Sports outlet ESPN has revealed plans to enter the sports betting industry with the launch of its own sportsbook, ESPN Bet. The company has entered into a $1.5 billion agreement with PENN Entertainment, which will see the rebranding of PENN Entertainment’s Barstool Sportsbook as ESPN Bet. The sportsbook will be accessible through ESPN’s mobile app and website, allowing fans to place bets directly through the platform. ESPN aims to solidify its position in the rapidly growing sports betting arena with this blockbuster deal.
According to a report by Forbes.com, ESPN has agreed to pay PENN Entertainment $1.5 billion in cash payments over the next decade. In return, PENN Entertainment will grant ESPN $500 million in warrants to purchase approximately 31.8 million common shares of PENN. This partnership will strengthen ESPN’s presence in the sports betting market and open up new revenue streams for the company.
Expansion into Sports Betting
This latest move marks ESPN’s continued expansion into the sports betting industry. In recent years, the company has introduced betting-themed shows and integrated betting odds on its website. ESPN has identified the potential of this market and is now venturing into sports betting with its own sportsbook.
ESPN’s parent company, Disney, expressed its interest in entering the gambling industry last September. However, Disney stated that it had no intention of creating its own sportsbook. Bob Chapek, the former CEO of Disney, stated, “that’s never in the cards for the Walt Disney Company.” Hence, striking a partnership with PENN Entertainment became the ideal solution for ESPN to venture into the world of sports betting.
PENN Entertainment’s Acquisition and Sale
PENN Entertainment initially acquired a 36% stake in Barstool Sports, founded by Dave Portnoy, in a $163 million deal in 2019. In February 2021, PENN Entertainment acquired the remaining shares of Barstool Sports for $388 million, gaining full control of the New York-based sports outlet. However, as part of the deal with ESPN, PENN has agreed to sell the entire Barstool Sports brand back to its founder, Dave Portnoy, thereby severing ties with the controversial sports outlet.
Portnoy, in a video released on Twitter, expressed frustration with operating Barstool Sports in the regulated gambling industry. He mentioned the challenges of dealing with gambling regulators and negative media coverage affecting the company’s stock prices. Despite the difficulties, Portnoy remains positive about the future of Barstool Sports and its content.
Financial Impact
Following the announcement of ESPN Bet, PENN’s stock surged over 21% in after-hours trading, reaching a three-month high of just over $30. Additionally, shares of Disney increased by nearly 0.5% in after-hours trading, reaching $88.13. These positive responses from the stock market indicate investors’ confidence in the sports betting partnership and its potential for both companies.
ESPN’s Reshuffling
ESPN has recently undergone a significant reshuffling, which included the layoffs of approximately 20 on-camera employees. Prominent hosts and commentators such as Jeff Van Gundy, Jalen Rose, Suzy Kolber, and Steve Young were among those affected by the wave of layoffs. This restructuring is part of ESPN’s ongoing efforts to adapt to changing market dynamics and optimize its operations.
- ESPN announces plans to enter the sports betting market with the launch of ESPN Bet, a rebranded version of PENN Entertainment’s Barstool Sportsbook.
- The agreement between ESPN and PENN Entertainment involves a $1.5 billion cash payment from ESPN over the next decade.
- PENN Entertainment will provide $500 million in warrants to purchase common shares of PENN to ESPN.
- The partnership allows ESPN to strengthen its position in the sports betting industry and tap into new revenue streams.
- PENN Entertainment has sold the entire Barstool Sports brand back to its founder, Dave Portnoy.
- The announcement of ESPN Bet has had a positive impact on the stock prices of both PENN and Disney.
- ESPN has recently undergone a major reshuffling, resulting in the layoffs of several on-camera employees.
Credit: forbes.com
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