ESPN sports-betting deal sets off industry chatter about future spinoff, competition, and more

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Disney's big sports-betting deal has industry insiders abuzz about possibilities, from a potential ESPN spinoff to heightened competition

Many view the deal as a"win-win" for ESPN, Penn, and its former partner Barstool Sports.Gambling industry insiders thought Disney CEO Bob Iger might makewhen he took back the reins of the ESPN owner late last year. They were proven right earlier this week. After years of speculation about if, when, and how ESPN would enter the sports-betting fray, the company announced on Tuesday a

"The regulated industry — probably not the best place for Barstool Sports and the type of content we make," Portnoy said in the video."For the first time in forever, we don't have to watch what we say, how we talk, what we do." There have been talks of Disney spinning off ESPN for some time now. Investor Dan Loeb's hedge fund Third Point penned a letter, in part for the flexibility it might give ESPN to lean into sports betting without risk to the Disney brand.

But the 10-year deal with Penn could also complicate any potential combinations — if, let's say, a PE firm wanted to combine ESPN with a different gambling operator.concerned about ESPN's financial future Nispel also doesn't see much risk for the Disney brand as gambling gets more widely accepted, adding that many people think of ESPN and Disney as independent brands.2. ESPN and Fanatics' entries could reignite competition

"We believe the deal can bring the newly branded [online sportsbook] into the top three in market share across the US and Canada over the next five years," Zachary Warring, an equity analyst at CFRA Research, wrote in a research note on Wednesday.'s Max Bichsel aren't sure about that prediction. "Fanatics has the most to lose here as they are seeking to employ a similar model, but they won't ever find media assets to compete with ESPN," said one betting-industry exec source, who asked for anonymity to speak freely about the market."Hard to imagine how either of them ends up as a tier-one operator in the space.

 

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