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As sports betting has slowly become legalized across the country, there have been scores of companies that have tried to stake their claim in the marketplace. Given the amount of money and prospective customers involved in a new nationwide market, it created a blitzkrieg of advertising and promos that we have hardly ever seen. If you live in a state where sports betting was recently legalized, you know very well what a Same Game Parlay is even if you can’t tell a field goal from a fielder’s choice.
While the dust settles from the sports betting gold rush, it’s clear that winners and losers have already emerged in the 37 states that have legalized the industry. Incredibly, DraftKings and FanDuel have claimed over 70% of the marketshare, drowning out any other competitors and creating what amounts to a duopoly of sorts over sports betting. Think Coke and Pepsi or Visa and Mastercard.
Enter the biggest brand name in sports – ESPN.
In a whirlwind of events, Penn sold Barstool Sports back to Dave Portnoy, then partnered with ESPN on a $1.5 billlion deal that will see ESPN Bet become their newly rebranded sports betting enterprise. Ironically, it was less than a year ago that ESPN was reportedly close to coming to a similar agreement with DraftKings that ultimately did not take place.
It’s a risky move, but also a necessary one. Disney has been up front about ESPN looking for strategic partners and $1.5 billion cash infusions don’t show up at your doorstep every day. However, sports betting companies have been on a long, slow, painful road to profitability that have already seen many competitors already fall by the wayside. For ESPN, the Penn partnership is a readymade way for them to get a foothold in the industry, but will their brand name and accessibility be enough to break through? It’s clearly a huge improvement over the polarizing and troublesome Barstool brand. And the ESPN Bet brand will literally be plastered over most major sporting events in this country. But barring some kind of insane promotion where you can win some of Pat McAfee or Stephen A. Smith’s salary on a bonus bet, it’s going to be a challenge to win over fans who have already settled into their app(s) of choice.
Vox’s Peter Kafka sums up the meaning of the ESPN-Penn partnership with this great bit of analysis: “On the other hand, ESPN, which used to own sports completely in the US, doesn’t anymore; Iger made that clear when he essentially put out an open call for investors earlier this summer. And this deal can be seen as another indicator of that reduced status. This afternoon, I asked gambling and media executives why ESPN hadn’t made a deal with more established gambling companies, either old-school brands like MGM or new digital leaders like DraftKings and FanDuel. Their answer: Those guys didn’t need ESPN to thrive in sports betting. And they certainly wouldn’t rebrand their existing sports betting operations with ESPN.”
It’s amazing to think that any sports company could have an insurmountable head start on ESPN. It’s even more incredible to think a sports company would feel as though they wouldn’t need the self-proclaimed Worldwide Leader in Sports. But that’s the width and depth of the current hold that DraftKings and FanDuel have over the sports betting market. Clearly ESPN felt like it was now or never to push their chips to the center of the table and show their hand. Will it be strong enough to be a winner? Or will it eventually see them hit the rail?