The Worldwide Leader in Sports is adding a sportsbook.
On Tuesday, ESPN announced a licensing deal with Penn Entertainment to rebrand Penn's sportsbook as ESPN Bet, yet another sports betting platform in the already-crowded space.
According to the release, Penn will pay ESPN $1.5 billion over the next 10 years. There are also going to be warrants for stocks of Penn with the potential of bonus warrants.
Penn is already a massive entity in the world of sports betting, with its two biggest brands being Barstool Sports and The Score, a Toronto-based content platform. Penn sold Barstool back its previous owner, Dave Portnoy, as part of the deal.
ESPN is by far the biggest partnership Penn Entertainment has landed, and it will join the already-massive industry that is sports betting since left it was left up to state legislation in 2018. Sixteen states are authorized to operate Penn sportsbooks.
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The dynamic of ESPN getting a sportsbook is an interesting one. As sports' largest purveyor of breaking news with a staff laden with insiders, fans can expect to see more sports betting content on a regular basis come fall. The effect on oddsmaking will also be worth monitoring.
"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," ESPN chairman Jimmy Pitaro said, in the release. "The strategy here is simple: to give fans what they've been requesting and expecting from ESPN."
How much did Penn Entertainment pay ESPN?
Penn Entertainment paid ESPN $1.5 billion cash for 10 years to rebrand its book to ESPN Bet.
It is also allotting $500 million in stock warrants to purchase 31.8 million Penn (PENN) shares. There will be potential for bonus warrants down the road based on performance.
How will ESPN Bet work?
ESPN Bet will operate as Penn Entertainment did previously, simply rebranded.
It will serve as the exclusive sportsbook of ESPN, which means all gambling odds seen on the network and mobile app will be via ESPN Bet and Penn Entertainment.
"With ESPN you're talking about a brand that everybody in the world knows about," Penn Entertainment CEO Jay Snowden said Wednesday morning, per Yahoo Sports. "It's not an old brand. It's not a young brand. It's an everything brand. There's a lot of affinity for that brand. And so we think that's going to be extremely complementary to what we've built over the course of last three years."
ESPN also said in a press release it will encourage responsible as part of the agreement, and programming will retain journalistic integrity.
Accessibility will be key to this partnership being worth Penn's while, with the integrated sportsbook being simple to operate for fans on mobile devices.
What does this mean for Barstool Sports?
Barstool Sports was previously Penn's most recognizable brand.
The company, however, was sold back to previous owner and founder Dave Portnoy, Penn said in its announcement of the partnership.
Penn has worked with Barstool since 2019, when it bought 36 percent stake for $163 million. It then bought the rest of the balance for $388 million.
Penn will profit from any future sale of Barstool as an attachment to the deal.
Portnoy also announced his buying back of Barstool Sports Tuesday on social media, saying he owns "100 percent of Barstool Sports" for the first time in a decade. Portnoy said the amount of regulation in the gambling world combined with his controversial nature as a figurehead made it difficult to be successful in that space.
In other words, Barstool is going to go back to its roots.
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States in which Penn Entertainment is authorized to operate
This number will likely only increase with Barstool out of the picture, but ESPN Bet will be live in the 16 states Penn Entertainment is authorized to operate in.
Those states are:
- Arizona
- Colorado
- Illinois
- Indiana
- Iowa
- Kansas
- Louisiana
- Massachusetts
- Maryland
- Michigan
- New Jersey
- Ohio
- Pennsylvania
- Tennessee
- Virginia
- West Virginia
Gambling has become a primary way many fans consume sports, with the boom being similar to the advent of fantasy sports in how it generates out-of-market interest. With ESPN tossing its hat in the ring, it will only increase the amount of bets being placed, especially with ESPN content seeding different bets.
