Disney ESPN Betting: Will the family-friendly giant dip its toes into online betting?

Disney may be dipping its toes in the world of sports betting in partnership with ESPN. But many are critical that sports betting isn’t in line with the Disney brand.

Will Disney back out in fears of losing its conservative base? Or does the Mouse see Disney ESPN betting as a way to dig itself and shareholders out of the financial black hole it found itself in during the COVID-19 pandemic?

Can sports betting be a part of the Disney brand?

One of the biggest questions surrounding Disney’s possible foray into betting is whether or not sports betting is part of the Disney brand.

Disney has a reputation for being family-friendly (generally throughout its platforms, including the Disney parks, ABC, media entertainment, and more). So, how does betting fit into this family-forward brand? And is the Disney brand moving away from family-only entertainment?

Disney’s Family-Friendly Past

Since its conception, Disney has been a brand that promotes fun for kids and kids at heart.

The company’s platform has been focused on family-friendly content. Disney+ advertises that all of its content is family-friendly.

While the Disney parks have sold alcohol since 1982 (EPCOT started serving alcohol the day it opened), you can now even find alcoholic beverages in the once dry Magic Kingdom.

Disney has had a reputation of being a ‘safe space’ for families that want to shield their children from the realities of adulthood. Even in the parks, everything inside the perimeter is considered a ‘bubble’ where employees were until recently told they had to hide tattoos and pierces, lest they offend a guest.

But in the past few decades (primarily after Michael Eisner’s departure as CEO and throughout Bob Iger’s reign), Disney has been widening its definition of family-friendly.

Disney Controversies: Did conservatives cancel the mouse?

Disney’s main fan base was once highly conservative Christian.

These days, the brand has been more inclusive toward all families. Disney has promoted diversity in its TV shows, Blackish, Fresh Off the Boat, and The Goldbergs. Many Pixar movies have featured LGBTQ characters (not main characters — but for Disney, many consider it a start).

It has been overhauling outdated tropes in park rides, removing offensive stereotypes of indigenous people in The Jungle Cruise (both the ride and the recently released straight-to-streaming motion picture) and revamping Splash Mountain, removing racist and offensive imagery the ride depicted from its 1946 feature film, Song of the South — with plans to replace the characters and storyline with ones from 2009 film, The Princess and the Frog.

In 2020, not long after Disney World’s reopening, a self-described “Christian Republican” wrote an op-ed in the Orlando Sentinel, criticizing Disney for its ‘wokeness’ and reporting that his family is, “strongly rethinking our commitment to Disney”.

Conservative Christians may have been Disney’s bread and butter for decades, but it seems as though Disney is moving away from this demographic. And while the conservative fan base may have balked at Disney’s foray into sports betting, the demographics replacing it probably won’t even bat an eye at it.

Are Millenials and Gen Z Disney’s new demographic?

The Orlando Sentinel piece received some serious backlash from the article as Twitter users (including a few A-list celebrities) mocked the article.

But Disney seems to know what it’s doing. Not only is its ‘woke’ attitude a step in the right direction morally, but it’s also just good business.

Morning Consult Brand Intelligence reported at the end of 2020 that Disney’s biggest fan base may have shifted a bit. Its polls discovered that:

• “Millennial, Gen Z are consistently the most loyal Disney+ users” 
• “On average, 44% of Gen Zers said they have used Disney+ at least once a week”
• “33% of childless millennials said they use Disney+ at least once a week”

Disney & ESPN

If Disney is planning on entering the sports betting arena, it makes sense that it would do so with ESPN, the sports network jointly owned by Disney and Hearst Communications (Hearst owns a majority stake).

Are you ready for some (Disney) Football?

Disney may be pursuing a multi-billion dollar deal with ESPN to add sports betting to its line of products and services.

While former CEO Bob Iger still shied away from sports betting, the current CEO, Bob Chapek, considers it a lucrative way to increase revenue.

According to The Hollywood Reporter (that broke the story), “While Disney isn’t following in the footsteps of Fox Corp., which has its own betting platform, Fox Bet, it has held talks with a handful of betting operators about a partnership, multiple sources familiar with the matter confirm (Disney does own a small stake in DraftKings that it acquired from Fox). BetMGM, Caesars, and DraftKings are all seen as frontrunners, though with so many players in the space, there is always the possibility for a wild card.”

