ESPN Goes All-In on Sports Gambling, Strikes Deal with PENN Entertainment

ESPN, a sports media behemoth owned by Disney that for years resisted any association with gambling, has reached an agreement with casino owner PENN Entertainment to establish ESPN Bet.

PENN Entertainment will pay $1.5 billion in cash to ESPN over an initial 10-year term and grant about $500 million in stock warrants to purchase 31.8 million PENN shares, vesting over the next decade. In return, it will access the ESPN brand and its marketing support.

The sportsbook, set to launch this fall in 16 states, will be a rebranding from Barstool Sportsbook, a key outlet of the sports media brand PENN purchased in two stages.

As part of the agreement, Barstool Sports founder Dave Portnoy is purchasing back PENN Entertainment’s entire stake in the company. PENN will also receive 50% of the total proceeds from any future sale or monetization of Barstool.

“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,” said said Jimmy Pitaro, Chairman, ESPN

Penn says its partnership with the largest sports brand in the US increases the long-term adjusted EBITDA potential for its interactive segment by between $500 million and $1 billion.

PENN becomes ESPN’s exclusive sportsbook, effectively ending existing partnerships with the likes of DraftKings and Caesars.