Penn Entertainment has caused a stir in the US online sports betting market as it announced a $1.5bn deal to form ESPN Bet, ditching its Barstool Sportsbook product in the process.
It has been reported that as a result of the deal, PENN Entertainment has taken a half a billion dollar hit on Barstool after detailing an intention to rebrand its sportsbook offerings to ESPN Bet during the coming autumn.
The firm has cut all ties with Barstool Sports, which it finalized the acquisition of in February. It has given all ownership of Barstool Sports back to founder Dave Portnoy.
The newly formed partnership means that PENN has landed an exclusive right to the ESPN Bet trademark in the US for an initial 10-year term, which may also be extended for an additional decade upon mutual agreement. PENN will pay ESPON $1.5bn across the decade relationship.
Jimmy Pitaro, Chair of ESPN, commented: “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 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.”
The deal means that Barstool will be back in the full ownership of Founder David Portnoy – with the condition of a non-compete restriction attached.
Portnoy posted on Twitter about the sale, but did not mention the ESPN facet of the deal. He stated: “We underestimated just how tough it is for myself and Barstool to operate in a regulated world.”
Jay Snowden, Chief Executive Officer and President of PENN, said of the sale: “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 US 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.”
Insider Sport Insight: Whilst the Barstool venture will have left PENN’s wallets feeling light in the pockets, a move for ESPN Bet can be a long term success for the group given the heritage of the ESPN brand name. Meanwhile, for Barstool, the deal represents a return to the roots and the group can continue to make the content that led to its growth.
