Penn has secured a decade-long exclusive right to the ESPN Bet trademark, with the possibility of extending it for an additional decade.
The wagering service will be supported by ESPN’s roster of talent.
According to Penn CEO and president Jay Snowden, ESPN Bet will be “deeply integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem.”
Commenting on the deal, ESPN chairman Jimmy Pitaro said: “After meeting with Jay and the Penn team, it was clear that they were the right long-term strategic partner to build ESPN Bet into a leading US sports betting platform.
“We are confident that the combination of our unparalleled audience along with Penn’s operational expertise and state-of-the-art technology provides us with a tremendous opportunity to serve the ever-growing number of consumers interested in betting.”
Transaction details
Over the next 10 years, Penn will provide ESPN with cash payments totalling $1.5bn, in addition to bestowing around $500m worth of its own shares.
After a three-year period, ESPN will also have the right to nominate a board member for Penn.
Both parties reserve the right to terminate the agreement if the US online sports betting market share is below a certain threshold after three years.
In order to extricate itself from certain “non-compete and other restrictive agreements” with Barstool, Penn sold all of its common stock in Barstool to the founder of the sports site, David Portnoy.
“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,” Snowden added.
In an emergency press conference broadcasted on X (previously known as Twitter), Portnoy expressed that he now possesses full ownership of Barstool Sports for the first time in a decade.
He also noted the challenges posed by regulatory bodies in the realm of gambling.
“The regulated industry is probably not the best place for Barstool Sports and the type of content we make,” Portnoy said. “Penn was able to broker an unbelievable deal with ESPN,” he added.
Penn has also stipulated that if Portnoy chooses to sell Barstool, it retains the right to receive 50% of the total revenue.
“By the way, I am never going to sell Barstool Sports ever. I’ll hold it till I die,” Portnoy asserted.
Unparalleled access
Penn concluded its acquisition of Barstool in February, having initially obtained a 36% stake in Barstool Sports in 2020.
“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,” Snowden stated.
Concluding his remarks, Snowden emphasised: “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 currently has licences to operate in Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Louisiana, Massachusetts, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia.
