In a surprising pivot that could rival a plot twist from one of its animated classics, Disney-owned sports network ESPN is making a groundbreaking move into sports betting. The seismic shift from Disney’s traditional stance against gambling is a nod to the changing media landscape and a reflection of the booming popularity of sports betting across the United States.
Long synonymous with family-friendly entertainment, Disney’s historical aversion to betting was evident when CEO Bob Iger declared that Disney had no intention of facilitating gambling in any way.
Yet, the winds of change have blown through the media and entertainment giant’s corridors. The rise of cord-cutting and the explosive growth of sports betting following a 2018 Supreme Court ruling has prompted Disney to reconsider its stance. In a move that defies its history, ESPN recently announced a $2 billion partnership with gaming company Penn Entertainment. The deal will herald the arrival of ESPN Bet, a sportsbook set to launch this autumn.
For a network that once merely covered sports, ESPN’s transformation into a platform that promotes sports betting is a watershed moment. This about-face is indicative of both the shifting media landscape and the growing acceptance of sports betting, which is legal in some form in 34 states and Washington DC. ESPN’s deal with Penn Entertainment is a strategic move to capture a burgeoning market and a response to the changing dynamics of media consumption.
As cord-cutting gains momentum, traditional television networks like ESPN have seen their viewership decline. At the beginning of 2020, ESPN was available in 83 million households; now, that number has dwindled to approximately 71 million. Rising sports rights costs and fierce competition from tech giants like Apple and Amazon have fueled these changes. Under its latest agreement, ESPN will pay the NFL a staggering $2.7 billion annually.
Although ESPN remains profitable, the shift in viewership and revenue model is a source of concern for both shareholders and Disney itself. The media conglomerate is navigating uncharted waters in the streaming era. Disney’s streaming division reported a loss of $512 million in the fiscal third quarter, prompting the company to increase prices for some of its offerings. The ESPN+ streaming service, which saw subscriptions soar from 3.5 million in 2019 to 25.2 million in 2023, underwent layoffs to mitigate costs.
The lucrative gambling industry
Concurrently, sports betting has experienced a meteoric rise. According to the American Gaming Association, a record $93.2 billion was legally wagered on sports in 2022, generating $7.5 billion in revenue for sportsbooks. This surge signals a significant shift from the $13 billion in wagers and $909 million in sportsbook revenue reported in 2019.
The introduction of ESPN Bet is set to transform the network into a comprehensive sports betting destination. Penn Entertainment’s rebranding of the Barstool Sportsbook app and website and a $1.5 billion payment to ESPN over a decade will solidify this transformation. ESPN-branded retail locations are also in the works.
Jay Snowden, CEO and President of Penn Entertainment, highlights the strategic significance of the partnership. He views ESPN as the optimal platform to reach sports fans and potential bettors, thus amplifying the impact of their collaboration. ESPN Bet’s launch will bring new shows, online offerings, and in-broadcast odds graphics to the network.
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