The Walt Disney Company had tried to keep Florida’s gambling industry under the thumb of lawmakers because it is a family-friendly company that doesn’t believe wagers fits in with its business model. However, it seems to be loosening its position on gambling – to some degree, at least – because it has now purchased a stake in a major sportsbook and daily fantasy sports (DFS) operator. Disney is now the proud owner of a piece of DraftKings.
The flip-flop is interesting. It was only three months ago that the company’s CEO, Bob Iger, told investors in a quarterly earnings call, “I don’t see The Walt Disney Company, certainly in the near term, getting involved in the business of gambling, in effect, by facilitating gambling in any way.”
Disney owns ESPN, which has started taking a larger interest in DFS and sports gambling, so any entry into the industry on the part of the sports network would make sense. However, Disney has maintained its distance from the activity and, in fact, hasn’t even commented on its DraftKings investment.
To be fair to Disney, it didn’t go out searching to invest in a sports gambling platform, at least not this time. The company recently merged with 21st Century Fox in a deal worth $71.3 billion, and Fox had previously held a stake in DraftKings. The company had invested $160 million in the platform three years ago, and the sportsbook has now become the largest in the country with an estimated value of around $1.5 billion.
However, this isn’t the first time Disney and DraftKings looked each other in the eye. The family-friendly company almost made an investment in the platform in 2015 when it considered a $250-million injection of capital. At the time, DraftKings was only worth around $900 million, so the investment would have been significant. Disney pulled out at the last minute, though, deciding that DraftKings and its DFS solution didn’t fit with the company’s “family-first” image.
It’s unclear, since Disney hasn’t spoken on the subject, how the deal will play out. Logically, ESPN and DraftKings could look to create a massive partnership. On the other hand, perhaps Disney will try to sell its stake, so Iger can keep his word and maintain a “family-friendly” company.