ESPN, the international sports broadcaster owned by media giant Disney, has struck a $2 billion deal with casino owner Penn Entertainment to launch a sports betting business under the brand ESPN Bet.
Under the deal, Penn Entertainment will pay ESPN $1.5 billion in cash and $500 million in stock warrants, for purchasing 31.8 million shares of Penn National, over the next 10 years in exchange for the brand, promotional services, and access to ESPN’s talent.
ESPN is the largest sports media brand in the US, with over 105 million monthly unique digital visitors. Its social media presence boasts 370 million fans, while 25 million subscribe to its ESPN+ streaming service. Tapping into that visibility is key to the partnership.
ESPN chair Jimmy Pitaro said: “Our primary focus is always to serve sports fans and we know they want both betting content and the ability to place bets with less friction from within our products.
“The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN. Penn Entertainment is the perfect partner to build an unmatched user experience for sports betting with ESPN Bet.”
The new arrangement will see the various Barstool Sportsbooks rebranded as ESPN Bet across the 16 legalized betting states where it has licenses.
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ESPN Bet will become the broadcaster’s exclusive sportsbook, effectively ending its existing partnership with DraftKings and Caesars, with both brands previously mooted as potential partners for ESPN.
After three years, ESPN will also be able to designate a Penn board member.
Jay Snowden, Penn Entertainment's chief executive, added: “ESPN Bet will be deeply integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem.
"ESPN Bet will also benefit from Penn’s operational experience, extensive market access, and proprietary technology platform, which successfully debuted in the US this July.
“Together, we can utilize each other’s strengths to create the type of experience that existing and new bettors will expect from both companies, and we can’t wait to get started.”
The Barstool brand, which was bought by Penn Entertainment in 2020, meanwhile, will be sold back to founder Dave Portnoy “in exchange for certain non-compete and other restrictive covenants.”
It is uncertain whether the non-compete and other restrictive covenants mentioned by Penn Entertainment blocks Portnoy from relaunching a Barstool betting product. Penn Entertainment retains rights to 50% of gross proceeds from any subsequent sale or monetization event around the brand.
Snowden said: “Barstool has been a great partner and we are thankful to Dave Portnoy, [CEO] Erika Ayers, [media personality] Dan Katz, and their team for helping to rapidly scale our digital footprint across 16 jurisdictions in the US and introducing their audience to our retail and digital products.
“The divestiture allows Barstool to return to its roots of providing unique and authentic content to its loyal audience without the restrictions associated with a publicly traded, licensed gaming company.”
Image: Mike Windle/Getty Images for ESPN