PENN helps create ESPN Bet

PENN Entertainment removed Barstool Sportsbook from its portfolio Tuesday and is teaming up with worldwide sports network ESPN to create ESPN Bet, a brand-new sportsbook.

The deal will see PENN pay $1.5bn to ESPN to create the new platform. ESPN will also receive $500m in warrants, both paid over the next ten years.

Barstool founder Dave Portnoy reacquired 100% of Barstool from PENN for an undisclosed fee and agreed to a 50% sell-on clause should he sell Barstool again, though he promised “[He’ll] hold it ‘til [he] die[s].”

A new platform migration

ESPN Bet will be worked into ESPN’s current offerings of sports media and coverage, according to officials at PENN.

“ESPN Bet will be deeply integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem,” said Jay Snowden, CEO and president of PENN, in a statement.

giving ESPN a clear path to near, if not total, control of the vertical

There has long been speculation that ESPN would one day enter the world of sports betting, following in the footsteps of FOX Bet as a primary sports media platform with a betting arm. FOX Bet recently closed up shop, giving ESPN a clear path to near, if not total, control of the vertical.

Previous speculation suggested that Disney, the parent company of ESPN, could use its stake in DraftKings to force a renaming of the platform or to create a new offering. That has been put to rest by Tuesday’s announcement that ESPN will partner with PENN to create a new sportsbook.

PENN will rebrand its sportsbooks in 16 states later in the fall. That will come with a website, mobile betting app, and retail sportsbooks. 

ESPN plans to integrate its content and usual programming with the new platform, also in the fall. Users will be able to place their favorite sports bets through ESPN’s digital offerings. 

“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. “The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN.”

Barstool back with Portnoy

ESPN has the right to appoint a board member at PENN after three years, per the terms of the deal. It will also create a responsible gaming committee to implement and oversee a variety of policies as it enters the world of sports wagering, now as a provider.

implication is that its employees will now reference odds from ESPN Bet

ESPN shows and programs regularly discuss betting odds during betting-focused segments, pre-games and live games, and other content pieces. The implication is that its employees will now reference odds from ESPN Bet, which consumers will be able to access from a variety of mediums.

As ESPN prepares to unleash its new vertical, Portnoy is back in full control of the company he created back in 2003. 

Barstool was valued at $606m in 2020 when PENN purchased the remainder of the company that it did not already own. Its stock soared 26% in the hours immediately after the deal was announced.

“The regulated industry is probably not the best place for Barstool Sports and the type of content we make,” Portnoy said on X (formerly known as Twitter) after the deals were announced. “Penn was able to broker an unbelievable deal with ESPN.”

On the back of the news, DraftKings’ stock fell 5% in after-hours trading Tuesday. BetMGM and Caesars also both declined by 1%.