Disney

Has Disney Changed Its Mind About Gambling?

DisneyProxima Studio / Bigstockphoto.com

The Walt Disney Company likes to see itself as a family-orientated business. Whilst Walt Disney himself has always been believed to have some problematic views, the modern day version of the company is one that looks to please all people with what it does and the work that it produces. When Disney first bought Marvel Studios, therefore, the first thing that it looked to do was to discontinue the slot machines that were produced with the Marvel name. It did the same thing when it bought the rights to the Star Wars franchise.

The organisation also moved to stop the development of themed casinos in Florida, the state in which it boasts most of its amusement arcades. Speaking on the matter, a Disney representative said, “We oppose the legalisation of so-called destination resort casinos because this major expansion of gambling is inconsistent with Florida’s reputation as a family-friendly destination.” It is somewhat surprising, therefore, that Disney now appears to be making a move into the world of betting and gambling in a big way.

Disney’s Initial Opposition to Gambling

Lucas Film logoIn October 2012, Disney bought all rights to LucasFilm, the production company behind the Star Wars franchise. It spent around £2.51 billion in order to do so, having already paid about $4 billion for Marvel three years earlier. In 2013, a report in the New York Times suggested that the organisation was looking to phase-out themed slot machines, with the plan to do so having been in place for ‘some time’. Marvel had initiated plans to discontinue slot machine licences as part of its integration to Disney, the spokesperson said.

The remaining licences for Marvel were running out over the years that followed Disney’s acquisition of the studio, whilst LucasFilm was also looking to follow suit but discontinuing any licences on gambling products. At the same time, Disney was fighting against the proliferation of gambling in the state of Florida, arguing that a destination, such as the state, was seen as family-friendly, which meant that there was no place for gambling. As a family-friendly organisation, Disney itself needed to steer clear of gambling too.

Was It All About Being Family-Friendly?

Despite Disney’s family-orientated business model, there are plenty who are not convinced that their opposition to gambling is entirely due to that side of the company. Competitors believe that, far from being about not wanting gambling to become too widespread in America, Disney is actually afraid of the competition that would arise out of making Florida a destination state for bettors. The Las Vegas Sands Corporation was hoping to open a new casino in Florida and Michael A Leven from the company spoke on the matter.

Leven said, “Disney’s internecine warfare against integrated resorts in Florida under this pretence demeans them significantly.” Whether this is true or not is a matter for some debate, but Disney weren’t the only company fighting against gambling at the time. The estate of JRR Tolkien said that it was going to sue Warner Bros over the fact that the studio, which owned the rights to the Lord of the Rings at the time, had used its saga for slot machines and even online video games, claiming it had done ‘irreparable damage’.

Disney’s Move into Gambling

ESPN logoThe conversation around Disney and slot machines mainly took place in 2012 and 2013, but eight years later and a new story emerged around the Walt Disney Company and gambling. Bob Chapek, the Chief Executive Officer of the organisation, admitted that Disney was looking to expand into sports betting courtesy of a partnership with ESPN. The revelation came during the earnings call over the fourth quarter of 2021, when he confessed that the company was ‘moving toward a greater presence in online sports betting’.

It wasn’t the first time that Disney had made a move that took the company away from the younger audience and towards a more adult one; at least in some respects. When the new cruise ship, Wish, was announced in July of 2021, it was confirmed that some parts of it would be classed as ‘adults only’. That move came on the back of Disney releasing some rides that were aimed at the teens / young adult market, suggesting that the company realised that aiming their wares at children and families alone meant that they were missing out on a revenue stream.

Even so, the shift towards betting and gambling is one that not many people saw coming from an organisation that had fought so hard against it less than a decade earlier. Bob Chapek’s announcement that they were moving towards ‘a greater presence in online sports betting’ took most people by surprise. That Disney feel that they have a ‘reach and scale’ that would allow them to partner with others in the gambling space ‘in a meaningful way’ was no less shocking to those that have been monitoring the situation since 2012.

Why Would Disney Suddenly Be Okay with Gambling?

The most obvious question to ask is why, exactly, Disney would suddenly be ok with the world of betting and gambling, having been so opposed to it nearly a decade prior. The answer is a complicated one, but it is difficult to escape those initial claims that, actually, it wasn’t the moral implications of gambling so much as the competition that gambling resorts would pose that meant that Disney didn’t want them turning up in Florida. There’s also the fact that the company suffered a ‘soft year’ in 2021, coming in under the expectations of Wall Street.

