BRISTOL, Conn.—ESPN has announced its first big push into sports betting with a new joint venture with Penn Entertainment that will see the ESPN Bet launch this fall.
As part of the agreement, Penn will rebrand its sports book as ESPN Bet in the 16 legalized betting states where it is licensed, the companies said. The rebrand includes the mobile app, website, and mobile website.
Penn will pay ESPN $1.5 billion in cash over the 10-year period. The agreement also grants ESPN about $500 million of warrants to buy Penn common shares.
As a result of the deal, Penn is selling its sports media operation Barstool back to its founder Dave Portnoy.
“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,” said Jimmy Pitaro, chairman, ESPN. “The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN. Penn Entertainment is the perfect partner to build an unmatched user experience for sports betting with ESPN Bet.”
“This agreement with ESPN and collaboration on ESPN Bet allows us to take another step forward as an industry leader,” Jay Snowden, CEO and president, Penn Entertainment said. “Together, we can utilize each other’s strengths to create the type of experience that existing and new bettors will expect from both companies, and we can’t wait to get started.”
The deal comes at a time when ESPN’s traditional business model has been facing pressure from cord cutting and the decline of the pay TV industry and its parent company Disney has been exploring the sale of some traditional TV assets.
The new deal could potentially offer ESPN’s extensive multiplatform business new revenue streams, though the sports betting industry remains highly competitive and is still in its infancy with existing players facing hefty marketing costs and in some cases large losses.
As part of the agreement, ESPN Bet will become ESPN’s exclusive sportsbook, and Penn Entertainment will receive odds attribution, promotional services inclusive of digital product integrations, traditional media and content integrations, and ESPN talent access, among other services that will help boost fan engagement with ESPN Bet, the two companies said.
The deal also builds on the fact that in recent years, ESPN has increased multi-platform sports betting content, adding digital programming, radio segments, and editorial coverage from talent.
In concert with Penn Entertainment’s comprehensive responsible gaming programming, ESPN will use its platforms to educate sports fans on responsible gaming, the two companies said.
