Disney BetESPN Plans Could Stoke Rush Street Interactive Rumors, Says Analyst

It’s widely known the Walt Disney Company (NYSE:DIS) wants to leveraging its ESPN social unit to base prominence in the online sports betting (OSB) space. It’s speculated that those ambitions could lead-in the entertainment behemoth to mull a takeover of PointsBet (OTC:PBTHF) or Benjamin Rush Street Interactive (NYSE:RSI), according to an analyst.

On the company’s financial fourth-quarter earnings group discussion call utmost week, Disney CEO Bob Chapek straight discussed the company’s involvement inward sports wagering. He noted such a foray is unlikely to harm the revered Walt Disney brand. Rather, it could be an supporter to the ESPN brand.

Disney has yet to firmly institutionalise to an ESPN wagering mobile app or a BetESPN sportsbook concept. Nor has the society clarified if its attack to sports betting will follow inward a verbatim or indirect fashion.

If ESPN does follow a sportsbook, it could be a positive degree for Benjamin Rush Street Interactive and drop back on DraftKings (NASDAQ:DKNG), says Philip Roth Capital analyst Edward VIII Engel. ESPN has separate, multi-year accords with Caesars Entertainment (NASDAQ:CZR) and DraftKings.

For ESPN, Market Access Mandatory

Currently, ESPN doesn’t possess sportsbook licenses, and cobbling together a portfolio of those permits could accept time, significance it’s more efficient for Walt Disney to acquire an constituted operator. Engel says that’s a relocation the troupe could consider.

Market access code is a tonality deterrent for ESPN expanding into OSB. In many OSB markets, including New York and Connecticut, the modified keep down of licenses are already taken,” says the Roth Capital analyst. “For a BetESPN production to reach scale, it would demand to acquire an incumbent. The to the highest degree potential targets are RSI and PointsBet.”

While the toll label for RSI would be higher, given its larger securities industry capitalization, Walt Disney canful easily stand that potency target. It makes for a more logical prospect for the ESPN parent, because it has market place approach inward 20 states, compared to 16 for Australia’s PointsBet. RSI’s roster of states includes Arizona, Connecticut, and Virginia. PointsBet isn’t operating(a) inwards those locations.

If Disney is serious about buying RSI, and that remains to follow seen, it might demand to enactment swiftly, because the worst-kept private inwards the sports wagering manufacture is that RSI is a takeover target. As just ane example, it’s believed the manipulator recently held acquisition talks with Fanatics.

Bad News for DraftKings, FanDuel

A BetESPN sportsbook could command at to the lowest degree 10 percent securities industry share, pilfering customers from DraftKings and FanDuel along the way, notes Engel. Plus, Disney has the cash to expend on expanding its sports wagering footprint.

“Meanwhile, Walter Elias Disney offers the equilibrise shroud required to expend billions on client acquisition. We trust share gains from BetESPN would thrust DraftKings’ securities industry apportion toward the depression death of management’s 15 percent to 25 percent long-term targets,” said the analyst.

Engel has been natural covering DraftKings for simply over a month and during that clip he initiated reporting with a “sell” rating and a $41 price target. The latter was later pared to $39 and is at present down feather to $34, due inwards parting to the specter of ESPN potentially encroaching upon the operator’s territory.