Key points:
- DraftKings rose Friday after reports it is nearing a deal with ESPN
- DraftKings shares jumped as much as 9% on the news
- The partnership would allow ESPN to benefit from the growing legalisation of sports betting
According to Bloomberg sources, Walt Disney’s ESPN and DraftKings (NASDAQ: DKNG) are close to finalising a significant partnership.
DraftKings shares initially jumped as much as 9.2% following the news, which was initially reported after the close on Thursday. Its shares are currently up 5%. However, despite recent gains, it is down 42% in 2022 and over 67% over the last 12 months.
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The reported partnership would allow ESPN to benefit from the growing wave of legalised sports betting, Bloomberg said people familiar with the matter told them. However, they stated that the details of the agreement could not be immediately learned.
Meanwhile, Disney holds a stake in DraftKings after it acquired Twenty-First Century Fox’s entertainment assets in March 2019.
A spokesperson for DraftKings told the financial publication that it has “a great, long-standing relationship with ESPN.”
Over several years, ESPN has been looking to license its brand to significant sports betting companies for at least $3 billion.
ESPN chairman Jimmy Pitaro recently told Bloomberg, “We know that sports fans are craving not just more sports betting content, but they’re craving the ability to actually place bets in a seamless fashion from their online digital sports experiences.”
On Thursday, Draftkings was initiated with an Underperform rating by Exane BNP Paribas analyst Alistair Johnson. The analyst told investors in a research memo that DraftKings profitability remains “a long way off.”
