ESPN Bet has signed an agreement with Penn Entertainment to launch a multi-platform online sportsbook in 16 states, including a mobile app.
Key Highlights
- ESPN and Penn Entertainment sign multi-year agreement for ESPN Bet Sportsbook
- Rebranding to ESPN Bet will include a mobile app
- Penn sells Barstool Sports back to Dave Portnoy, with a 50% proceeds clause
The 10-year deal will see Penn Entertainment rebrand its current sportsbook and relaunch it as a branded ESPN product, with the anticipated launch date in the upcoming months.
Once rebranded and launched, ESPN Bet will be operated by Penn Interactive, with Penn also receiving odds attribution and promotional services.
The sportsbook will initially go live in the 16 states where Penn Entertainment is already licensed for.
ESPN Bet will also hope to attract its US fantasy sports customer base to its sports betting platform, following a similar method proven to be successful by the likes of FanDuel and DraftKings.
In last week's GI Friday, Scott Butera told Gambling Insider that a big operator would get the convergence model right. Will ESPN Bet be that operator?
"The deal shows two things: 1. ESPN decided to not operate themselves and go down the licensing path and 2. It demonstrates Penn has great confidence in the sector by investing $2bn in the ESPN brand" - Stephen Crystal
Jay Snowden, Penn President and CEO, said: “This transformative, exclusive agreement with ESPN marks another major milestone in Penn’s evolution from a pure-play US regional gaming operator to a North American entertainment leader.
“ESPN Bet will be deeply integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem.
“ESPN Bet will also benefit from Penn’s operational experience, extensive market access and proprietary technology platform, which successfully debuted in the US this July.”
It’s been no secret that ESPN has been investing in its multi-platform sports betting products in recent years and this deal is no exception.
By collaborating with Penn Entertainment, ESPN will have a pre-existing sportsbook as its foundation to rebrand, rather than build from the ground up.
This rebranding effort will include the desktop and mobile website, as well as the mobile app.
However, there will be some that are surprised to see that Penn Entertainment is the company that ESPN finally decided to settle on.
After all, there have been years of speculation that ESPN would forge a partnership with DraftKings, especially since ESPN’s owners hold a small stake in the company.
Last year, there were reports that ESPN was looking to license its brand to a sports betting firm for $3bn.
The potential deal was so highly-anticipated, that shares in DraftKings jumped 9.2% in price following Bloomberg News article that stated there was a chance that ESPN would choose the sports betting operator as its partner.
It has now been announced, though, that Penn Entertainment has agreed to make $1.5bn in cash payments to ESPN over the next 10 years
Alongside this, ESPN has been granted $500m in warrants to purchase around 31.8 million Penn common shares as part of the deal.
Jimmy Pitaro, ESPN Chairman, said: “After meeting with Jay and the Penn team, it was clear they were the right long-term strategic partner to build ESPN Bet into a leading US sports betting platform.
“We are confident that the combination of our unparalleled audience, along with Penn’s operational expertise and state-of-the-art technology, provides us with a tremendous opportunity to serve the ever-growing number of consumers interested in betting.”
To facilitate this, Penn has sold all of its Barstool Sports shares back to Founder, Dave Portnoy, including a clause to receive 50% of the gross proceeds in the next sale of the company.
The acquisition of Barstool Sports by Penn Entertainment was only finalised in February of this year.
In a statement released by Snowden, he thanked Barstool CEO Erika Ayers, media personality Dan Katz and Portnoy for the time they spent working with Penn.
“The divestiture allows Barstool to return to its roots of providing unique and authentic content to its loyal audience without the restrictions associated with a publicly traded, licensed gaming company" - Jay Snowden
Although, all eyes will be on ESPN Bet, to see how the media giant manages to support its sports betting addition.
This announcement comes only a week after Flutter closed Fox Bet, the sports betting platform launched between Fox Corporation and The Stars Group.
Fox Bet isn’t the only casualty in the online media sports betting world either, as FuboTV closed Fubo Sportsbook last year, with MaximBet ceasing operations only a few months later.
ESPN has also taken note of Penn Entertainment’s responsible gaming programme and has pledged to use its platform to educate fans on potential harm.
Commenting on the deal exclusively to Gambling Insider, SCCG Management CEO and Founder Stephen Crystal said: "The deal shows two things: 1. ESPN decided to not operate themselves and go down the licensing path and 2. It demonstrates Penn has great confidence in the sector by investing $2bn in the ESPN brand."
