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Penn stepped up in “very aggressive way” to score ESPN deal

| By Zak Thomas-Akoo
In Disney’s Q2 earnings call, chief executive Robert Iger outlined why the business chose to partner with land-based and online gaming operator Penn Entertainment to launch ESPN into sports betting.
Disney sports betting

According to Iger, Disney has been engaged in discussions with many different entities over a long period of time about how ESPN should enter sports betting.

The licensing agreement will work to significantly grow engagement with ESPN consumers, particular younger viewers, he argued.

“And Penn, why Penn? Because Penn stepped up in a very aggressive way and made an offer to us that was better than any of the competitive offers by far,” said Iger.

“We like the fact that Penn is going to use this as a growth engine for their business. And we actually believe and trust in their ability to – in this partnership – to grow their business nicely while we grow ours.”

Disney interim CFO Kevin Landberry also ruled out the business foregoing advertising revenue from other gaming operators because of the deal.

Penn sports betting: Take two

On Tuesday, Penn announced its sportsbook would be relaunching as ESPN Bet in a $1.5bn deal.

The new agreement represents a major overhaul of the business’ US online sports betting strategy – but one where Penn sticks with its previous path of media-led gaming.

The move is planned for November, with the operator arguing the agreement will increase its long-term adjusted EBITDA potential for its interactive segment by between $500m and $1.0bn.

The announcement also saw the operator divest itself of Barstool Sports, the media brand Penn paid $551m to acquire as its vehicle to launch in the US sports betting market. Penn returned the media brand to controversial founder Dave Portnoy for $1.

In a recent interview with Variety, Portnoy suggested Penn missed out on gaming licences and its share price took a hit from his involvement. Ultimately, he argued the regulated gambling industry is not a good fit for Barstool Sports.

Disney’s long flirtation with sports betting

Rumours have long swirled about Disney, through ESPN, entering the sports betting space, due to it being the most popular sports media brand in the United States.

The years since the repeal of PASPA in 2018 have seen several other sports media properties acquired to enter the gaming space, notably theScore and Barstool Sports, both of which were acquired by Penn. Fox Bet, another media-betting joint venture between The Stars Group and Fox Sports, descended into legal action before it was wound down.

Penn opted to use Barstool for its vehicle to enter the US, and theScore for Canada after the regulation of the Ontario market.

In September 2020, ESPN entered an agreement to showcase odds with Caesars-owned William Hill and Daily Fantasy Sports information from DraftKings, representing Disney’s first foray into the space.

The next year then-CEO Bob Chapek said the company would be pushing for a greater presence in sports betting, highlighting ESPN as the “perfect” platform to achieve it.

Last September, Chapek reiterated the company’s interest in sports betting. At that time he said work on the potential launch of an ESPN betting app was ongoing and revealed the business had received up to 100 enquiries from businesses about it.

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