PENN Partners with ESPN for ESPN Bet, Sells Barstool to Dave Portnoy

PENN Entertainment is partnering with ESPN in a $2 billion project to create a new sportsbook called ESPN Bet, per a Tuesday reveal.

ESPN, the American leader in worldwide sports coverage, will now be in charge of creating betting lines for a variety of sports events. Other top online sportsbooks will still have the opportunity to advertise their platforms on ESPN despite the new deal. 

As part of a non-compete clause, PENN also sold Barstool sportsbook—which it acquired in part and then later in full—back to founder Dave Portnoy.

ESPN will receive $1.5 billion cash and $500 in warrants over 10 years as part of its agreement to lend PENN the use of its name. Disney, ESPN’s parent company, has long been rumored as holding an interest in joining the world of legal sports betting, but company officials have also maintained that it would never make such a move.

“With ESPN you're talking about a brand that everybody in the world knows about,” said PENN CEO Jay Snowden said on an earnings call Wednesday. “It's not an old brand. It's not a young brand. It's an everything brand. There's a lot of affinity for that brand. And so we think that's going to be extremely complementary to what we've built over the course of the last three years.” 

ESPN plans to integrate its content and programming into its new sports betting platforms, which will include a website, mobile app, and online sportsbook. PENN will rebrand its sportsbooks in 16 states to the ESPN theme later in the fall. 

PENN will also receive access to ESPN talent, promotions, and media to bolster its offerings to fans and sports bettors. 

"The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN,” said ESPN Chairman Jimmy Pitaro. “PENN Entertainment is the perfect partner to build an unmatched user experience for sports betting with ESPN BET."

PENN purchased 36% of Barstool for $163 million in 2019 and the remainder for $388 million earlier this year. The sale to Portnoy was for an undisclosed amount, though the company has the right to receive up to 50% of the proceeds should he sell any or all of the company again.

The domino of ESPN joining the world of sports betting is arguably the most pivotal development in the industry since the 2018 decision in federal court to legalize the practice nationally.

Because of ESPN’s massive audience and dominance of sports events, network shows, and exclusive content, it will have unmatched access to every corner of the sports world and a customer base ready to tap into. 

Other major sportsbooks such as FanDuel and DraftKings have also used ESPN to advertise their platform with live reads of betting odds, featured segments during pregame shows, and more. Although they will still have the opportunity to utilize ESPN’s platform, they will be competing against odds from ESPN Bet. 

PENN’s stock soared 14% by opening Wednesday morning following the announcement. Meanwhile, DraftKings stock fell 10% by closing Tuesday, and other top operators such as BetMGM and Caesars also declined. 

Disney is slated to report its earnings after closing Wednesday. 

Portnoy said on X (formerly Twitter) that now that he is back in control of Barstool, he won’t let it go “until [he] die[s].”

Portnoy and PENN had ambitions to make Barstool one of the top sportsbooks in the industry but struggled to gain traction.

“We got denied licenses because of me, you name it,” said Portnoy. “So the regulated industry probably [is not] the best place for Barstool Sports and the type of content we make."