Disney’s ESPN is diving deeper into the booming industry of sports gambling by introducing its own sports betting platform.
In collaboration with U.S. casino owners Penn Entertainment, ESPN is set to rebrand and unveil its sportsbook as “ESPN Bet.” This marks a pioneering venture where the ESPN label will be prominently displayed on a sports betting platform. This autumn will witness “ESPN Bet” taking the reins from Penn’s “Barstool Sportsbook” across the 16 states where betting is sanctioned.
ESPN has entered an agreement with @PENNEntertain to launch ESPN BET, a branded sportsbook in the U.S.
ESPN BET will be available for fans this fall
Details: https://t.co/evaUbfn5Nh pic.twitter.com/UqIkME4Lyk
— ESPN PR (@ESPNPR) August 8, 2023
ESPN’s search for a partner in this niche had been underway for a few years now. Previous CEO Bob Chapek had emphasized that ESPN’s strategy wouldn’t entail direct betting but would favor a collaborative approach with a gambling entity. The collaboration promises a fresh revenue influx for ESPN, a much-needed boost considering the declining trajectory of traditional TV due to cord-cutting. Concurrently, this strategic move positions Disney to consolidate finances, particularly as they cope with the streaming unit’s financial drain.
Recent insights from Disney CEO Bob Iger indicated the company’s inclination to collaborate with a strategic ally and potentially divest its cable-TV assets.Tuesday’s revelation highlighted the exclusivity Penn secures to the “ESPN Bet” brand in the U.S. for a decade, a tenure extendable by another decade upon mutual consensus.
Disney will be looking to improve their financial returns with this move
Financial intricacies of the deal include Penn’s commitment to remit $1.5 billion to ESPN over the span of 10 years. Moreover, ESPN is slated to receive warrants valued at roughly $500 million, facilitating the purchase of approximately 31.8 million of Penn’s common shares within the same timeframe.
Additionally, ESPN is poised to nominate a non-voting observer to Penn’s directorial board, with an option after a three-year interval to elect a board member, subject to specific regulatory nods and an ownership benchmark.
Penn parts ways with Barstool Sports
Interestingly, Penn will be transferring its Barstool stakes back to its founder, David Portnoy. This follows Penn’s full acquisition of Barstool earlier in February for a whopping $388 million.
As the agreement unfolds, Penn is entitled to half the gross earnings from any future monetization efforts of Barstool initiated by Portnoy.
With the sports gambling fever taking over the United States in the last few years, this seems like a clear win for ESPN and Disney.
