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US – PENN and ESPN agree $1.5bn online sports betting partnership

By - 9 August 2023

PENN Entertainment has entered into a transformative, exclusive US online sports betting agreement with ESPN and ESPN Enterprises giving PENN exclusive rights to the number one US sports brand for an initial 10-year term for $1.5bn.

The online Barstool Sportsbook will be rebranded ESPN Bet in the fall of 2023; TheScore Bet will continue to operate in Canada.

ESPN Bet, operated by PENN Interactive, will benefit from exclusive promotional services across ESPN platforms including programming, content, and access to ESPN talent. PENN has agreed to make $1.5bn in cash payments to ESPN paid over the initial ten-year term and grant ESPN approximately $5001m of warrants to purchase approximately 31.8m PENN common shares that will vest ratably over 10 years, in exchange for media, marketing services, brand and other rights provided by ESPN

Powered by our new promotional engine, our new app will include a separate Hollywood-branded iCasino product in those states where permitted.

PENN Divests Barstool Sports to Founder David Portnoy: PENN sold 100 per cent of the Barstool Sports common stock to Founder David Portnoy in exchange for certain non-compete and other restrictive covenants. PENN 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

Jay Snowden, Chief Executive Officer and President of PENN, commented: “This transformative, exclusive agreement with ESPN marks another major milestone in PENN’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. 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.”

Jimmy Pitaro, Chairman of ESPN, 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 U.S. 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.”

Mr. Snowden continued: “In connection with the transaction, we are selling Barstool back to founder David Portnoy. Barstool has been a great partner and we are thankful to Dave Portnoy, Erika Ayers, Dan Katz and their team for helping to rapidly scale our digital footprint across 16 jurisdictions in the U.S. and introducing their audience to our retail and digital products. 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.”

“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. PENN’s ability to leverage the leading sports media brands in both the US and Canada with ESPN and theScore, combined with our newly launched sports betting app, will allow us to significantly expand our digital footprint and catapult ESPN Bet into a strong podium position in this space. 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,” concluded Mr. Snowden.

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