ESPN and PENN Entertainment have branded their $2 billion deal to create ESPN Bet no less than “The Future of Sports Media & Betting” and laid out its vision for the agreement in a detailed presentation to investors.
The deal deck, filed with the U.S. Securities & Exchange Commission, provides a window into the ambition the Disney-owned sports media giant and Pennsylvania-based gaming company have for the pact.
Perhaps most notable in the deck is a projection that ESPN Bet will reach as high as a 20% share of the domestic online sports betting market by 2027, an ambitious goal likely requiring breaking into the solid duopoly currently held by FanDuel and DraftKings.
Among the other key deal terms:
- PENN Entertainment will oversee the daily operations of the Sportsbook and retain all customer data.
- The agreement looks to leverage PENN Entertainment’s database of 27 million customers and ESPN’s digital portfolio of 370 million social media followers, more than 100 million monthly digital unique users, more than 25 million subscribers of ESPN+, and 11 million for its fantasy mobile app.
- In addition to the $500 million in committed stock warrants in PENN Entertainment, ESPN can also earn performance warrants of up to 6.4 million additional shares, currently worth about $159 million, based on ESPN Bet market share. Achieving those performance warrants would require ESPN Bet to gain at least 20% market share.
- PENN Entertainment believes the pact will provide an estimated $500 million to $1 billion in annual, long-term adjusted earnings potential in its interactive segment.
- ESPN holds an option to appoint a member to the PENN Entertainment board after the deal’s third year or a non-voting observer at any time.
Jay Snowden, PENN CEO and president, called the deal “another major milestone in Penn’s evolution from a pure-play U.S. regional gaming operator to a North American entertainment leader.”
