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Shares in DraftKings rose by as much as 12.8% in after-hours trading yesterday (6 October) after Bloomberg News reported the operator may be approaching a major sports betting partnership with Disney-owned ESPN.

According to the report citing people familiar with the matter, the two firms are nearing a deal which would allow the sports broadcaster to capitalise on the rapidly growing US sports betting market.

ESPN – which already holds a 4% stake in DraftKings and is the operator’s third-largest stakeholder – has held integration agreements with both DraftKings and Caesars since September 2020.

The broadcasting giant has long been looking for ways into the sports betting industry, sparking several rumours about the different ways it could approach the market.

In September, Disney CEO Bob Chapek told Bloomberg that sports betting is a constant request among the firm’s under-35 sports-loving audience, and that the firm was “working very hard” on the development of a sports betting app.

Industry consensus, however, has been that entering the space via a partnership such as the one suggested with DraftKings is much more likely than ESPN becoming an operator itself, with Acies Investments co-founding partner Chris Grove describing the brand developing its own sportsbook as the least likely of all the possible market entry routes.

“No one I talk to has seen any meaningful footprints of Disney developing this kind of app,” Grove said at the time and pointed out that there has not been any visible related hiring or M&A activity.

In January, Disney revealed that it was recruiting for a New York-based senior sports betting manager to work for its ESPN subsidiary. The job description said the successful applicant would be responsible for the day-to-day partner management of betting and licensing deals for ESPN.

The individual would also be expected to act as the go-to project manager for existing and new partnerships while overseeing key external relationships with betting partners.

Given that description and the latest rumours around a major deal with DraftKings, it seems a broad-ranging brand partnership between ESPN and an established operator is by far the likeliest way to go for the broadcaster’s entry into the sports betting sector.

Indeed, last month Disney CEO Chapek told CNBC that the firm would never take bets itself, but that it would aim to provide sports fans with more “frictionless sports betting potential”.

The deal could follow a similar structure to one struck in September by DraftKings, which saw the operator selected as the sponsor and exclusive pre-game and in-play odds provider of Thursday Night Football (TNF) on Amazon’s Prime Video.

The multi-year collaboration sees DraftKings deliver pre-game content and unique betting offers every Thursday throughout the NFL season.

As part of the agreement, TNF will also feature DraftKings integrations in the live pre-game, including odds and additional sports betting insights, while the firms are also collaborating on TNF-themed offerings including same-game parlays, made available on the DraftKings Sportsbook app.

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