PENN Entertainment and ESPN have reached an agreement to operate ESPN Bet. The bookmaker will replace Barstool Sportsbook, which PENN sold back to its previous owner. The deal between PENN and ESPN is worth $1.5 billion, with PENN holding the brand rights of ESPN Bet for ten years.
On Tuesday, gambling company PENN Entertainment announced in a press release that it will partner with ESPN to launch a sportsbook called ESPN Bet. PENN Entertainment will pay $1.5 billion in cash over ten years to operate ESPN Bet. The agreement also includes an option to extend the partnership for another ten years.
Additionally, ESPN will receive $500 million to acquire 31.8 million regular shares of PENN Entertainment. In return, ESPN will provide media, brand rights, marketing services, and more. ESPN Bet will be promoted both online and on television through the American sports network. If ESPN Bet achieves certain milestones, such as a specific market share, ESPN can receive a bonus of up to 6.4 million PENN shares.
The agreement represents a significant opportunity for value creation for PENN, according to the gambling company. They expect to generate between $500 million and $1 billion in annual EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization).
Jay Snowden, Chief Executive Officer and President of PENN, referred to the agreement as a major milestone:
“This transformative, exclusive agreement with ESPN marks a new important milestone in PENN’s evolution from a purely American regional gaming operator to a North American entertainment leader. ESPN Bet will be deeply integrated into ESPN’s broad editorial, content, digital, and linear product and sports program ecosystem. ESPN Bet will also benefit from PENN’s operational experience, extensive market access, and proprietary technology platform, which was successfully launched in the US in July of this year.”
Jimmy Pitaro, Chairman of ESPN, added:
“After meeting with Jay and the PENN team, it was clear that they were the right long-term strategic partner to build ESPN Bet into a leading sports betting platform in the US. We are confident that the combination of our unparalleled audience together with PENN’s operational expertise and state-of-the-art technology provides us with a great opportunity to serve the ever-growing number of consumers interested in betting.”
With the launch of ESPN Bet, ESPN’s parent company Disney will immediately end its agreements with DraftKings and Caesars. Disney had already expressed its intention to enter the betting market through ESPN in 2021.
PENN, on the other hand, will part ways with Barstool Sportsbook. PENN has owned Barstool since February 2023 but has sold all shares back to its previous owner, David Portnoy. However, Portnoy must give 50% of the gross proceeds to the gambling company when Barstool Sports is sold. A non-compete agreement also applies.
PENN Entertainment is among the top ten largest gambling companies in the world. The company operates Hollywood Casino and is active in sports betting in Canada under the brand name theScore. ESPN Bet will be available in sixteen states in the United States starting from the fall. It will compete with giants like DraftKings and FanDuel.
Whether ESPN will enter the Dutch gambling market is unknown. ESPN holds the rights to several football leagues in the Netherlands, including the Eredivisie. The pay-TV channel also broadcasts American sports such as basketball (NBA) and American football (NFL).
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