ESPN Reaches $2 Billion Agreement With PENN Entertainment To Create ‘ESPN Bet’ Sportsbook
ESPN has announced a major agreement with PENN Entertainment to launch ESPN Bet, a branded sportsboook for sports gambling fans in the United States.
To create the new gambling avenue, PENN will rebrand its current sportsbook, the Barstool Sportsbook, and relaunch it this fall. The sportsbook will be available in the 16 states where PENN is currently licensed.
Photo: CNBC
As part of the new agreement, PENN Entertainment has also divested itself of Barstool Sports and sold the company back to its founder Dave Portnoy.
Terms of The Deal
The new partnership will see Penn pay ESPN $1.5 billion in cash over the 10-year term, with another $500 million in warrants that will vest over that term, “in exchange for media, marketing services, brand and other rights provided by ESPN.”
Credit: ESPN
Penn will also get the rights to the ESPN brand for betting purposes for 10 years, with a mutual option to extend for another 10 years.
ESPN programs will promote the service, as will various on-air personalities. The network will also be able to designate a Penn board member after three years.
For ESPN, the new sportsbook will mark the worldwide leader in sports’ first real foray into sports gambling. The company says that the new deal will leverage ESPN’s industry-leading multi-platform reach, with the rising product operations and expertise of PENN Entertainment.
A Change of Course For Disney
The jump into sports gambling by ESPN has long been rumored, although some have worried about how the family-friendly Disney brand would look getting involved in the industry.
Disney CEO Bob Iger, while initially opposed to a move towards gambling, seemed more open to the idea in recent months, as attitudes towards sports gambling continued to shift in the United States.
Despite his personal reservations, Iger has stated that an infusion of gambling into ESPN was “inevitable.”
“I think that’s important for consumers, particularly young consumers. I mentioned earlier in another meeting, I have two sons who are 24 and 20. And it’s not just about fantasy sports, but they’re interested in it. And I prefer to wait as long as possible. I think it’s inevitable that there’ll be basically seamlessness between sports programming and sports betting.”
Photo: Chip Somodevilla/Getty Images
A Major Partnership
While previously not in the gambling sphere themselves, in recent years ESPN has increased sports betting content on its networks. ESPN Bet Now brings the network fully into the industry with a partner who has the experience and a footprint there.
Photo: SportsCenter
“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, of 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.”
For PENN, the news means they are essentially trading Barstool Sports for ESPN. By divesting themselves from Barstool, they enter into an agreement with a safer and more well-known brand.
“This agreement with ESPN and collaboration on ESPN BET allows us to take another step forward as an industry leader. 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,” Jay Snowden, Chief Executive Officer and President of PENN Entertainment, said.
A New Future For ESPN
The new agreement between ESPN and PENN will mark the beginning of a new era for the struggling sports network. Perhaps not coincidentally, the news was released just one day before Bob Iger is set to present Disney’s second-quarter earnings.
As ESPN begins its transition from cable network to streaming service, the network has another major stream of income that can rely on.
No matter what the future holds, today is a new day for ESPN.
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