Penn Entertainment made a big move this week signing a $1.5 billion deal with ESPN and dumping its relationship with Barstool Sports entirely. It’s a move that brings a major media player to the regulated US sports betting market, while sending another media player to the bench; probably forever.
Penn’s big move has two parts, dumping Barstool Sports and picking up ESPN. On the Barstool Sports side of the deal, Penn Gaming is selling Barstool founder Dave Portnoy back the share of his company that Penn finished purchasing for $500 million earlier this year. Portnoy was happy to be out of the regulated sports betting space entirely telling the New York Post, “We underestimated just how tough it is for myself and Barstool to operate in a regulatory world where gambling regulators, the New York Times, Business Insider hit pieces f–king with the stock price. Every time we did something it was one step forward two steps back.”
On the ESPN side of the deal, Penn is paying the sports broadcaster $1.5 billion over 10 years to license the ESPN brand for a new sportsbook called ESPN BET. Penn is also granting ESPN the right to purchase another $500 million worth of Penn shares over ten years.
With licenses to operate in 16 states, Penn Gaming brings some real market weight into the deal. As THE name in sports broadcasting, ESPN brings considerable gravitas to the deal as well.
How ESPN will balance its interests in sports betting with its responsibilities as a broadcaster remains to be seen. The sport giant has long expressed an interest in getting into sports betting by partnering with an existing operator and this deal seems to fit the bill.
For his part, ESPN Chairman Jimmy Pitaro doesn’t think that his company’s foray into sports betting is something his audience really wants. “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,” ESPN chairman Jimmy Pitaro said. “The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN,” he said in a posting on ESPN.com.
So far there’s no word on when ESPN BET will launch, but it could be as soon as this fall, possibly in time for US football season.