Are ESPN Sports Betting Plans Shelved With Bob Iger’s Return to Disney Leadership?

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ESPN has long been a network willing to build big, then raze it all with the grace of a wrecking ball.

It adds networks, alters programming direction, creates and exploits media celebrities when the perceived tastes of the audience or the economic landscape dictate. Then it just as quickly tears it all down when there’s a rethink at Disney, the company that has been 80% owner of the broadcast and sports streaming giant since 1996.

The surprising announcement that former Disney CEO Bob Iger would return to replace Bob Chapek was just the type of rumble sure to reverberate from the Magic Kingdom to ESPN’s Bristol, Conn., base.

It’s expected that this latest quake will likely divert ESPN from what seemed like a destined branded sportsbook partnership, perhaps with DraftKings — in which it has a 6% ownership stake — or Caesars, with which it shares a content association.

ESPN Seemed Destined for Betting App, Pre- and Post-Iger

Chapek slowly led anyone paying attention over the past two years to the realization that ESPN’s dominant national sports presence could and would somehow be leveraged to exploit sports betting being legal in 36 American jurisdictions. This had represented yet another change of direction that at first seemed stunning.

Iger said in 2019, after all, that he couldn’t foresee Disney “facilitating gambling in any way.”

But those were different times, and Chapek and his ESPN underlings, like ESPN chairman Jimmy Pitaro, had laid that case out well as the network began spicing its content with betting lines and even added a Daily Wager gambling show.

In June, Pitaro told The Athletic Sports Media Podcast that sports betting is “pretty much at this point a must-have” and “something we need to be doing. It’s something that our fans are expecting from us.”

At a Sports Business Journal conference on Wednesday, he said that “no deals imminent” in regards to sports betting.

“Bob’s ultimately going to have to dig in with me,” Pitaro added. “We believe that there is upside for the ESPN business. We believe that there’s upside for the ESPN brand. Again, and Bob and I will do this, we have to consider things from a Disney perspective as well.”

What Could Push ESPN Away From Sports Betting Deal?

This shouldn’t be taken as some sort of Cinderalla’s Castle intrigue or retrograde moralization. Iger will have other more lucrative revenue streams to mine. And quickly.

As Disney attempts to steady its financial ship under Iger, sports betting, the proverbial low-margin “amenity,” would be a drain on the collective bandwidth of a global media conglomerate dealing with a $1.5 billion loss in its direct-to-customer business in the fourth quarter of 2022. ESPN lost 10 million subscribers in 2021, and two million in the fate Q4 of 2022, putting the acquisition of more live sports and streaming rights, bolstering subscriber platforms, and the shedding of ancillary content high on any Iger agenda.

Live sports, streaming deals, and wooing subscribers to pay platforms figure to be a priority, but Iger said during a company forum this week that Disney needed to “chase profitability, not subscribers.” An Eilers & Krejcik Gaming newsletter report claimed ESPN was seeking $300 million yearly to associate with a sportsbook. An earlier Wall Street Journal report pegged the figure at $3 billion over a multi-year deal. With gambling companies chasing profitability, too, that figure may be unattainable. But, ESPN’s massive user base and brand awareness could greatly shave costs in one of the most expensive facets of the sports betting business: customer-acquisition.

 

Former ESPN president John Skipper told Sportico he believes shedding sports betting ambitions would likely be among Iger’s early plans for ESPN.

Will ESPN Join MaximBet, Fubo on Sportsbook Extinction List?

ESPN sportsbook platform, while heavily scrutinized, theorized, and prioritized, was never realized.

And its drawing-board scuppering could likely involve more than a failure to generate business. There seemingly would have been customers. In an Odds Assist survey of 660 US respondents, age 25 and older who currently patronize legal sportsbooks, 73.3% said they would patronize an ESPN sportsbook.

But it turns out the sportsbook business, particularly in acquiring customers, is difficult. And expensive.

Fubo Gaming, closed in October after an internal review discovered a “challenging macroeconomic environment.” Fubo’s situation, as a streaming service, was somewhat analogous to Disney and ESPN, albeit on a much smaller scale.

MaximBet, a self-described lifestyle sportsbook brand that was live in Colorado and Indiana, ceased operations in October. Churchill Downs announced in February that it would shut down its TwinSpires sportsbook brand.

Certainly, Disney has exponentially greater resources than all of these companies. But a low-margin venture for ESPN might not have ever been worth the cost as compared to streaming or subscriber content.

Brendan Bussman, managing partner of B Global, doesn’t see a correlation between the ESPN, Fubo and MaximBet situations.

“With the recent exodus of brands like Maxim and Fubo, this is part of the natural ebb and flow of a market where some brands survive and others do not,” he told Gaming Today. “This is the case that their approach in the market did not resonate.  The market is still strong as it continues to mature and will see further M&A activity.
“ESPN continues to be one of the elephants in the room and the Mouse has its challenges on how it may or may not enter into the market. Part of the delay may be the recent change in leadership.  Part of the delay is finding the best opportunity for the brand which on its own is one of the biggest in sports. But its parent has larger implications.
“This is more about finding the right fit than it is on any indication of the market.”

Disney Solidifies Streaming Infrastructure With BAMTech Purchase

Earlier this month, Disney opted to lay out $900 million to attain the remaining 15% of BAMTech, the streaming firm that powers Disney+, and the company’s other consumer services. The decision came days after the return of Iger, who pushed hard to shift Disney’s focus to streaming in his first 15-year stint in charge.

Chapek Teased Betting Deal, but Couldn’t Produce One

Maybe it was never going to be “ESPN Sportsbook,” in the vein of FOX Bet or theScore app that was eventually absorbed into PENN Entertainment.

Maybe Iger would have sought to shut it down upon his return.

But ESPN could have had its sports betting identity sorted out already if Chapek hadn’t frozen the brand in “expensive stasis,” Acies Investments partner Chris Grove told Business Insider. Chapek certainly had fits and starts, saying at the Disney D23 Expo in Anaheim, Calif., in September that ESPN was “working very hard” on a sports betting app, then regrouping at CNBC a few days later to clarify that his platform would only ever enter a branding partnership with an existing sportsbook.

“We at ESPN have the ability to do that. Now we’re going to need a partner to do that, because we’re never going to be a book, that’s never in the cards for the Walt Disney Company,” Chapek told CNBC. “But at the same time, to be able to partner with a well-respected third party can do that for us.”

It was a costly tack, Grove told Business Insider.

“You could argue that Disney lost out on hundreds of millions, if not billions, in sports-betting dollars thanks to Chapek’s strategy.”

“You could argue that Disney lost out on hundreds of millions, if not billions, in sports-betting dollars thanks to Chapek’s strategy,” he said.

Grove said if Iger is able to coordinate new ESPN streaming and sports betting deals, “that dynamic could generate enough momentum to get past whatever has kept Disney stuck to date on striking a big sports-betting deal.”

Bloomberg reported in October that ESPN and DraftKings were in advanced stages of agreeing to a landmark partnership, but nothing has been announced.

About the Author
Brant James

Brant James

Brant James is the lead writer for Catena Media Sharp Sites including Gaming Today. He has covered the American sports betting industry in the United States since before professional sports teams even knew what an official gaming partnership entailed.

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