ESPN is finally wading into the sports betting market following a groundbreaking deal with PENN Entertainment announced today.
PENN has secured the rights to use the ESPN name for an online sports betting product for 10 years, and is reportedly planning to rebrand its Barstool Sportsbook app as ESPN Bet, according to a press release from PENN today. Barstool is currently one of the 11 online sportsbooks in Maryland.
As part of the industry-shaking deal, PENN will pay $1.5 billion to ESPN paid over the ten-year term. It will also grant ESPN approximately half a billion shares of PENN, currently valued at $31.8 million. Terms of the deal also enable ESPN to earn as much as 6.4 million more shares of PENN in the future. That means the deal could be worth as much as $2 billion to ESPN eventually.
Upon ESPN BET Sportsbook Maryland meeting certain U.S. OSB market share performance thresholds, ESPN could receive bonus warrants to purchase up to an additional approximately 6.4 million PENN common shares.
ESPN Bet provides PENN with massive name in sports
PENN announced that a 9 a.m. event, which will be streamed, will be held on Wednesday morning to reveal more about the partnership with ESPN.
“Our agreement with ESPN will provide us access to the largest ecosystem in sports, with 105 million+ monthly unique digital visitors, an audience of more than 370 million across social platforms, 25 million ESPN+ subscribers, and the nation’s #1 fantasy database,” PENN said in their press release.
As part of the decision to partner with ESPN, PENN announced it is selling back the Barstool brand to founder Dave Portnoy. That would seemingly allow Portnoy to use the name for content, merchandise, and other ventures. But the Barstool mobile betting app currently operated by PENN would be renamed with ESPN branding. It will go into affect in the Fall of 2023.
ESPN’s Daily Fantasy product is the largest in North America, based on subscribers. ESPN also has the ESPN Club and ESPN Grill at Disney venues. The brand has been synonymous with sports and entertainment since its inception in 1979.
Effectively, this deal will allow PENN to replace Barstool Sportsbook with an ESPN sports betting app, trading out a niche brand for arguably the most recognized sports news and content brand in North America.
Barstool Sportsbook was operating in 16 states
Barstool is currently available in Maryland and 15 other states. The betting app has proven popular with younger sports bettors, profiting from its roots as a sports brand aimed at male college students and sports fans. It was founded as a brand by Portnoy in Boston in 2003.
Since the U.S. Supreme Court issued a ruling in 2018 that cleared the way for legal sports betting across the country, there has been speculation as to whether a well-known sports brand like ESPN would venture into the market. The company, which is owned by Disney, has resisted until now. In recent months, ESPN has laid off a large portion of its top-name on-air personalities, in what has been described as an effort to survive sinking subscription rates as Americans cut the cord from cable television.
An ESPN branded betting app, one with a stable, well-tested platform from its new partner, could push PENN into a position to challenge DraftKings and FanDuel, the leaders in the industry. In some states, FanDuel and DraftKings combine for more than 60 percent of the market share based on total handle.
The online sports betting industry is also keen to see how Fanatics Sportsbook will fare as it plans entry into several markets in 2023. A potential ESPN-branded betting app and sports wagering website could have a ripple effect in the industry.
