Disney’s Wager on Sports Betting Has Investors and Insiders Worried: Report

Insiders at The Walt Disney Co. worry that its latest move into sports betting could tarnish the company's brand, unnamed sources told The Wall Street Journal, and one investor has said that they may sell their stake in the entertainment conglomerate when it moves forward with its new gambling venture.

The company, which owns ESPN among a number of television assets, is set to launch the sports network's first-ever sports betting app in mid-November, a Disney spokesperson told The Messenger in an email. Disney inked a 10-year licensing deal with Penn Entertainment in August to rebrand its betting app, Barstool Sportsbook, as ESPN BET.

Penn Entertainment, which owns casinos and operates gambling and sports betting apps, said it will pay Disney $1.5 billion in cash over the course of the decade-long contract and give it the option to buy a $500 million stake in Penn. The ESPN BET app, website and some retail locations will allow ESPN fans to make their wagers in the 16 states where Penn is licensed, ESPN said in its announcement.

Specifics of how the app will work and how many physical betting locations it will offer are still being worked out by ESPN, the spokesperson told The Messenger.

"This licensing deal will offer a compelling new experience for sports fans that will enhance consumer engagement. We’re excited to offer this to the many fans who have long been asking for it," Disney CEO Bob Iger said in a call with investors after the deal with Penn was first announced in August.

But Disney insiders such as executive Jenny Cohen, appointed in February 2021 as the company's first vice president of social responsibility, voiced concerns over the deal when it was still under discussion last year, sources told The Wall Street Journal. That's also when Disney investor BlackRock told the company its European funds would reduce their stakes in the entertainment company if the deal went through, according to The Journal.

Disney and ESPN did not respond to The Messenger’s requests for comment.

ESPN BET is the first gaming platform run by Disney, but the company has been gaining a foothold in the sports betting space for years. In 2020, Disney made deals with sportsbooks operated by DraftKings and Caesars Entertainment, linking to the platforms within ESPN’s online content. 

ESPN BET could be a revenue boost for Disney as the company experiences ongoing troubles, from waning profits and falling shares to ESPN+ subscriber declines.