ESPN makes its betting move as Penn lets go of Barstool

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Disney-owned sports broadcaster ESPN is moving into sports betting in partnership with Penn Entertainment, which will sell the Barstool brand back to founder Dave Portnoy.

Penn’s Barstool Sportsbook is relaunching as ESPN Bet this Autumn through the $1.5bn deal. This immediately provides the brand with a footprint across 16 legal betting states, covering its mobile website and app and desktop site.

Penn is divesting Barstool Sports, its sportsbook brand since 2020, as a result of the deal. Barstool founder Dave Portnoy buys back 100% of its share capital “in exchange for certain non-compete and other restrictive covenants”.

‘Give fans what they’ve been requesting from ESPN’

ESPN Bet leverages ESPN’s multi-platform reach, while taking advantage of Penn’s operational expertise and product offering, including a new platform that launched in the US last month.

It becomes ESPN’s exclusive sportsbook, effectively ending existing partnerships with the likes of DraftKings and Caesars. Both brands were previously mooted as potential sportsbook partners for the broadcaster. 

Penn, meanwhile, receives odds attribution and promotional services including digital product, traditional media and content integrations. It gains access to ESPN talent and other services to maximise awareness of ESPN Bet. 

“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 ESPN chair Jimmy Pitaro said.

“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 Entertainment takes a step forward as an industry leader thanks to the agreement, CEO and president Jay Snowden added.

“Together, we can utilise 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 terms of US sports betting’s latest mega deal

Penn will pay $1.5bn in cash payments over the ten-year term of the deal. ESPN is granted a further $500m of warrants to purchase 31.8m common Penn Shares in return for media, marketing services, brand and other rights provided.

ESPN’s stake in the business could grow further should ESPN Bet hit market share targets for online betting. Meeting these performance thresholds grants ESPN an option to purchase up to 6.4m additional common shares.

It also gains an option to appoint one non-voting board observer. After year three of the agreement, this converts to an option to designate a director to Penn’s board.

ESPN to promote social responsibility with Penn

The partners plan to promote responsible gaming using ESPN’s extensive reach.

A dedicated committee will regularly review compliance, programming and policies at ESPN, while responsible marketing policies and guidelines to safeguard fans will be implemented.

ESPN also retains journalistic integrity when covering sports betting, while industry experts will advise on best practice and review its RG programming.

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