Disney also signed a 10-year NFL rights deal, starting in 2023.

COVID’s Impact on the Mouse

While online sales skyrocketed during 2020 (it’s reported Amazon’s reported $8.1 billion in profit at the beginning of 2021), the Walt Disney Company struggled to make it through park closures, massive employee layoffs, and docked cruise ships throughout most of the year.

Disneyland and Disney World parks in Anaheim, CA, and Orlando, FL, closed for a significant period of time since the parks opened. Previously, Disneyland had only had three unscheduled closures — once in 1963 after President Kennedy was assassinated, in 1994 after the ​​Northridge Earthquake, and in 2001 after the September 11th terrorist attacks.

And it’s not just park and store closures that caused the Mouse to lose money, either. Movie theater closures meant the Hollywood side of Disney’s offerings needed to delay release dates or send big-budget flicks directly to streaming.

Streaming Woes

While many of the major Hollywood distributors were forced to send their movies directly to streaming services, Disney faced major backlash with the decision not to give its summer 2021 Marvel Cinematic Universe release Black Widow a box-office-only premier.

Actress and producer, Scarlett Johansson, claimed that by sending the film straight to streaming the same day it premiered at the theaters, Disney allegedly breached its contract.

The dispute was settled between Disney and Johansson, but the accusation wasn’t a great look for a company already struggling from major losses that year.

Disney Park Revenue

Disneyland, CA, shuttered its doors for a 13-month closure (Disney World in Orlando, FL, closed for only about four months), causing major financial losses. The Hollywood Reporter reported that Disney lost a total of $6.9 billion in 2020 due to park closures alone.

Disney Cruiseline lost $255 million because of the pandemic.

Disney reported losses during five consecutive quarters, due to the COVID-19 pandemic.

Even though Disney’s third-quarter earnings in 2021 were called, “A blowout,” by CNBC (revenue was up 307.6% or $4.3 billion, compared to $1.06 billion in the same period the previous year), was that enough to make up for $6.9 billion losses suffered during the previous year?

Sporting Events: Disney’s Light at the End of the Tunnel

While the Walt Disney Company as a whole was struggling throughout the pandemic, its streaming service ESPN+ flourished.

Forbes reported that ESPN+ subscription increased by 66% over the fiscal year, and sporting events were 90% of the most-watched programming in Disney’s TV portfolio.

According to Forbes, the ESPN streaming service increased subscribers by 66% over the fiscal year, 90% of the most-watched broadcasts on Disney’s owned TV networks last year were sports events.

Sports Betting: A Lucrative Income Stream

It’s not surprising that Disney is turning to sports betting to make up for losses incurred in 2020. Sports betting has proven to be a lucrative income stream — not just for betting platforms — but as a form of tax revenue since it was legalized by many U.S. states.

Legalization of Sports Betting in the U.S.

In 2018, the U.S. Supreme Court ruled that states had the right to legalize and regulate sports betting, striking down the Professional and Amateur Sports Protection Act (PASPA).

States were then allowed to set their own laws regarding sports betting. Since, more than a dozen states have passed legislation, legalizing sports betting. The first state to do so was New Jersey (the original case was titled Christie v. National Collegiate Athletic Association before New Jersey Governor Chris Christie left office).

NJ Increases Revenue in Sports Betting

In October, New Jersey became the first state to surpass the $1 billion mark in sports betting revenue. In November, the state beat its own record, raking in $1.3 billion in bets in one month.

In July 2021, the state received $4.33 million in sports betting tax revenue, and in June of the same year received $8.73 million.

And it’s not only states that are making bank on sports betting revenue either.

Is everyone betting on sports betting?

The best online sportsbooks have proven that sports betting is a lucrative way to increase revenue, both for large corporations and states (in the form of tax revenue).

If Disney wants to expand its brand to include sports betting with ESPN, it may lose more of its conservative base — but it could also make up for those losses by wooing new customers and catering more to its younger, open-minded millennial and Gen Z base.