Indeed, one of the few bright spots for the Walt Disney Company was in sports, thanks to ESPN seeing its subscriber base increase by around 66% over the fiscal year. In fact, 90% of the most-watched events on Disney-owned networks in 2020 were sporting events, which is only likely to increase thanks to the 10-year deal signed with the National Football League that is due to start in 2023. The only problem was that advertising was down in the fourth quarter of 2021 compared to the previous fourth quarter, meaning that new revenue streams were needed.

One such revenue stream that could be explored, according to Chapek, is that of gambling. He said, “We do believe that sports betting is a very significant opportunity for the company, and it’s all driven by the consumer. It’s driven by the consumer, particularly the younger consumer that will replenish the sports fans over time and their desire to have gambling as part of their sports experience.” In other words, Disney needs to get into gambling ‘in a bigger way’ in order to consistently attract a younger audience.

Testing the Waters

Disney has already made moves to test the waters in terms of gambling opportunities. In 2020, the company made a deal with Caesars Entertainment and DraftKings, linking their sportsbook to ESPN. By the August, it was being reported that a brand licensing deal between ESPN and one of the two companies could be worth as much as $3 billion. In truth, the main question appears to be how Disney will get in on the action involved in gambling, rather than if. Chapek said as much during an investor conference in September 2021.

Speaking about whether ESPN would move beyond simply licensing out betting and actually host wagers itself, he said, “There’s a long way between imbedding into ESPN as a business model and licensing out. Let’s just say that our fans are really interested in sports betting. Let’s say that our partners with the leagues are interested in sports betting, so we’re interested in sports betting.” Those that have been watching the case with interest believe that this is Chapek essentially admitting that Disney will get involved, if the interest is there.

Things Might Have Been Changed by the Supreme Court

Walt Disney Hollywood starEricBVD / Bigstockphoto.com

One of the key changes that might well have influenced Disney’s decision is the fact that in 2018, the Supreme Court in the United States of America struck down a ruling that banned sports betting. Since then, 32 states, as well as Washington D.C., have all launched legal betting markets, meaning that the industry is awash with cash right now. It is a market that numerous British companies have tried to make headway in, such is the extent to which the betting scene has taken off around the US in the years since the court’s ruling.

Legal Betting Markets

In the first half of 2021, American companies took in $24 billion worth of legal bets, which works out as about $2 billion in gross gambling revenue. By 2030, the industry is expected to take in as much as $400 billion in bets, producing $30 billion in revenues. That is a pie that Disney very much wants to have a slice of, joining the likes of Sports Illustrated and Fox by getting on board the betting train. Daniel Dienst, who is the Executive Vice Chairman of Sports Illustrated’s owners, Authentic Brands Group, thinks that there is no longer a stigma around betting.

Speaking on the matter, he said, “Gambling, sports wagering in particular, has moved out of the vices world. I think it’s part and parcel to the culture of how people engage with sports.” That also seems to be the opinion that Disney is forming, with Chapek saying, “Gambling does not have the cachet now that it had, say 10 or 20 years ago, and we have some concerns as a company about our ability to get in it without having a brand withdrawal. But I can tell you that given all the research that we’ve done recently, that that is not the case.

ESPN to Benefit

In fact, Chapek went as far as to say that gambling would likely ‘strengthen the brand of ESPN’, without having any sort of impact on Disney’s brand. As a result, the company is likely to ‘aggressively’ pursue the associated demographic and the ‘not insignificant revenue implications’ that are attached to it. In other words, if Disney’s own reputation isn’t going to be sullied and ESPN’s own reputation is actually likely to be enhanced by offering a gambling arm, why wouldn’t Walt Disney Company want to be involved in that?

The days of Disney objecting against gambling coming to Florida are long gone. That doesn’t necessarily mean that we’re going to see Mickey Mouse taking part in the World Series of Poker any time soon, of course. Instead, it might mean that more ‘adults only’ areas of Disney resorts start popping up, with access to a sportsbook or a casino coming as standard. For now, it’s only something that we’re seeing on Disney-themed cruise ships, but further down the line who knows which Disney-owned properties might start to branch out?

Author: Neil Garza