Penn Entertainment launches ESPN Bet in 17 states
Shares of Penn Entertainment (PENN) closed higher Tuesday after the company launched ESPN Bet, a rebranding of an existing sports-betting app owned by Penn Entertainment, in 17 states after dropping Barstool Sportsbook. According to the AP, Penn will pay $1.5 billion over the next 10 years for exclusive rights to the ESPN name.
According to Disney (DIS): "ESPN BET will become ESPN’s exclusive sportsbook, and PENN Entertainment will receive odds attribution, promotional services inclusive of digital product integrations, traditional media and content integrations, and ESPN talent access, among other services."
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Video Transcript
JOSH SCHAFER: I want to take a look at shares of Penn Entertainment. Penn launching ESPN Bet today. That was a partnership we had talked about going back to August. Penn dropped Barstool Sportsbook, partnered up with Disney. Shares were up today. I think about-- they closed up about a little over 3%. But really, this is the deal we had talked about over a $2 billion deal with ESPN for Penn to use ESPN'S brand for the first time in sports gambling.
It's legal in states that Penn previously had licensing in, so not New York. But states like New Jersey, Pennsylvania, you're now going to see ESPN Bet. But that's really all you're seeing, I think. And that's sort of the big takeaway for me from today is, yes, they can now use the ESPN brand to leverage their sports book, but there's not a lot new that comes with the book, at least as of today.
PRAS SUBRAMANIAN: Right. And I think they're going to need that. And just looking at some numbers for Fanduel and Draftkings combined, 70% of the market. Include MGM and Caesars, that's 90. So they're only at 2% right now, Barstool. So in order to get that-- at least get that 10%, they've got to leverage that ESPN name. Maybe that comes with the on-- sort of on-programming branding and the little bugs they can run with that, with promoting the product. I mean, they're going to need that if we're going to-- they need to get at least double-digits here to compete with Fanduel and Draftkings, that are sort of just dominating, right?
ALEXANDRA CANAL: Yeah, we know how adamant Bob iger is to make ESPN-- it's a big focus for the company. And if you think about taking ESPN direct to consumer, there's a lot of possibilities that could potentially happen with ESPN Bet. Also worth noting that tonight is the Netflix Cup, that live golf tournament that they've been talking about.
JOSH SCHAFER: No one's betting on it.
ALEXANDRA CANAL: No one's betting on that.
JOSH SCHAFER: No one's watching it.
ALEXANDRA CANAL: But you are seeing a lot of these media companies really lean into sports as of late.
