ESPN Strikes $2 Billion Sports-Betting Deal With Penn Entertainment

livemint.com:

ESPN agreed to a $2 billion deal to allow its brand to be used in Penn Entertainment’s online sportsbook, a strategic turn for both companies as they try to tap into the sports-betting sector’s growth. Penn Entertainment, whose shares surged more than 20% after hours on news of the pact, said its Barstool Sportsbook app would be rebranded as ESPN Bet this fall as part of the 10-year agreement. In addition to $1.5 billion in cash over the term of the agreement, ESPN will receive warrants worth about $500 million to purchase shares in Penn.

The move marks a sharp pivot for Penn, which has struggled to secure market share in the competitive U.S. sports-gambling industry. The company also said it has sold its ownership of Barstool Sports to Barstool founder David Portnoy in exchange for 50% of the proceeds on any future sale of the media brand.

Penn acquired Barstool through a pair of transactions valued at a combined $550 million. Portnoy, whose company has drawn scrutiny from regulators, said that the companies underestimated how tough it would be for Barstool to operate in the regulated gambling industry. He said he plans to never sell the company again.

“For the first time in forever, we don’t have to watch what we say, how we talk, what we do," Portnoy said in a video on X, formerly known as Twitter. “It’s back to the pirate ship." The ESPN Bet app will be promoted on the broadcaster’s platforms and will have access to ESPN programming and talent. ESPN struck marketing deals in 2020 with sports-betting companies Caesars and DraftKings, including linking to the gambling sites from ESPN’s digital platforms.