When you think of Disney, I am sure the first things that come to mind involve family movies, princesses or theme parks – certainly not sports betting, right? In a strange turn of events, Disney is indeed breaking into the sports betting world.
While sports betting in the UK has been popular for over 60 years, legal sports betting has only recently become increasingly popular in the US since the 2018 Supreme Court decision that opened the door to state-by-state legislation. The US has replaced the UK as the biggest regulated online market.
It seems that the Disney-owned sports channel ESPN wants a slice of the action, and has just signed a $2bn deal with casino and online gambling company Penn Entertainment.
Earlier this year, Penn completed a $551m acquisition of Barstool, the American blog website and digital media company owned by David Portnoy, famous for its funny sports social media videos.
However, on August 8th, Portnoy announced he had brought back the entirety of his company – according to reports for only $1.
This will see a Penn rebrand of the sports book currently known as Barstool Sportsbook – to ESPN Bet. Penn will pay ESPN $1.5 billion in cash payments over a ten-year term and give it $500mn worth of warrants for its shares. The rebrand will take effect this Autumn.
Portnoy founded Barstool back in 2003, eventually turning it into a powerhouse. When Penn began its two-part purchase of Barstool 2020, they planned to use the Barstool brand name and popularity to attract younger consumers.
However, in both 2021 and 2022, Insider published two articles alleging sexual misconduct against Portnoy, claims which the founder denied, leading to an attempt to sue for defamation. This was later was tossed out by a judge, saying that Portnoy did not have enough proof that Insider defamed him, and in February 2023 Portnoy withdrew his lawsuit. In 2023 Barstool was fined $250,000 by regulators for targeting under 21s with their advertising.
Then, in May, Penn fired popular Barstool personality Ben Mitz, who was caught saying a racial slur while reading rap lyrics on a live stream. Portnoy disagreed with Penn’s ruling to fire Mitz, telling New York Post, “I hate the decision – but I don’t deal with the things Penn deals with in terms of state regulators etc.” Mitz has since apologized for his actions.
Portnoy does not seem to be disappointed by the divestiture; in a video posted to social media, he said, “For us, for Barstool, for the first time in forever, we don’t have to watch what we say, how we talk, what we do,” he added “It’s back to the pirate ship”. Penn will receive 50% of proceeds if Portnoy ever eventually decides to sell his brand, although it is doubtful as he stated in the video, “I am never going to sell Barstool Sports ever. I’ll hold it till I die.”
The partnership is a vast renege – for Disney; during his first run as Disney CEO, Bob Iger had dismissed ever going into sports betting, stating that gambling could never coexist with Disney’s immaculate family image. Iger’s stance did soften–at least enough to make marketing deals with sportsbooks such as Draft Kings, but he still very much carried the same views. However, in 2020 when Bob Chapek replaced Iger as CEO, Chapek appeared more interested in sports betting, which was becoming extremely popular after its legalisation in 2018. Since Igner returned to his role last Autumn, he seems more comfortable with sports betting because his research tells him what young consumers want to do.
Does this surprising deal only indicate just how big sports gambling is and how fast it is growing in the US? After all, sports betting is now legal in 30 states, and Americans seem to love it – spending over $220 billion on it since 2018.