ESPN Deal Could Spur DraftKings International Expansion, Say Analysts
Posted on: October 10, 2022, 03:33h.
Last updated on: October 10, 2022, 03:33h.
DraftKings’ (NASDAQ:DKNG) widely anticipated deal with Walt Disney’s (NYSE:DIS) ESPN unit, which has yet to be confirmed by either party, could spur the gaming company’s international expansion efforts, according to industry analysts.
Rumors surfaced last week that the two companies are working on an exclusive agreement, but details are to this point scant as neither side has confirmed the negotiations.
Last year, ESPN was rumored to be seeking a $3 billion licensing pact with a sportsbook operator, and it’s believed the network held talks on that subject with Caesars and DraftKings. However, investors are likely hoping for something more substantive than simply a licensing accord and they likely don’t want to see money-losing DraftKings shelling out $3 billion.
Regarding markets outside the US, DraftKings, along with several domestic rivals, operates in Ontario, Canada. However, the bulk of US-based online sportsbook operators — Rush Street Interactive (NYSE:RSI) being a notable exception — don’t currently operate outside the US and Canada.
ESPN Deal Could Open India to DraftKings
In a note to clients, Needham analyst Bernie McTernan said that as India moves toward regulating sports wagering, that’s a market where DraftKings could make inroads if it reaches a pact with ESPN.
Given the current equity markets, we would be surprised if DKNG would act on this opportunity on a standalone basis. However, attacking this opportunity with Disney+HotStar could be more interesting given the leadership position Disney+HotStar has in the market,” he wrote.
In India, Disney+Hotstar holds broadcast rights to cricket leagues, kabaddi, Wimbledon, English Premier League, and more, making it a potentially compelling partner for DraftKings, assuming the country regulates sports wagering.
The market is likely attractive to a variety of gaming companies because not only was there an estimated $1.5 billion in unregulated sports wagers placed there last year, but India is also the world’s second-largest country by population and home to Asia’s third-largest economy.
DraftKings Needs ESPN Splash
Some market observers argue that any DraftKings/ESPN arrangement needs to be about much more than content, because content alone won’t move the needle for investors.
For DraftKings, that pressure could be amplified as the stock plunged nearly 14% today on news that the company and competitors are pulling back on advertising for Proposition 27 in California because it appears likely the initiative is heading for defeat.
On a somewhat related note, BTIG analyst Clark Lampen points out in a note to clients today, DraftKings could leverage the ESPN brand to gain access to new states and expand market share along with the possibility of international expansion.
Neither DraftKings nor Disney have set a timeframe for publicly announcing an agreement.
Related News Articles
Source: casino.org
