• Disney now owns a stake in DraftKings, a major sportsbook and DFS operator.
  • ESPN would be a logical beneficiary of the acquisition.
  • Disney has not yet publicly commented on its investment in DraftKings.

BURBANK, Calif. – Early on in the discussion of legalizing sports betting nationwide, analysts suggested that The Walt Disney Company could support the industry. However, Disney CEO Bog Iger assured the public that his brand would not capitalize on the new entertainment product.

“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.”

Apparently, the “near term” is over.

Yes, Disney now has an ownership stake in DraftKings.

DraftKings is the nation’s leading daily fantasy sports (DFS) provider and has become one of its largest sportsbook operators.

Disney acquired its share in DraftKings when it swallowed up 21st Century Fox in a $71.3 billion merger on March 20.

The degree of Disney’s ownership stake in DraftKings is not known, but Fox invested $160 million in the DFS brand three years ago. DraftKings is worth an estimated $1.5 billion today.

In 2015, Disney nearly made a direct investment in DraftKings. The deal would have given Disney a $250 million stake in the company, then valued at $900 million.

The deal also would have seen DraftKings spend over half a billion dollars in ads on Disney’s ESPN family of products.

Disney ultimately withdrew its interest in DraftKings. Management determined that the “adult product” aspect of DFS did not jibe with the company’s family-first image.

With sports betting now firmly in the mainstream, Disney appears to have softened its stance on “facilitating” the gaming industry.

It is nevertheless unclear what the future holds for the partnership.

One potential outcome is that Disney’s DraftKings ownership stake could publicly marry the DFS brand to ESPN. This would follow rival Fox Sports’ recent steps to launch its own sports betting app.

An equally likely outcome, of course, is that the Mouse House will offload its share in DraftKings going forward.

Neither Disney nor DraftKings has offered any comment on these latest developments.

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