It was a surprise last week when the Walt Disney Company announced that it was entering the world of sports gambling. On the eve of Disney’s earnings call with Wall Street investors, ESPN President Jimmy Pitaro announced that ESPN was entering into a $1.5 billion deal with Penn Entertainment to create ESPN Bet. During the earnings call, Disney CEO Bob Iger was able to taut the agreement as a giant step forward for Disney and ESPN.
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While sports gambling is a huge moneymaker, the deal wasn’t all it seemed when it was first announced. When former Disney CEO Bob Chapek first floated the idea of ESPN getting into gambling, he wanted nearly $4 billion in the deal, while Disney settled for less than half of that amount. ESPN also agrees with what analysts call a “second or third tier” gambling company in Penn Entertainment, which is only licensed in 16 states and is not licensed in any of the states where Disney has a significant presence.
Disney also had some internal issues that it had to deal with before entering into sports gambling. During Bob Iger’s purge of the company, Disney laid off its chief compliance officer, Alicia Schwarz. Horacio Gutierrez replaced her, but now, Disney needs to bring in the big guns to comply with state gaming regulations.
So, to help with their compliance team, Disney has rehired Rafael Ribeiro as deputy chief compliance officer. Ribeiro was with Disney earlier this year but left the company to become a partner at Hogan Lovells in Miami.
Ribeiro worked for Disney as assistant general counsel before leaving earlier this year. According to Bloomberg Law, Ribeiro reports to Dorothy Attwood, an attorney and longtime vice president of global public policy for the company.
This move comes as Disney needs to beef up its compliance team for the move into sports gambling. Penn Entertainment was licensed in 16 states, and now ESPN Bet will also be licensed in those same states. This means that Disney will have to comply with the gambling rules for 16 states, as there are no nationwide gambling regulations. This will require a more significant legal presence to handle each state.
Disney’s legal affairs team will now have its hands complete with regulatory compliance, and they are bringing in a group with legal experience in these matters. It is new waters for the Walt Disney Company.
We will continue to update this story at Disney Fanatic.
