In a major sports betting deal, ESPN has reached a $2 billion deal with casino owner Penn Entertainment to launch ESPN Bet, a branded sports book.
ESPN Bet will launch this fall in the 16 states where Penn has sports betting licenses. It will replace the Barstool Sportsbook.
Penn is paying ESPN $1.5 billion in cash over the 10-year term, with another $500 million in guarantees to be given over the term “in exchange for media, marketing, branding and other rights provided by ESPN.”
Under the terms of the agreement, Penn will obtain the rights to the ESPN brand (for betting purposes) for 10 years, with the option to extend for another 10 years by mutual agreement. ESPN shows will promote the service, and some ESPN talent will also participate. ESPN will also be able to appoint a board member from Penn after three years.
In connection with the deal, Penn will sell Barstool Sports, which it acquired in 2020. Barstool founder Dave Portnoy is the buyer of the brand, and there is a non-compete clause among other restrictive covenants. Penn will also “receive 50% of the gross proceeds” if there is a subsequent sale of the Barstool.
“Our primary focus is always serving sports fans and we know they want betting content and the ability to place bets with less friction from within our products,” Jimmy Pitaro, ESPN president, said in a statement. “The strategy here is simple: give fans what they have been asking for and expecting from ESPN. PENN Entertainment is the perfect partner to create an unmatched user experience for sports betting with ESPN Bet.”
“This transformative and exclusive agreement with ESPN marks another important milestone in PENN’s evolution from an exclusive US regional gaming operator to a North American entertainment leader,” added Jay Snowden, Penn’s CEO. “ESPN Bet will integrate deeply with ESPN’s broad ecosystem of editorial, content, digital and linear products, and sports programming. ESPN Bet will also benefit from PENN’s operating experience, broad market access and proprietary technology platform, which successfully debuted in the US this July.”
