The unexpected divorce between Penn National and Barstool created most of the buzz on Tuesday afternoon. But it’s Penn National’s next move that will raise plenty of eyebrows in and around Bristol.
Via Axios.com, Penn National will pay ESPN $1.5 billion over 10 years for the new arrangement, which will result in the various Barstool Sportsbooks being rebranded as ESPN BET.
ESPN also will receive $500 million in stock warrants over the next decade, for purchasing 31.8 million shares of Penn National.
It’s an enormous cash infusion for ESPN, coming on the heels of widespread layoffs of both on-air and behind-the-scenes employees.
The magnitude of the deal invites speculation as to how long it was in the works, and whether the dominos fell in a way that allowed the dust settle on the employee bloodletting before news emerged of annual payments of $150 million for a long-awaited gambling partnership for ESPN.
Axios.com also reports that the Penn National deal does not prohibit ESPN from selling ads to competitors like FanDuel and DraftKings, which will allow ESPN to generate even more revenue over the next decade from gambling companies that want to publicize its gambling products in and around the broadcasting of the events on which people gamble.
Whether the association gives Penn National the market share it craves remains to be seen. If it works, ESPN BET could become one of the top gambling platforms in the world. If it doesn’t, well, ESPN will still end up with an extra $1.5 billion over the next decade.
While the added cash won’t solve the more fundamental problems arising from the ongoing impact of cord-cutting on ESPN’s monthly revenue, it definitely won’t hurt the broader effort to bring in more money than it spends.
The relationship also highlights the various questions and concerns about the intersection gambling and sport, with ESPN now walking the line between massive partnerships with those that produce the sports on which betting occurs, and a company that hopes to facilitate more and more (and more) betting by the general public.
In an industry largely devoid of federal regulation, moves like this will do nothing to slow the momentum toward a broader effort to ensure full and complete integrity of the games, and of the wagers placed on them.
