PENN Entertainment Partners with ESPN for U.S. Online Sports Betting Agreement

PENN Entertainment, Inc. has entered into an online sports betting (OSB) agreement in the U.S. with ESPN, Inc. and ESPN Enterprises, Inc. Details of this partnership, alongside PENN’s Q2 2023 financial results, are set to be discussed in a conference call and webcast at 9:00 a.m. ET tomorrow. The full details of the agreement are available on the Company’s website.

Under the terms of the agreement, PENN will have a 10-year right to the ESPN Bet trademark for OSB within the U.S., with the potential to extend this arrangement for an additional decade. In terms of branding, the online platform known as Barstool Sportsbook is set to be renamed ESPN Bet in the Fall of 2023. Despite this change in the U.S., theScore Bet will continue its standard operations in Canada.

ESPN Bet, which will fall under the management of PENN Interactive, will utilize promotional services across various ESPN platforms. This includes access to ESPN’s programming and talent.

From a financial perspective, PENN will make cash payments to ESPN amounting to US$1.5 bn (£1.17 bn/€1.37 bn) over the initial ten years of the agreement. In addition to this, ESPN is slated to receive warrants for the purchase of approximately 31.8 million PENN common shares. If certain performance criteria are met, ESPN could be eligible for additional warrants.

Three years into their agreement, ESPN will have the option to nominate a representative for PENN’s board, subject to the fulfilment of certain regulatory and ownership conditions.

Additionally, PENN is anticipating the launch of a new app that will provide a Hollywood-branded iCasino product, but this will depend on specific state permissions.

In a separate development, PENN has sold its shares in Barstool Sports, Inc. to its founder, David Portnoy. This sale includes certain agreements on non-compete provisions. If Portnoy opts for a future sale or any form of monetization of Barstool, PENN has secured rights to claim a portion of the gross proceeds.

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 U.S. 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 U.S. 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 U.S. 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.

Published on:

Editorial Tags: