Penn replaces its Barstool sportsbook, hoping ESPN is better positioned for sports betting
Making a trade… Casino owner Penn Entertainment made a deal with ESPN to launch an ESPN-branded sportsbook that’ll replace its Barstool one, which struggled to win market share. After buying Barstool in 2020 for $550M, Penn sold it back to its founder, Dave Portnoy, for $1 (well, there’s also a non-compete and other agreements). ESPN Bet is set to launch this fall in the 16 states where Penn has sports-betting licenses.
Hail Mary: As cord-cutting continues, ESPN parent Disney is seeking to revive ESPN’s revenue — and is even considering selling off the network if it can’t.
Over-under: Penn estimated its ESPN deal could make between $500M and $1B a year, though experts say sports betting is a low-margin biz.
2 teams dominate… FanDuel and DraftKings control an estimated 70% of the sports-betting market. The apps leveraged their fantasy-sports popularity and a blitz of marketing and sign-up offers to gain dominance. Lots of others are trying (slash tried) to break into the fast-growing biz — which after only being legal in 7 states in 2018 now rakes in $7.5B in 38 states + DC. Casino owners MGM and Caesars are a distant third and fourth, while Fox folded its sportsbook last month after failing to break through.
Barstool was under close scrutiny from regulators after Portnoy was accused of sexual misconduct last year. Portnoy said Barstool had been denied betting licenses because of him.
Reputation matters in a regulated industry… Portnoy said it’s “back to the pirate ship” for Barstool, suggesting he doesn’t have to be as careful about what he says and does now that he’s out of the highly regulated industry. Meanwhile, Penn’s new deal is with an established Disney subsidiary that cares about maintaining a family-friendly rep. Disney has so far been extra cautious in its strategy with entering the world of sports betting.