PENN, ESPN Agree To Deal For Online SportsbookBarstool Sportsbook To Close Under Deal |
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ESPN today announced an agreement with PENN Entertainment to launch an ESPN-branded sportsbook.
The deal will result in the shuttering of the Barstool Sportsbook, which PENN operated. PENN Entertainment will rebrand its current sportsbook and relaunch as ESPN BET, effective this fall in the 16 legalized betting states where PENN is licensed.
ESPN BET will become ESPN’s exclusive sportsbook, and 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.
PENN has agreed to make $1.5 billion in cash payments to ESPN paid over the initial 10-year term and grant ESPN approximately $500 million of warrants to purchase about 31.8 million PENN common shares that will vest ratably over 10 years, in exchange for media, marketing services, brand and other rights provided by ESPN
Upon ESPN Bet meeting certain U.S. online sports betting market share performance thresholds, ESPN could receive bonus warrants to purchase up to an additional approximately 6.4 million PENN common shares.
“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 stock was up as much as 25% following the news. DraftKings Sportsbook, a top rival of PENN, was down about 9% on the announcement.
Jay Snowden, Chief Executive Officer and President, PENN Entertainment said: “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.”
Sports betting has never been more popular, according to figures from the American Gaming Association.
Nationwide, Americans wagered a record $31.11 billion on sports in Q1 2023, generating an all-time high of $2.79 billion in quarterly revenue (+70.1% year-over-year). The growth compared to Q1 2022 was largely driven by new market launches in Kansas, Massachusetts and Ohio.
Sports betting is live and legal in 34 states plus the District of Columbia.
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