ESPN Seeking $3B Sportsbook Licensing Deal, Held Talks with Caesars, DraftKings

Posted on: August 27, 2021, 12:52h. 

Last updated on: August 30, 2021, 11:41h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Walt Disney’s (NYSE:DIS) ESPN unit is reportedly shopping its iconic brand to sportsbook operators in a bid to potentially land a $3 billion, multi-year pact.

ESPN sportsbook
Scenes from ESPN’s Daily Wager show, filmed in Las Vegas. The sports network is looking to license its name to a sportsbook operator. (Image: ESPN)

The Wall Street Journal reported this afternoon that “the worldwide leader in sports” already held discussions with gaming companies, including Caesars Entertainment (NASDAQ:CZR) and DraftKings (NASDAQ:DKNG). Connecticut-based ESPN reached marketing deals with both companies last year.

Under the terms of the accords, the two gaming operators will be able to run advertising on ESPN.com, the most-visited sports website in the world, and on the ESPN mobile application.

Caesars and ESPN have another relationship by way of the Daily Wager betting show being filmed at a studio at LINQ Hotel on the Las Vegas Strip. Caesars runs that casino-resort.

The Journal piece didn’t identify other gaming companies with which ESPN has held talks.

What ESPN Is Looking For

Given its status as the most recognizable sports network in the US, and recent efforts to boost betting-related content, it’s clear ESPN wants to get a slice of the rapidly expanding sports wagering pie. It’s also likely the network doesn’t want to be involved in running a sportsbook and the regulatory process that comes with that business.

On offer is the right for a suitor to use the ESPN name for branding purposes and potentially rename its sportsbook after the leading sports TV network in the US,” the Journal reports, citing people close to the talks. “A deal could come with an exclusive marketing commitment that would require the sports-betting firm to spend a certain amount of money advertising on ESPN’s platforms.”

In the ultra-competitive sports betting landscape, brand recognition matters. That much is proven by the three largest players in the space — FanDuel, BetMGM, and DraftKings.

Latecomers and upstarts often have some brand awareness of their own, whether it be with certain demographics or gamblers familiar with a company via land-based casinos. Bottom line: Operators face high customer acquisition costs, and brand recognition can help mitigate those expenses, while aiding in customer retention.

Betting/Media Intersection Continues

ESPN looking to license its brand to a sportsbook operator continues a lengthy run of media companies pushing into the betting world.

ESPN rival Fox Sports actively pushes the FOX Bet brand, while last year, Bally’s Corp. (NYSE:BALY) struck an agreement to puts its name on regional sports networks (RSNs) owned by Sinclair Broadcast Group.

CBS Sports has a deal whereby its data is provided by William Hill, which was acquired by Caesars, and Penn National Gaming (NASDAQ:PENN), which owns a stake in Barstool Sports and recently announced the acquisition of Score Media & Gaming (NASDAQ:SCR). Analysts estimate media partnerships with iGaming and sports betting operators will drive $30 billion in revenue by 2030.

The Journal article doesn’t indicate if ESPN has a preference for a deal with Caesars or DraftKings. But Disney owns six percent of DraftKings non-voting equity, which the entertainment conglomerate got via its 2019 $71.3 billion takeover of 21st Century Fox.