One of the world’s largest media and entertainment brands is entering the legal sports betting market.
ESPN has agreed to a long-term deal with PENN Entertainment to launch online sports betting sites across the United States. As part of the 10-year agreement, PENN Entertainment will rebrand its Barstool Sportsbook property as ESPN Bet starting in the fall of this year. PENN, which offers casino, retail, and mobile wagering in 20 states, will continue to have operations in Ontario under theScore Bet branding.
ESPN BET is about to be a thing after an agreement with PENN Entertainment. pic.twitter.com/0NEUECzwAg
— Brandon DuBreuil (@CoversBDB) August 8, 2023
“This transformative, exclusive agreement with ESPN marks another major milestone in PENN’s evolution from a pure-play U.S. regional gaming operator to a North American entertainment leader,” said PENN CEO and president Jay Snowden. “ESPN Bet will be deeply integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem.”
The deal between ESPN and PENN will require the Pennsylvania-based entertainment and gaming company to pay the “Worldwide Leader in Sports” $1.5 billion in cash. ESPN will also be given roughly $500 million of warrants to purchase around 31.8 million shares of PENN stock.
The shares will vest over a 10-year period and will also provide PENN with rights to ESPN media, marketing services, and branding. ESPN has the opportunity to acquire 6.4 million additional shares based on ESPN Bet's market performance.
Due to Barstool’s rebrand, PENN Entertainment will sell the media brand back to its founder David Portnoy.
Emergency Press Conference - I Bought Back Barstool Sports pic.twitter.com/dmUk0eNowx
— Dave Portnoy (@stoolpresidente) August 8, 2023
PENN purchased a 36% stake in Barstool Sports in 2020 for $163 million. In February, the company acquired the remaining 64% of Barstool in a deal valued at $388 million.
PENN is coming off a promising start to 2023. The company generated $1.67 billion in revenue for the first quarter ending March 31, 2023, a 7% increase year-over-year. The company reported a net income of $514.4 million during the quarter, up from $51.6 million in Q1 2022.
Its new business partner Disney — ESPN’s parent company — is also coming off a strong start. The entertainment giant posted $21.8 billion in revenue in Q2 2023, up 13% year-over-year.
