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In a major sports betting move, ESPN has cut a $2 billion deal with casino owner Penn Entertainment to launch ESPN Bet, a branded sportsbook.

ESPN Bet will launch this fall in the 16 states where Penn has sports betting licenses. It will replace the Barstool Sportsbook.

Penn is paying ESPN $1.5 billion in cash over the 10-year term, with another $500 million in warrants that will vest over the term “in exchange for media, marketing services, brand and other rights provided by ESPN.”

According to the terms of the deal, Penn will get the rights to the ESPN brand (for betting purposes) for 10 years, with the option to extend for another 10 years with mutual agreement. ESPN programs will promote the service, with some ESPN talent being involved as well. ESPN will also be able to designate a Penn board member after three years.

In connection with the deal, Penn will sell Barstool Sports, which it acquired in 2020. Barstool founder Dave Portnoy is the buyer of the brand, and there is a non-compete clause among other restrictive covenants. Penn will also “receive 50% of the gross proceeds” if there is a subsequent sale of Barstool.

“Our primary focus is always to serve sports fans and we know they want both betting content and the ability to place bets with less friction from within our products,” stated Jimmy Pitaro, chairman of ESPN. “The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN. PENN Entertainment is the perfect partner to build an unmatched user experience for sports betting with ESPN Bet.”

“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,” Jay Snowden, Penn’s CEO, added. “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.”

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