ESPN and PENN Entertainment say they are teaming up on a new sports betting product.
The sportsbook, called ESPN BET, will launch in more than a dozen states where sports betting is legal and where PENN is licensed to operate. PENN will pay ESPN around $1.5 billion over 10 years as part of the deal, and has granted ESPN the option to purchase up to 31.8 million shares worth over $500 million, Yahoo Finance reported.
“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,” Jimmy Pitaro, the chairman of ESPN, said in a statement. “The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN. PENN Entertainment is the perfect partner to build an unmatched user experience for sports betting with ESPN BET.”
The announcement came one day before ESPN’s majority owner, the Walt Disney Company, was set to disclose its second quarter financial earnings. Early media reports indicated Disney was exploring various sports betting partnerships involving ESPN.
Executives at ESPN said they will use their television and digital platforms to “educate sports fans on responsible gaming,” and that the brand’s editorial team will continue covering the sports betting industry with “high standard(s) of journalistic integrity.”
In a related move, PENN said it was selling its digital media company Barstool Sports back to Dave Portnoy, who launched the brand as a weblog in 2003. Portnoy sold a minority stake in Barstool Sports to PENN for $163 million in 2019, and sold the remainder of the company earlier this year for $388 million.
On Tuesday, Portnoy said the Barstool Sports brand did not mesh well with the heavily-regulated sports betting industry.
“Every time we did something it was one step forward, two steps back,” Portnoy said, blaming so-called “hit pieces” from major news outlets like the New York Times and Business Insider for the bulk of the turbulence.
“So the regulated industry probably isn’t the best place for Barstool Sports and type of content we make,” he said.