ESPN on Aug. 8 announced it is partnering with casino operator PENN Entertainment under a $2 billion, 10-year joint venture to launch “ESPN BET,” a branded online sports book for fans in the United States.
At the same time the deal was announced, ESPN, which is owned by Disney, said it had dropped its current online sports book with the sports website Barstool Sports.
Under the new partnership, PENN Entertainment will rebrand its current online Barstool Sports book and relaunch as ESPN BET by the fall in the 16 states where PENN currently operates mobile sports books, according to a press release.
Those states include Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Louisiana, Massachusetts, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia.
The rebrand, which marks the first time ESPN’s brand will appear on a sports-betting platform, includes the mobile app, website, and mobile website.
The new deal “furthers ESPN’s commitment to serve fans” by leveraging its “industry-leading multi-platform reach with the rising product operations and expertise of PENN Entertainment,” the press release states.
ESPN said ESPN BET will become the network’s exclusive sports book and that PENN Entertainment will receive odds attribution, promotional services inclusive of digital product integrations, traditional media, and content integrations, and ESPN talent access, among other services that “collectively generate maximum fan awareness of ESPN BET,” according to the press.
‘The Strategy Here Is Simple’
Upon ESPN BET meeting certain U.S. online sports betting (OSB) market share performance thresholds, ESPN could receive bonus warrants to purchase up to an additional 6.4 million PENN common shares.ESPN may also designate a PENN board member after three years, subject to gaining gaming regulatory approvals and a minimum ownership threshold.
“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,” said Jimmy Pitaro, chairman, ESPN. “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.”
PENN said in its press release it anticipates the newly announced deal will add an estimated $500 million to $1 billion in annual long-term adjusted earnings potential in its interactive segment.
Jay Snowden, CEO and president, PENN Entertainment, said the “transformative” and exclusive agreement marks another “major milestone” in PENN’s evolution from a pure-play U.S. regional gaming operator to a “North American entertainment leader.”
Mr. Snowden said the new branded sports book will be “deeply integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem,” and will benefit from PENN’s “operational experience, extensive market access, and proprietary technology platform,” which debuted in the United States in July.
‘One Step Forward, Two Steps Back’
Prior to the announcement of the deal, PENN sold Barstool Sports, Inc. back to its founder, Dave Portnoy. Mr. Portnoy founded Barstool in 2003.According to PENN, the entertainment company sold “100 percent” of Sports, Inc. common stock back to Mr. Portnoy in exchange for “certain non-compete and other restrictive covenants” after previously purchasing a 36 percent stake in the company for $163 million in 2020 and acquiring the remaining interest in Barstool Sports for approximately $388 million in February this year.
PENN also has the right to receive 50 percent of the gross proceeds received by Mr. Portnoy in any subsequent sale or other monetization event of Barstool, the company said.
In a video posted to X (formerly Twitter) on Aug. 8 dubbed an “emergency press conference,” Mr. Portnoy confirmed he had taken back full ownership of Barstool and that his company and PENN Entertainment had “gone their separate ways.”
However, he insisted he has “nothing but great things to say” about PENN and called the decision a “win-win” for all.
“We underestimated just how tough it is for myself and Barstool to operate in a regulated world,” Mr. Portnoy said. “Every time we did something, it was one step forward, two steps back. We got denied licenses because of me. You name it. So the regulated industry is probably not the best place for Barstool Sports and the type of content we make,” he said.
Mr. Portnoy added that he has no plans to sell Barstool Sports “ever” and vowed to “hold it ’til I die.”
PENN Entertainment stock was trading up more than 17 percent early morning Wednesday while Disney stock was up 1.28 percent.
