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Penn Entertainment’s Barstool Sportsbook is Now ESPN Bet

by Dave Schwab - 8/21/2023

Tennessee Titans football

Earlier in August of this year, regional gaming company Penn Entertainment and Disney’s ESPN reached an agreement to convert all existing Barstool Sportsbook retail and online sports betting properties into ESPN Bet. The arrangement between Penn Entertainment and ESPN is scheduled to last the next 10 years, and ESPN Bet has an immediate brand to built from with Barstool Sportsbook. Penn’s retail and online sports betting operations is in sixteen states as Barstool Sportsbook. ESPN Bet will rebrand the various sports betting properties later this fall.

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Penn Entertainment CEO and President Jay Snowden recently commented of the agreement:

“This transformative, exclusive agreement with ESPN marks another major milestone in PENN’s evolution from a pure-play US regional gaming operator to a North American entertainment leader. ESPN Bet will be deeply integrated with ESPN’s broad editorial, content, digital and linear product,  and sports programming ecosystem. ESPN Bet will also benefit from PENN’s operational experience, extensive market access, and proprietary technology platform, which successfully debuted in the US this July.”

ESPN had been in talks with other major US sportsbook operators including DraftKings, but Penn Entertainment’s association with Barstool Sportsbook was a right fit.

Penn Entertainment’s Deal with ESPN

As part of the agreement, Penn Entertainment will pay ESPN $1.5 billion for exclusive rights for the ESPN Bet brand. The original agreement would last 10 years with the option for extend the deal for another 10 years. ESPN also reportedly gets about $500 million of warrants to buy 31.8 million shares of Penn common shares.

There are predetermined market share performance thresholds for ESPN to get additional bonus warrants for Penn’s shares and the sports media company has the option to put one non-voting observer on the Penn Entertainment board.

Penn would become a partner with ESPN Bet to diversify the overall platform led by parent-company Disney and ESPN. In return for its investment, Penn Entertainment will get immense ESPN media and marketing services as well as the rights to the ESPN Bet brand itself.

CEO and President Snowden added:

“Our agreement with ESPN will provide us access to the largest ecosystem in sports, with over 105 million monthly unique digital visitors, an audience of more than 370 million across social platforms, 25 million-plus ESPN subscribers, and the nation’s top fantasy database.

PENN’s ability to leverage the leading sports media brands in both the US and Canada with ESPN and theScore, combined with our newly launched sports betting app, will allow us to significantly expand our digital footprint and catapult ESPN Bet into a strong podium position in this space. We believe we can achieve substantial adjusted EBITDA in our Interactive Segment over the coming years – and this will translate to very strong free cash flow generation for the Company and value creation for our shareholders.”

Penn Entertainment and Barstool Sportsbook

Penn Entertainment previously bought out Barstool Sportsbook from David Portnoy as owner of Barstool Sports. ESPN will retain 50% of the gain in profits if and when Portnoy decides to sell the Barstool brand. Penn Entertainment’s sportsbook property is an immediate fit with ESPN Bet as far as partnering with ESPN.

Snowden recently commented on the issue of Barstool Sportsbook:

“In connection with the transaction, we are selling Barstool back to founder David Portnoy. Barstool has been a great partner and we are thankful to Dave Portnoy, Erika Ayers, Dan Katz, and their team for helping to rapidly scale our digital footprint across 16 jurisdictions in the US and introducing their audience to our retail and digital products. The divestiture allows Barstool to return to its roots of providing unique and authentic content to its loyal audience without the restrictions associated with a publicly traded, licensed gaming company.”

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