An initial 10-year deal between Penn Entertainment and ESPN will see Penn’s Barstool Sportsbook rebranded to ESPN Bet later this year.
Penn has secured the rights to the ESPN Bet trademark in the partnership, which will see Penn pay US$1.5bn in cash payments to ESPN over the initial 10-year term, which can be extended by mutual agreement.
Penn said its estimations are that the move will provide between $500m and $1bn of annual long-term adjusted EBITDA potential in its Interactive segment.
Jay Snowden, CEO and President of Penn, said the ESPN deal is another milestone in the company’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,” he added. “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.”
Penn has also granted ESPN approximately $500m of warrants to purchase around 31.8 million shares in Penn, in exchange for media, marketing services, brand other rights provided by ESPN.
Penn has also sold 100 per cent of the Barstool common stock to David Portnoy in exchange for certain non-compete and other restrictive covenants. Penn, it said, "also has the right to receive 50 per cent of the gross proceeds received by David Portnoy in any subsequent sale or other monetization event of Barstool."
Jimmy Pitaro, chairman of ESPN, said Penn is 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.”
