ESPN is finally entering the legal sports betting space.
The Disney-owned sports media giant — which for years actively resisted any connection with gambling — has completed an agreement with PENN Entertainment to create ESPN Bet.
The sportsbook, set to launch this fall in 16 states, will be a rebranding from Barstool Sportsbook, a key outlet of the sports media brand PENN purchased in two stages.
ESPN is making the move amid an ongoing and massive reorganization, including large-scale layoffs and a potential partial equity sale. But network leaders still believe the time is right, as legal sports betting further establishes itself more than five years after the landmark U.S. Supreme Court decision allowing states to set their own laws in the space.
“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, ESPN chairman. “The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN.”
PENN Entertainment is making $1.5 billion in cash payments to ESPN over an initial 10-year term and granting about $500 million in stock warrants to purchase PENN Entertainment shares, vesting over the next decade. In return, it will access the ESPN brand and its marketing support, gaining access to the largest entity in U.S. sports digital media.
As part of the deal, Barstool Sports founder Dave Portnoy is also buying 100% of that outlet back from PENN Entertainment, ending a three-plus-year relationship that never saw the Barstool Sportsbook mount a significant challenge to industry leaders FanDuel and DraftKings. PENN Entertainment also will reap 50% of the gross proceeds of any subsequent sale or monetization of Barstool.
ESPN is making the move just days after Fox Corp. and Flutter Entertainment shuttered Fox Bet amid an ongoing consolidation in sports betting. PENN National shares shot up by more than 20% in after-hours trading amid the news that it’s dumping Barstool Sports in favor of ESPN.
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