In a move that marks ESPN's official entry into the sports betting industry, the sports media giant has announced a partnership with Penn Entertainment to launch ESPN BET. Under the agreement, Penn will rebrand its current sportsbook and relaunch it as ESPN BET in the 16 legal betting states where it is licensed. The deal, reportedly worth $2 billion, will see Penn pay ESPN $1.5 billion in cash over a 10-year period, while ESPN will receive $500 million of warrants to purchase Penn stock in exchange for media, marketing services, brand, and other rights.
ESPN Chairman Jimmy Pitaro stated that the primary focus of the partnership is to provide sports fans with both betting content and the ability to place bets seamlessly within ESPN's products. ESPN aims to give fans what they have been requesting and expecting, and believes that Penn Entertainment is the ideal partner to create an unmatched user experience for sports betting.
As part of this agreement, Penn sold Barstool Sports back to its founder Dave Portnoy. Portnoy expressed his respect for the Penn team but admitted that being associated with a regulated industry did not align with the content Barstool Sports was accustomed to producing. He stated that it was the best decision for both parties and that Barstool Sports can now return to its original form.
ESPN emphasizes its commitment to responsible gaming and intends to educate sports fans on responsible gambling. The company will maintain its high standard of journalistic integrity when covering betting and plans to establish a committee of responsible gaming. ESPN will also implement responsible marketing policies and guidelines to protect fans.
The announcement of the partnership had a significant impact on Penn's stock, which rose by 23% after hours. This collaboration between ESPN and Penn Entertainment represents a major step forward for both companies and is expected to shape the future of sports betting within ESPN's platforms.