The US entertainment group Walt Disney is entering the sports betting business together with the casino owner Penn Entertainment. For Disney, the entry is a reversal.
The US media and entertainment group Walt Disney is entering the sports betting business together with Penn Entertainment. The new betting provider will operate under the name ESPN Bet and be affiliated with the sports channel ESPN, which belongs to Disney. Both companies announced this.
ESPN is an American television network that was originally founded to promote less popular sports in the United States. Since 2005, the sports broadcaster has been 80 percent owned by ABC, which in turn belongs to Walt Disney. While ESPN still generates billions in revenue, Disney’s long-time profitable business with the sports channel is on the decline: Subscribers are shrinking as people cancel their cable TV packages.
According to estimates by S&P Global Market Intelligence, the number of cable subscribers has shrunk from 98 million in 2013 to fewer than 74 million last year. Streaming service ESPN Plus, which launched alongside Disney Plus in 2019, has 24 million subscribers as of October 1, 2022, a fraction of what ESPN earns from cable TV subscribers.
Disney under pressure
In addition, the entire Disney group is under pressure: the number of subscribers to the in-house streaming service Disney Plus is declining, and many formats have been removed from the range for cost reasons. The cinema films “Arielle, the Mermaid”, “Indiana Jones and the Wheel of Destiny” or “Elemental”, which were released this year, also proved to be financial failures.
For the group, the cooperation with Penn Entertainment comes at a very difficult financial time. Disney boss Bob Iger recently spoke of challenging times and also referred to the declining number of cable customers: “We just have to find out how we can monetize ESPN in a changing world,” Iger said in March.
Barstool Sportsbooks becomes ESPN Bet
With Penn Entertainment and the expansion to sports betting, they now apparently hope to have found a way of monetization. Penn Entertainmant, a US entertainment company that operates casinos, among other things, had toyed with entering the sports betting market for some time and also took over Barstool Sportsbooks, an existing sports betting portal. This is now to be renamed to ESPN Bet.
Penn is expected to pay ESPN $1.5 billion in cash over a 10-year term and offer approximately $500 million in warrants. The Barstool Sportsbooks brand name change to ESPN Bet will take effect in the fall, the companies said.
Sports betting on the rise in the US
Online sports betting has only been legal in the United States since 2018, when the Supreme Court overturned a sports betting ban passed by Congress in 1992. New Jersey was the first state to legalize sports betting; since then, online betting has been legalized in 34 states and the District of Columbia. Sports betting has also been legalized in four other states, but has not yet been introduced.
The betting business is a highly competitive market: according to the American Gaming Association (AGA), Americans wagered more than $31 billion in legal sports betting in the first quarter of 2023. An increase of 70 percent compared to the previous year. Providers of online sports betting promise high profits.
Disney boss Iger has also recognized this. For a long time, he was opposed to the inclusion of sports betting in the Disney Group’s offerings. In April, however, he had already announced a change of course in an interview with the “Times” magazine: “I was probably more conservative for a long time. But I have changed because I think that the acceptance of sports betting has increased significantly.”
With information from Lilli-Marie Hiltscher, ARD finance department.