ESPN has signed a licensing deal with Penn Entertainment to create ESPN BET, a sportsbook for audiences in the United States.
Penn will rebrand its current sportsbook to ESPN BET later this fall in the 16 states where it is licensed. The rebrand will include a mobile app, website, mobile website and mutually agreed upon retail locations.
Penn agreed to pay ESPN $1.5 billion in cash over 10 years, as well as grant ESPN $500 million of warrants to purchase approximately 31.8 million common shares of Penn. There are options to receive bonus warrants depending on the performance of ESPN BET.
The partnership is ESPN's latest foray into sports gaming. The company has daily multiplatform betting-focused shows, runs odds on its website and TV programs and has covered the gaming industry on its website and social channels for years.
The rebranded offering will be ESPN's exclusive sportsbook and will be part of ESPN's programming and content integrations starting in the fall. Audiences will be able to place bets through ESPN's digital products.
"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," ESPN chairman Jimmy Pitaro said. "The strategy here is simple: to give fans what they've been requesting and expecting from ESPN."
Pitaro, who made the announcement along with Penn Entertainment chief executive officer Jay Snowden, said he expects to use each company's respective strengths "to create the type of experience that existing and new bettors will expect from both companies."
Penn currently has licenses to run online sportsbooks in 16 states -- Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Louisiana, Massachusetts, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia.
Nationwide, the American Gaming Association estimated that $93.2 billion was bet at sportsbooks during the 2022 calendar year -- 63% higher than in 2021. Legal sportsbook revenue was $7.5 billion in 2022, according to the AGA.
Last November, Pitaro had said that the company would likely partner with an existing sportsbook rather than create one of its own. He said that the decision would be one that works for ESPN as well as the Walt Disney Company as a whole.
ESPN will continue to cover the sports betting space through its news and information outlets. The company has also committed to developing an ESPN committee of responsible gaming, to implementing responsible marketing policies and guidelines to safeguard fans, and to working with industry experts on best practices for responsible gaming programming.