billion deal. Penn would change the name of its sports betting portals, currently known as Barstool Sportsbook and available in 16 states, they would now be called ESPN Bet.
The move comes less than six months after Penn completed its $551 million acquisition of Barstool, the sports betting and entertainment site founded by dave portnoy in 2003, known in North America for his controversial comments.
Under the terms of the agreement, Penn will pay ESPN a $1.5 billion in cash for a 10-year term, and will provide $500 million in warranties for Penn’s shares. The brand change will take effect this fall, that is, in the Argentine spring.
The agreement between Penn and ESPN is a defining moment for the Disney sports platform that was hesitant to accept the deal. These doubts were precisely linked to the fact that as the owner of ESPN, Disney feared the impact on its family portfolio from getting stuck in the online casino business (although betting platforms have taken over all sports, from soccer to NBA basketball). And besides, he had to rub shoulders with a figure canceled by the media, dave portnoy. In a video posted to his Twitter account, Portnoy cited The New York Times and Insider articles as one of the reasons Barstool and Penn were “denied their gaming licenses” at the time.
“It was my fault,” added the former owner. The New York Times in 2022 described the sportscaster and businessman as promoting irresponsible gambling, while the previous year Insider spoke to several women who accused him of sexual misconduct. “We underestimate how difficult it is for Barstool and me to operate in a regulated world,” Portnoy complained, adding: “We don’t have to watch what we say, how we speak, what we do, we have to go back to the pirate ship“, he sentenced.
Business
Jay Snowden, CEO of Penn, touted ESPN’s broad reach among linear and broadcast viewers, and social media, which includes more than 105 million monthly digital visitors and 25 million ESPN+ subscribers.
On the flip side, sports betting is a relatively young industry in the US, having relaunched after a 2018 US Supreme Court ruling struck down a federal ban. Since then, 34 states and the District of Columbia have legalized the practice according to the American Gaming Association.
Since then, the battle for market share has been fast and fierce, with the groups FanDuel and DraftKings commanding a combined 70 percent market share for the last 12 months according to Eilers & Krejcik Gaming.
Penn has about 2 percent of the market through Barstool Sportsbook, but now it could grow. And many see a possible merger down the road: Disney acquired a 5 percent stake in DraftKings in 2019 when it bought 21st Century Fox. And it also made a deal with Caesars Entertainment that gave it the exclusive right to provide sports betting odds to ESPN.
Bet
The move is a setback for Disney CEO Bob Iger, who for years avoided sports betting because he believed it was too spurious for the family-owned Disney brand. In 2019, he told investors that he didn’t expect Disney to get involved. “I was probably on the more conservative side on this for a long time.
But I have changed because I think the acceptance of sports betting has grown significantly,” he told Time magazine in April. Jimmy Pitaro, President of ESPN, noted that the network’s alliance with Penn was due to increased demand for sports betting products among its viewers. “We know sports fans want betting content and the ability to place bets with less friction within our products,” he said in a statement.
Penn shares have since risen nearly 10 percent to $27.20, while Disney shares rose slightly to $88, understanding that the company’s revenue will also improve with this new business unit.
Money
disney need money right now. They’re looking to reduce a $5.5 billion red, and this way they’re getting $2 billion just for putting up the brand: They license the most famous four letters in sports, ESPN, to PENN National.
But there are conflicts and red flags galore.. In the last two NBA drafts (where the league’s newest players are selected), sports experts like Shams Charania and Adrian Wojnarowski have tipped the betting odds with their reports. That’s a major potential conflict of interest: ESPN would ban its own employees from using ESPN Bet, acknowledging the influence of their talents and journalists to tip the scales.
Something that also happens at Fox, who is approaching the Flutter platform: they will close the sports betting business Fox Betaccording to Bloomberg. rupert murdoch, president of Fox News Channel, would finish closing the deal over the next month. Fox partnered with Canadian online betting company The Star Group to launch Fox Bet in 2019. But the relationship between the partners changed when Star was acquired by Flutter. Fox sued Flutter in 2021 to exercise its option to buy the 18.6% stake in FanDuel, one of the world’s largest fantasy sports companies.
Billing
US sports betting revenue reached $2.3 billion in the second quarter of 2023, setting a new record. Revenue generated by online and land-based sports betting houses increased by 56.6% in the annual balance, according to a report from the American Gaming Association. And the boost was partly attributed to the launch of sports betting in several states, including Massachusetts, Kansas, Ohio and Maryland.
Continued growth in the gambling industry in turn drives state and local tax revenue, with $3.62 billion in direct gaming taxes in Q2 2023, up 9.6% from Q2 2023. 2022. A increase dominated by online betting which have also become popular as sponsors of various sporting events and leagues.
Soccer and gambling are now connected. They are the sponsors of the jerseys and billboards, and even the leagues (such as the AFA) are associated with betting companies. And although there are legislative proposals to break that relationship, it seems unlikely that the regulations will be implemented anytime soon.
Sponsors
The paradigmatic case is that of the Premier Leaguewhere in the current 2022/23 season, more shirts are sponsored by gaming companies than any other business – eight out of 20. Dafabet is on Bournemouth’s shirt, Stake.com at Everton, and W88 at Fulham.
There is also SBOTOP in Leeds United, Fun88 in Newcastle United, and Sportsbet.io in Southampton, to name a few of the Premier League gaming companies involved. Several of these portals, with the exception of Dafabet, are operated by the same company, TGP Europe.
In Argentina, with the arrival of the Swedish Betsson to the Boca shirt, there are already seven clubs that have betting sites as sponsors: Racing (Betsson), River (Codere), Vélez (Bplay), Estudiantes de La Plata (Bplay), Newell’s Old Boys (City Center) and Rosario Central (City Center). In addition, BetWarrior has been a sponsor of the Argentine national team since May 2022 and maintains a contract with AFA until 2026: it became one of the main sponsors of the Argentine Cup and the National Tournament.
“Latin America is a strategically important region in which we are performing well, and we have great ambitions for the future in Argentina,” said Pontus Lindwall, CEO of Betsson, which grew from €170 million to €222 million in revenue in the first quarter of 2023. setting the pace an unstoppable business.
by RN
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