The Media Today

ESPN’s Big Gamble

August 18, 2023
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In 2018, the US Supreme Court struck down the Professional and Amateur Sports Protection Act and lifted the gate to sports gambling across the country. Betting is now legal in thirty-four states, plus Washington, DC; in the past five years, according to the Washington Post, Americans have wagered more than two hundred billion dollars on sports. Fantasy-league platforms—such as FanDuel and DraftKings—have metamorphosed into sports books that are swallowing sports media whole. In 2019, on an earnings call, Bob Iger—the CEO of Disney, the parent of ESPN—said, “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.” Last week, ESPN announced a ten-year, $1.5 billion deal with Penn Entertainment, a casino company, to create a sports book called ESPN Bet.

“On a superficial level, the Penn deal is a dramatic volte face for a company that had once sworn off sports betting when that sort of moralizing was still economically palatable,” Dylan Byers observed, in his newsletter for Puck. And yet, he added, “the convulsions and transformations of the media business over the last few years gave Iger little choice but to relent to inexorable market forces.” In a 2021 piece for CJR, Danny Funt explored those convulsions and transformations as they applied to sports journalism and its relationship to gambling. Funt covered the ethical quandaries of journalists capitalizing on nonpublic information, reporters going to work for betting firms, and sports books acquiring media outlets. Michael Lombardi—a former NFL team executive, later a sports reporter, who provides gambling advice at VSiN, “the CNBC of sports betting”—told Funt, “If you don’t like change, you’re going to like irrelevance even less.” NBC Sports had recently gotten in the game, forming a partnership with a sports book called PointsBet worth nearly five hundred million dollars; Fox and CBS signed deals with other gambling companies—as did ESPN, which, as Funt noted, had, despite certain appearances, courted sports-betting for years.

Back when platforms such as FanDuel emerged, “sports-journalism outlets recognized them quickly as gambling in disguise,” Funt wrote. Nigel Eccles, the founding CEO of FanDuel, told Funt, “I remember one senior ESPN executive telling us we were going to jail.” Yet at the same time, ESPN was the home field of Bill Simmons, who argued, “Gambling is a part of sports; we may as well accept it.” (Later, Simmons founded The Ringer, which entered a partnership agreement with FanDuel.) Chad Millman, the editor in chief of ESPN the Magazine, established a gambling beat, devoted an issue to the subject, and created an online vertical for betting news. “Millman,” Funt wrote, “decided to raze the wall separating sports reporting from the action when, in 2017, he left ESPN to help found a sports betting media startup called the Action Network.”

The ESPN deal with Penn, which gives ESPN options to buy five hundred million dollars in Penn stock, “allows ESPN to rake in a large sum of money related to gambling without—in keeping with Disney’s family-friendly brand—becoming a sports book itself,” per the New York Times. ESPN Bet is scheduled to debut in the fall, a reinvention of what had been Barstool Sportsbook, named for Barstool Sports, a media company that Penn is selling back to its founder. Byers raised the suggestion that Barstool Sports “is actually getting out of a losing situation” with Penn—and noted that ESPN Bet is modeled after Fox Bet, which is now being shut down. Flutter Entertainment—the firm that partnered with Fox, the largest online betting company in the world, and the parent of FanDuel—lost a reported three hundred and thirteen million dollars in the US last year. Ultimately, Byers wrote, “the Penn deal isn’t a solution to ESPN’s larger revenue challenge.”

The announcement of ESPN Bet came a month after ESPN laid off about twenty on-air commentators and told staff that some contracts would be renegotiated at reduced salaries or left to expire. Earlier in the year, Iger announced that he planned to cut seven thousand jobs at Disney and, the Times reported, that ESPN and its streaming offshoot would “become a stand-alone unit for the first time, a move that was instantly interpreted as making the sports behemoth easier to spin off or sell.” In July, on CNBC’s Squawk Box, Iger said, “Everything’s on the table.” That Disney’s cable networks—anchored by ESPN and its spin-offs—drove fourteen billion dollars in revenue and three billion dollars in profit during the first half of the year seems little consolation: “Revenue for those six months was down 6 percent from a year earlier,” the Times reported, “as profit plunged 29 percent.”

