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ESPN, a division of Disney, will soon open a sportsbook platform, furthering its foray into the realm of gambling. ESPN and US gambling company Penn Entertainment have announced a partnership to rebrand and relaunch Penn Entertainment’s sportsbook as ESPN Bet.
This is the first time the ESPN name will appear on a sports betting website. Penn’s Barstool Sportsbook will be replaced by ESPN Bet, which will henceforth operate solely for ESPN. It will debut this fall in the 16 states where gambling is permitted.
For a while, ESPN had been hunting for a partner in the sports betting industry. Former Disney CEO Bob Chapek stated in the fall of last year that ESPN wants to collaborate with a gambling company even though it would never accept bets on its own.
As cord-cutting puts pressure on the traditional TV industry, the partnership gives ESPN an additional source of income. The agreement also enables Disney to bolster its cash position as it continues to lose money on its streaming business and plans to buy Comcast’s stake in Hulu early in the next year.
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Penn to Pay ESPN $1.5 Billion in 10-Year Deal
The corporation is seeking a strategic partner, and Disney CEO Bob Iger recently said on CNBC that the company is open to selling off its cable TV networks. The agreement, which was made public on Tuesday, grants Penn a 10-year exclusive license to use the ESPN Bet trademark in the US.
If both parties agree, that 10-year period may be extended. Penn will agree to pay ESPN $1.5 billion in cash over a ten-year period as part of the agreement. The arrangement also gives ESPN warrants worth $500 million that will vest over the same time period and can be used to purchase 31.8 million common shares of Penn.
Additionally, ESPN will have the choice to appoint one non-voting board observer to Penn’s board or, after three years, to appoint a board member who will be subject to certain regulatory approvals and a minimum ownership requirement.
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Source: www.cnbc.com
