Disney Acquires Equity Stake in DraftKings Via 21st Century Fox Deal

When the Walt Disney Company paid $71.3 billion to acquire 21st Century Fox in March, the “Mouse” likely eyed multimedia brands like X-Men and Hulu as the mega-merger’s key components.

And while bringing iconic characters like Wolverine and Deadpool back into the Marvel universe is indeed a coup for Disney, the company also purchased an ownership stake in DraftKings.

Disney assumed an 11 percent stake – which was originally acquired by Fox for $300 million as part of a Series D funding round in 2015 – in the daily fantasy sports (DFS) kingpin and ascendant sportsbook operator. That’s the word from Dustin Gouker of Legal Sports Report, after the gaming industry outlet confirmed Disney’s newly absorbed slice of DraftKings last month.

In an odd twist of fate, Disney finally owns a piece of DraftKings after attempting to invest $250 million in the Boston-based online gambling powerhouse one month before that 2015 funding from Fox came through.

Curious Timing Considering CEO’s Comments

Disney’s decision to obtain equity in DraftKings was made public only a month after chief executive officer Bob Iger declared that the company had no interest in the gambling business.

During a conference call with investors held in February, Iger seemed to draw a line in the sand separating Disney’s corporate behemoth from gambling-related commerce:

“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.

I do think that there’s plenty of room, and ESPN has done some of this already and they may do more to provide information in coverage of sports, as a for instance, that would be relevant to and of particular interest to gambling and not be shy about it, basically being fairly overt about it.

But getting into the business of gambling, I rather doubt it.”

Disney is the parent company of ESPN, and the network hasn’t been shy about its own interest in covering sports betting related matters. The ESPN.com website includes a section called ESPN Chalk devoted to discussing sports from a betting perspective. And prominent on-air figures like SportsCenter anchor Scott Van Pelt directly mentions point spreads and Over / Under totals in his “Bad Beats” segment.

But while Disney has previously delineated between that coverage and Iger’s proviso about “facilitating gambling,” adding DraftKings equity to its portfolio would appear to blur those lines.

DraftKings’ Emergence as Sportsbook Operator Could be Key

Fox Corporation divested itself of its film studio and other assets, while retaining its print publications and the FOX Sports networks.

That means FOX Sports’ recent deal with PokerStars parent company The Stars Group – the two companies will collaborate on the launch of a FOX Bet online/mobile sportsbook app – wasn’t affected in any way by Disney’s multibillion-dollar takeover of 21st Century Fox.

And while Disney’s ultimate plans for its DraftKings stake aren’t clear as of yet, the company could see sports betting as an opportunity a la FOX Bet.

DraftKings has long dominated the DFS market but after becoming the first online/mobile sportsbook operator to launch in New Jersey last August, the company has made similar inroads in that budding industry. The app’s launch was followed shortly afterward by the opening of a DraftKings operated brick and mortar bet shop within licensing partner Resorts Casino Hotel in Atlantic City.

At the moment, DraftKings is second only to perennial DFS rival FanDuel in terms of monthly revenue performance. Per the latest data released by the New Jersey Division of Gaming Enforcement (NJDGE), DraftKings helped the Resorts AC licensing group generate $4,766,701 in online sportsbook revenue throughout April.

That’s well behind the $8,776,808 in win revenue posted by rival FanDuel, but DraftKings more than doubled its closest competitor, making New Jersey’s online/mobile sportsbook scene a two-horse race.

Overall, DraftKings has provided the bulk of Resorts AC’s more than $50 million in online sports wagering revenue.

The company also operates a brick and mortar sportsbook in Mississippi and has designs on entering other states where the industry has been legalized.