Disney and PENN Entertainment Team Up to Launch ESPN Bet
Disney PENN & ESPN Bet
Penn Entertainment (Nasdaq: PENN) has rebranded its online sportsbook with a 10-year, $2 billion licensing deal with ESPN. The new look mobile app and website launches today, November 14th, and is available in 17 states including Arizona, Colorado, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. The state of Nevada is noticeably absent due to the state’s requirement for in person registration at a participating casino and ties to some of the biggest brands on the Las Vegas strip such as MGM, Caesars, and Wynn, each with their own sports betting apps.
ESPN Bet is a bold endeavor for PENN to gain market share from industry leaders DraftKings (39%) and FanDuel (31%). PENN currently has only 2% of the legalized online betting in the U.S. but believes licensing the ESPN brand will allow it to reach its 20% market share target by 2027. It’s been a rough 2023 for PENN in the gambling space. Earlier this year, PENN acquired the remaining 64% stake in Barstool Sports for $405 million. PENN purchased a minority 36% stake in the Barstool in 2020 for $163 million. However, the acquisition of Barstool in February turned negative quickly as PENN was denied gaming licenses attributed to the controversial and polarizing content and personalities of Barstool Sports. As a result, PENN was compelled to sell Barstool back to founder Dave Portnoy for $1.00 in August, just months after the acquisition of the company. PENN reported a loss of disposal of Barstool in the amount of $923 million in its latest 10-Q, which included $715 million of goodwill and intangible write offs. The sale back to Portnoy included the right to 50% of any future sale of Barstool; although, Mr. Portnoy claims he will ‘never’ sell the company again.
ESPN is diving deeper into the world of sports betting after strategically incorporating more betting odds and information into its broadcast content in recent years. The ‘worldwide leader in sports’ rebranded its Daily Wager show to ESPN Bet Live in September and moved its studio to ESPN headquarters in Bristol, Connecticut after three years at the LINQ Hotel on the Las Vegas strip. The LINQ residency was a partnership between Caesars Entertainment (owner of the LINQ) and ESPN. Now that ESPN has joined forces with PENN, it was time for a split and change of venue.
Although there are concerns about ESPN’s sports broadcasting rights and its new venture into sports betting, the Disney owned company has placed wagering restrictions on select employees that could learn inside information as part of their coverage. The increasing commercial interest in U.S. sports betting is a result of the Supreme Court overturning the Professional and Amateur Sports Protection Act (PASPA) in 2018. The PASPA previously prohibited sports betting outside of the state of Nevada. Earlier this month, DraftKings reported revenue for the third quarter increased 57% to $790 million. Online sports betting revenue in the U.S. is expected to reach $7.6 billion in 2023 with projections to increase to $14.4 billion by 2027.