Penn Entertainment disclosed its third quarter trading update, reporting an overall revenue of $1.62 billion. In the report, the entertainment giant revealed it will be launching ESPN Bet on Nov. 14.
The launch of the sportsbook is in line with Penn Entertainment’s $1.5 billion collaboration with ESPN, the largest sports media brand in the United States. This strategic alliance, revealed in August, marked Penn’s expectation of ESPN taking over its Barstool Sports division and potentially contributing around $1 billion to its long-term adjusted EBITDA.
Following the ESPN partnership, the Barstool Sportsbook is currently undergoing a comprehensive rebranding effort and will be officially rebranded as “ESPN Bet.” Meanwhile, Penn’s other asset, theScore, will maintain its operations in Canada without any changes.
Penn holds betting licenses in a total of 17 states, spanning Ohio, New Jersey, Massachusetts, Pennsylvania, Illinois, Arizona, Indiana, Maryland, Colorado, Michigan, Iowa, Tennessee, Virginia, Kansas, Louisiana, West Virginia, Maryland, and Kentucky. With the upcoming launch, the sportsbook will become accessible to bettors in all 17 of these states.
Penn Chief Executive Officer, Jay Snowden commented on the new development:
“We are excited to announce that we plan to simultaneously launch ESPN Bet across the 17 states in which we operate online sports betting, subject to final approvals.
“This strategic alliance is expected to further expand our digital ecosystem and drive re-engagement with the millions of customers in our digital and retail databases, leading to compelling cross-sell opportunities.”
As part of this strategic partnership, Penn Entertainment secures an exclusive 10-year license to utilize the “ESPN Bet” name within the United States. In exchange, the Disney-owned ESPN will receive a cash payment of $1.5 billion, disbursed over the decade-long agreement. Furthermore, ESPN will also be granted warrants worth $500 million, enabling them to acquire approximately 31.8 million shares of Penn Entertainment.
Should ESPN Bet prove successful, the media company may become eligible for bonus warrants. This development is in line with Penn Entertainment’s firm commitment to securing a 20% market share within the rapidly growing online sports betting industry in the United States.
ESPN to Market the Sportsbook to its Large Audience
Leveraging its vast audience of 200 million across both linear and digital platforms, ESPN aims to seamlessly incorporate the sportsbook, incorporating real-time betting odds into their programming. In addition, the advertising campaign for the sportsbook will be spearheaded by ESPN hosts Elle Duncan and Scott Van Pelt.
In the coming months, Penn Entertainment is set to further enhance its platform and media integration with ESPN. The entertainment company has unveiled its ambitious goal of captivating sports enthusiasts nationwide by offering an integrated experience that seamlessly combines sports betting with media.
ESPN commands a staggering digital presence, attracting more than 105 million unique monthly visitors to its online platform. With an impressive social media following that extends to 370 million accounts, as well as a substantial subscriber base of 25 million on its ESPN+ streaming platform, the brand holds the title of the largest sports brand on TikTok, where it boasts an impressive 41 million followers.
In the wake of the ESPN agreement, Penn Entertainment sold the entire stake in Barstool, consisting of 100% of outstanding shares, to the brand’s founder, David Portnoy, for the symbolic sum of $1. This deal also encompassed non-compete clauses and various other restrictive agreements. Penn Entertainment, however, retained a significant stake in the brand’s future success, maintaining rights to receive 50% of the gross proceeds from any future sale or monetization related to the Barstool brand.