ESPN Strikes $1.5B Deal To Jump Into Sports Betting With Penn Entertainment

You’ve heard of ESPN, the sports media behemoth. Prepare for ESPN Bet, a rebranding of an existing sports-betting app owned by Penn Entertainment, which is paying $1.5 billion in addition to other considerations for exclusive rights to the ESPN name.

The agreement, announced on Tuesday, could propel Walt Disney Co.-owned the company into unknown territory. Disney is highly protective of its family-friendly image, which is not normally connected with sports betting.

Penn will run ESPN Bet, which ESPN has pledged to market across its web and broadcast platforms to raise “maximum fan awareness” of the app. According to the firms, ESPN Bet will also have undisclosed “access” to ESPN personnel.

Penn’s rights to the companies brand will initially be valid for ten years but can be extended for another ten years by mutual agreement. In addition to the $1.5 billion licensing contract, paid out over a decade, Penn will grant ESPN $500 million in rights to purchase Penn shares.

“With ESPN Bet, Penn Entertainment is the ideal partner to create an unrivalled user experience,” ESPN chairman Jimmy Pitaro said in a statement.

Prepare for ESPN Bet, a rebranding of an existing sports-betting app owned by Penn Entertainment, which is paying $1.5 billion.

In the past, Disney has struggled with the issue of adult-oriented entertainment. Until roughly 15 years ago, the Walt Disney World park in Orlando, Florida, had a gated late-night enclave called Pleasure Island — a reference to the 1940 film “Pinocchio,” in which the characters visited a den of iniquity by that name. In addition to restaurants, shops, and a nightly countdown to “New Year’s Eve,” replete with fireworks, Pleasure Island offered pubs, music venues, and nightclubs.

When attendance declined, Disney closed the Pleasure Island nightclubs in 2008 and renovated the site into The Landing at Disney Springs, a restaurant and shopping center.

ESPN also stated that it would use its platforms “to educate sports fans on responsible gaming,” such as by continuing to cover the sports betting industry with “journalistic integrity,” establishing a “responsible gaming” committee within the company, and developing marketing guidelines that “safeguard” fans.

Penn also announced the sale of Barstool Sports, an irreverent sports media website, to its creator, Dave Portnoy. Penn purchased a 36% ownership in Barstool Sports in February 2020 for around $163 million and the majority of the company in February 2023 for approximately $388 million. Penn or Portnoy did not disclose the parameters of the divestment agreement.

In a video released on X, the site formerly known as Twitter, Portnoy exuded joy about the site’s re-emergence. He said the regulated gambling business “was probably not the best place for Barstool Sports and the kind of content we make.” Portnoy went on to say that he would “never” sell the company. Penn would receive 50% of the total earnings from any future sale or “monetization” of Barstool as part of the divestiture agreement.

SOURCE – (AP)