Wall Street logic aside, for ethical journalism, sports betting is “slippery turf,” Funt wrote for CJR. When it comes to reporting on finance, there are established rules: “Mainstream outlets strictly prohibit their employees from investing in the companies they cover. (The Securities and Exchange Commission wouldn’t approve, either.)” Within sports media, however, “gambling in the press box is common, especially in football, and few sports outlets bar reporters from betting within their beats.” This summer, ahead of the NBA draft, a sports journalist—paid by both The Athletic and FanDuel—moved betting odds; when an uproar ensued, Dave Sharapan, a longtime oddsmaker, told the Washington Post, “The lines of everything between the leagues, teams, official betting partners and media people and the books and the business—there are no more lines.” And as Eccles told Funt, if a sports site “is totally independent and really run from an editorial angle, if it’s not benefiting you, why the hell own it?” You can read Funt’s piece here.

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Other notable stories:

  • The Washington Post’s Jeremy Barr reports on evidence that prime-time ratings at Fox News are starting to rebound after initially dropping following the network’s ousting of Tucker Carlson in April; Fox, Barr writes, has since introduced “a new prime-time lineup designed to capitalize on the existing loyalties of the network’s fans.” In other Fox News news, executives and lawyers for the network have donated tens of thousands of dollars to Democratic senator Joe Manchin this year, The Intercept’s Daniel Boguslaw reports. Donald Trump, who is still weighing whether to join the Republican primary debate on Fox next week, blasted the network for airing “the absolutely worst pictures of me, especially the big ‘orange’ one with my chin pulled way back.” And Fox is ditching a 2016 debate sound effect that, per Politico, “was confusing to dog owners.”
  • The Nation’s Liz Farkas and Matthew Phelan report this morning that James O’Keefe, who was ousted as leader of the right-wing sting group Project Veritas earlier this year, is now under investigation by prosecutors in New York State. “While the exact nature of the investigation is not yet public, the timing would suggest that it relates to O’Keefe’s alleged financial improprieties during his tenure as the group’s chairman and CEO,” Farkas and Phelan report, adding that the probe “follows a raft of civil lawsuits, criminal investigations, and six-figure court losses that have trailed the group under O’Keefe’s leadership—including a still-active federal investigation into the theft of property belonging to President Biden’s daughter Ashley.” (Read CJR’s Caleb Pershan on that.)
  • Angele Latham, of The Tennessean, dug into a congressional resolution proposed by local congressman Andy Ogles and Utah senator Mike Lee, both Republicans, citing “irresponsible and sensationalistic” journalistic practices as a major reason for rising gun violence; the resolution calls on news organizations to stop giving shooters “the notoriety and infamy they desire,” and also urged journalists not to promote any “ideology or public policy change” in coverage of shootings but rather to prioritize coverage of heroic actions on the part of law enforcement or bystanders. Experts warn that the resolution runs counter to the spirit of the First Amendment and mischaracterizes coverage trends.
  • Earlier this week, ABC News ran a headline claiming that climate change “can’t be blamed” for the wildfires that have devastated Hawai‘i. After critics—including Emily Atkin, who writes the climate newsletter Heated—called out the headline for being inaccurate, ABC amended it by adding the word “entirely.” That prompted right-wing outlets to claim that ABC had bowed to pressure from “activists,” but Atkin notes that, in reality, the network changed the headline because it was wrong. (ICYMI, CJR’s Jon Allsop wrote about climate and colonialism in coverage of the fires on Monday.)
  • And Slate’s Luke Winkie interviewed Kyle Gordon—a comedian whose recent Europop parody song “Planet of the Bass” has become an unlikely smash hit—and ended up talking to him about Say Nothing, a book by Patrick Radden Keefe, of The New Yorker, about the Troubles in Northern Ireland. “It’s an amazing book,” Gordon said. “I think I was interested in the Troubles because it was so opaque and difficult for me to parse as a kid.” (ICYMI, Allsop interviewed Keefe about the book when it came out in 2019.)

ICYMI: The New Yorker’s Louisa Thomas on women’s soccer as a global media phenomenon

Betsy Morais is the managing editor of CJR.