ESPN Bet took over as the branding face of Penn Interactive’s online sportsbook on Tuesday. Bettors in 17 states in which Penn has a license to accept sports wagers now have a new option and the launch of an ESPN-branded online sportsbook has serious implications for the online gambling industry in the United States.
In terms of endemic media brands aligned with sports content, there is no bigger name in the US than ESPN. Thus, for an online sportsbook, tying betting markets to content will never be easier.
Situations will unfold that could maximize the potential of ESPN as a promotion mill for ESPN Bet. At the same time, endemic media and relatively inexpensive promotion avenues are no guarantee of future success.
ESPN Bet takes over branding in 17 states
During Penn Entertainment’s most recent earnings call, it told investors that Nov. 14 was the launch day for ESPN Bet. ESPN and Penn announced the licensing deal in August as Penn shared that it was dumping the problematic Barstool Sportsbook branding.
ESPN Bet is available to bettors in 17 states. Those are:
- New Jersey
- West Virginia
Although the exact terms of the licensing deal are not public, it’s likely that ESPN is set to receive some form of residual income. For that reason, ESPN has a vested interest in ESPN Bet succeeding.
Toward that end, ESPN has already announced some content initiatives. There is a commercial featuring Elle Duncan and Scott Van Pelt. Additionally, ESPN has rebranded its former “Daily Wager” show to “ESPN Bet Live.”
Furthermore, depictions and mentions of markets and odds on ESPN products will come exclusively from ESPN Bet. While it remains uncertain exactly how pervasive ESPN Bet marketing will be on ESPN products as a whole, it might be a situation where ESPN feels that situation out as it goes.
In addition, the powerful hand of ESPN’s overlord may play a large role in the promotion of ESPN Bet moving forward.
Disney’s streaming future in development alongside ESPN Bet
As much as an ESPN-branded online sportsbook presents an intriguing narrative for the industry, there are intriguing storylines afoot at Disney. ESPN’s owner has a streaming video business which is very much in flux right now.
In early November, Disney reached an agreement with NBCUniversal to buy out the Comcast stake of the streaming video product Hulu. Disney currently owns 67% of Hulu while Comcast controls the other 33%.
Todd Spangler of Variety reports that Disney expects to send almost $9 billion NBCUniversal’s way in December. While there are contract terms to wrangle over yet according to Spangler, Disney will sometime soon gain full control of one of the most consistently popular streaming platforms in the US.
While that means Disney will have full control over what brands advertise on Hulu, that shouldn’t be taken to mean that Hulu will overnight become a promotion mill for ESPN Bet. To a large extent, ESPN and Hulu will continue to operate as separate entities despite their common ownership.
That’s especially true given the similarly fluid future of ESPN.
ESPN to debut proprietary OTT product in 2025
On the heels of the Hulu buyout news, Disney added a twist to the story. Amid earlier reports that Disney was open to taking on investors in ESPN, Disney CEO Bob Iger has confirmed that Disney wants to offer an ESPN streaming video service as an over-the-top option in 2025.
In plain English, ESPN video products will be available without a cable or satellite subscription at that time. Customers will be able to buy access to channels like ESPN, ESPN2, ESPNNews, etc. directly from ESPN.
That would also circumvent the need for a Hulu Live subscription for people who just want ESPN content. According to Luke Bouma of Cord Cutter News, ESPN content will still be available on services like cable, satellite and live-streaming television.
In theory, ESPN+ as a proprietary OTT product is a more direct path to ESPN Bet promotion. Even within that context, though, fears that ESPN content will become one big ESPN Bet commercial could be quite exaggerated.
Restraint could be ESPN’s best bet
Simplistic thinking states that because of ESPN’s likely residuals from ESPN Bet’s revenue, ESPN is motivated to promote ESPN Bet ad nauseam to sports fans. In fact, ESPN’s desire to see ESPN Bet succeed could provide the exact opposite motivation.
As a consumer, you’ve undoubtedly experienced repetitive advertisements. Research confirms that the chagrin you experienced is common. For example, a 2021 study found that survey respondents were more likely to take on a negative view of a company or its products/services when associated with excessive advertising than they were to develop a negative association with a brand connected to controversial content.
Put another way, it’s actually less damaging to a brand for consumers to associate it with something controversial than for the same brand to be associated with excessive advertising. Neither are good, but the latter is worse than the former according to the survey.
Thus ESPN might hold back to avoid that saturation threshold. Another reason for ESPN to show some restraint in this regard is the concerns of gambling regulators. Regulators across the country have expressed concern about how ESPN will manage its content given that it now has a licensing deal with an online gambling company.
For example, there was significant hesitation in approving the rebrand in Massachusetts due to that issue. If ESPN content simply becomes a long-form commercial for ESPN Bet, regulators will take notice and could act in a way detrimental to Penn’s licensure.
The return on investment for streaming products like ESPN and Hulu is another reason to doubt that ESPN will simply push ESPN Bet on a never-ending loop.
The math may not math
Even on streaming platforms, advertisement space is a finite commodity. Devoting such space to a partner like ESPN Bet could represent a loss of revenue if Penn isn’t paying the standard price to ESPN or Hulu for that airtime.
Given that Disney via ESPN would only be getting a portion of ESPN Bet revenue, that could add up to a loss compared to what Disney would pull from simply selling that airtime to a different brand. Furthermore, that revenue could be much more unpredictable.
If Disney is getting a straight percentage of ESPN Bet’s revenue, the volatile nature of sports wagering might be unattractive. Even if ESPN Bet is successful in gaining market share, revenue can still fluctuate wildly from one month to the next.
In comparison, rates for advertising on Hulu and ESPN are more predictable. Disney also has greater control over that revenue, being able to ask its price to an extent. At its simplest level, ESPN Bet is a way for ESPN to make some more revenue on its existing products.
Because of the uncertainty of online sports betting and how popular ESPN Bet will become, it’s unlikely Disney will invest heavily in promotion. Much of that could be left to Penn to take on. Even amid changes to Disney’s streaming products, don’t expect to see one ESPN Bet promo after another.
The House of Mouse has other things cooking.