ECONOMY

Disney Builds a New Magic Kingdom in Sports Betting

Even the Walt Disney Co., about as family-centric as a Fortune 500 corporation can be, likes sports gambling’s prospects and wants in on the action.

Bob Chapek, the company’s chief executive, told investors at a conference on Tuesday that Disney plans to get “aggressive” about expanding its presence in sports wagering. It is considering forging closer licensing partnerships with gambling operators through ESPN, its sports broadcasting powerhouse. ESPN already cut deals with some of those companies that allow it to routinely feature points spreads and other betting lines during games. ABC, another Disney property, has been doing the same during some of its sports shows.

Asked at the conference whether ESPN would move beyond licensing its name to gambling companies and fully embed wagering inside ESPN itself, Chapek demurred.

“There’s a long way between embedded into the ESPN business model and licensing out,” he said. “Let’s just say that our fans are really interested in sports betting. Let’s say that our partners — with the leagues — are interested in sports betting. So we’re interested in sports betting.”

At least one of ESPN’s most high-profile employees is interested in gambling, too. Adam Schefter, a prominent on-air analyst designated by the network as an “NFL Insider,” recently invested in Boom Entertainment, a maker of sports and casino gambling apps that is also developing what it describes as “real money gaming products.” One of Schefter’s co-investors in Boom is Robert Kraft, owner of the New England Patriots football team and other sports ventures. Current and former gambling, sports and broadcast executives and companies are also investors.

Schefter’s stock in trade are football scoops such as new contracts, trades, injuries, starting line-ups and the other gossipy stuff that gives viewers a sense of who’s up or down, and who might win or lose. That information is also valuable to gamblers — or anyone who might own, say, a sizeable stake in a newfangled gambling company interested in digital sports betting. Viewers, and Schefter’s 8.5 million Twitter followers, might end up wondering whether he will shade his opinions or bury important information if he directly or indirectly has money riding on games and athletes. It gives a whole new meaning to “NFL Insider,” but ESPN seems unconcerned.

I asked the network if it had a conflicts-of-interest policy outlining ethically acceptable investments for its employees. It declined to say whether a policy exists and, if one does, whether Schefter’s Boom investment comports with it. ESPN also declined to comment when I asked whether it felt that any social or business lines are getting crossed amid the sports betting boom, given that professional sports and affiliated media networks were, until very recently, opposed to alliances with gambling operators. It referred me to Chapek’s conference comments.

But there’s no mystery here. Disney and ESPN are clearly comfortable pursuing gambling partnerships. Lots of money can be had, the cable television market is fraying and Disney wants to solidify its bonds with cord-cutting younger viewers, particularly those who prefer wagering on their mobile devices to strolling into a brick-and-mortar casino or finding a back-alley bookie.

Still, Disney’s gambling forays, coupled with the headlong rush by states, leagues, teams, the media and others into sports gambling, won’t be frictionless. Gambling may be a pastime for most, but it is an addiction for many. The more ubiquitous and accessible sports betting becomes, the more addiction there will be. Kids and young men are particularly vulnerable.

Gambling can also ensnare sports and its athletes. That’s an age-old reality, with regular reminders. Following a two-month investigation, the National Hockey League said Wednesday it didn’t find evidence that Evander Kane, a forward with the San Jose Sharks, bet on his own games or tried losing them to cash in wagers. The investigation was prompted by accusations from Kane’s wife. But Kane has acknowledged being a gambling addict and betting in casinos and with bookies during hockey season — and losing at least $1.5 million doing so before filing for personal bankruptcy earlier this year. He said he never gambled on hockey or threw a game. The NHL said it reserves “the right to investigate any new information that might arise relating to the gambling allegations.”

Disney has certainly been aware of gambling’s corrosive effects and has tried to toe a fine line around wagering. As recently as 2019, the company’s former chief executive, Bob Iger, said he didn’t see Disney “getting involved in the business of gambling, in effect, by facilitating gambling in any way.” But Iger, like Chapek, said the company was comfortable partnering with companies that offered betting information. And even before the Supreme Court unleashed the current U.S. boom in 2018 by striking down a federal ban on sports betting that essentially limited it to Nevada, ESPN offered gambling fare such as “Chalk Talk” and “Bad Beats.”

Now ESPN is reportedly pursuing licensing deals worth at least $3 billion with sports betting titans such as Caesars Entertainment Inc. and DraftKings Inc. Those transactions could create ESPN-branded bookmakers. Disney also has a large equity stake in DraftKings and ESPN airs specials focused on sports gambling called the “Daily Wager.” Disney’s magic kingdom may end up unsullied by all this, or it may wind up with some adult problems on its hands.

Or maybe Disney will just claim that this gambling boom is inevitable and there’s nothing it can do to stand in its way. To use a signature statement Schefter often deploys in his Twitter feed when he reports new sports gambling partnerships: “Sign of the times.”

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Timothy L. O’Brien is a senior columnist for Bloomberg Opinion.



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