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ESPN Reportedly Mauling Over $3 Billion Sports Betting Deal
By Jeff Osienya Aug 30, 2021 IndustryRecent reports reveal that ESPN could take a more direct role in the sports betting sector by licensing its brand name to a sportsbook operator. The sports media bigwig doesn’t want to be left out of the booming sports betting market.ESPN, the sports media giant, owned by the Walt Disney Company, is actively looking to enter the sports betting scene by licensing its brand to leading sports betting companies. ESPN is planning to tap into the booming sports betting industry in a licensing deal that will cost at least $3 billion over the course of a couple of years.
The report was first published by the Wall Street Journal, indicating that ESPN is holding talks with different companies in the gambling world, including DraftKings and Caesars Entertainment. As we speak, ESPN has an ongoing marketing partnership that it inked with both DraftKings and Caesars and is now seeking to bolster the arrangements in a bid to generate even more revenue.
Such a deal would give a gambling operator the right to rename their sportsbook using the ESPN name, a deal that is already a norm in the US sports betting world. Other famed media brands have forged similar partnerships to capitalize on iGaming, and the arrangements are flourishing. For instance, Penn National Gaming operates the Barstool Sportsbook after leveraging its Barstool Sports digital media company. Fox also teamed up with The Stars Group to introduce Fox Bet, whereas Sports Illustrated joined forces with 888 to introduce the SI Sportsbook.
Striking While the Iron is Red Hot
When the Supreme Court of the US repealed PASPA in May 2018, giving states the mandate to introduce regulated sports betting as they saw fit, sports betting has grown exponentially since then. Before the 2018 Supreme Court decision, Nevada was the only state that had legalized event wagering on different sports games.
Besides the Silver State, Oregon, Montana, and Delaware were the other three US states exempted from the PASPA. The trio had already legally approved a specific form of sports betting when the PASPA was first passed in 1992. These forms of sports wagers were lottery games that were centered on the outcome of sporting events. From a sports betting standpoint, they were essentially parlays where players had the option of picking the outcome of at least three different games.
Further, Arizona, New Mexico, and Wyoming also had limited legal pre-PASPA types of sports betting. In Arizona, sports pools among friends were allowed provided that the pool didn’t cross a $100 threshold. On the other hand, New Mexico had legalized a specific type of wager on bicycle races, whereas Wyoming had okayed wagers on rodeo events and golf tournaments.
However, since the 2018 PASPA repeal, 32 states and the District of Columbia have legalized sports betting, a move that’s proven to be lucrative for state coffers. Recent projections from Chris Grove, an analyst at gambling industry research firm Eilers & Krejcik Gaming, indicate that in 2021, revenue generated from sports betting is expected to hit up to over $4 billion. So, for sure, it makes sense that ESPN doesn’t want to miss out on this boom, as different states continue to launch their regulated sports betting markets.
No Guarantees Yet for the ESPN Sports Betting Deal
Nonetheless, as exciting as the news is, industry analysts from publications such as Fox Business have cautioned that there are guarantees about the ESPN sports betting licensing venture. That’s because US sports-betting companies have recently been working to invest in cementing the strength of their brands across the country. As a result, the sportsbook brands may also shy away from making additional investments like buying naming rights from ESPN.
Additionally, reports indicate that ESPN and Caesars haven’t responded to queries sent to them by media houses about the potential deal. DraftKings, on the other side of the coin, responded with a vague answer, neither confirming nor denying the media accounts. The company representative contacted said that as standard policy, DraftKings does “not comment on the specifics” of any business negotiations.
Whatever the case, ESPN will most certainly see this deal through as it has recently changed its stance on gambling. Rather than staying on the side-lines by just featuring some sports betting-related content in its shows such as the ‘Daily Wager,’ the company looks like it now wants to take a more active role.
Well, the Walt Disney Co. recently expressed interest to dip its toes into DFS and sports betting waters via its ESPN brand during its annual investors’ day in December 2020. This was an unexpected but welcome U-turn for Disney after decades of steering away from any association with the world of gambling.
While there are no indications of which side Disney is leaning towards between DraftKings and Caesars, it’s worth noting that Disney currently owns 6% of non-voting equity of DraftKings. By an interesting twist of fare, Disney ended up a shareholder when it acquired 21st Century Fox in March 2019, as Fox already had a stake in DraftKings before the buyout.
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