August 09, 2023
In 2020, Penn Entertainment, the casino and racetrack operator headquartered in Wyomissing, purchased a stake in the sports media company Barstool Sports, hoping that the partnership would promote its sports betting business, branded as Barstool Sportsbook. Penn fully acquired Barstool earlier this year.
Now Penn Entertainment has agreed to sell all of its shares back to Barstool's founder, Dave Portnoy. The decision allows the gambling company to partner with ESPN; Barstool Sportsbook will become ESPN Bet this fall.
Penn will pay ESPN $1.5 billion in cash over the next 10 years, and ESPN will buy nearly 32 million shares of Penn worth $500 million, Yahoo Finance reported.
"This transformative, exclusive agreement with ESPN marks another major milestone in Penn’s evolution from a pure-play U.S. regional gaming operator to a North American entertainment leader," said Jay Snowden, president of Penn. "ESPN Bet will be deeply integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem. ESPN Bet will also benefit from Penn’s operational experience, extensive market access, and proprietary technology platform."
"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," said ESPN chairman Jimmy Pitaro. "The strategy here is simple: to give fans what they've been requesting and expecting from ESPN."
Penn's partnership with Barstool Sports struggled. Reporting on "violent sex" allegations made against Portnoy caused Penn's stock to fall, and sexist and racist behavior has kept Portnoy in unfavorable news. (ESPN attempted a collaborative show with Barstool Sports in 2017, but the show was cancelled after one episode when an ESPN reporter called out Portnoy and Barstool for sexist coverage of her.)
In a video posted to the social media platform X, formerly known as Twitter, Portnoy said Penn struggled to get approved for gambling licenses because of his involvement.
"We did this deal about three years ago, and I think both parties were like, 'We're going to take this thing to the moon,'" Portnoy said. "We underestimated just how tough it is for myself and Barstool to operate in a regulated world, where gambling regulators, the New York Times [and] Business Insider hit pieces, f****** with the stock price every time I did something. We got denied gambling licenses because of me, you name it. So the regulated industry is probably not the best place for Barstool Sports and the type of content we make. Penn was able to broker an unbelievable deal with ESPN. We wish them nothing but the best in their endeavors."
As a part of the sale, Penn has the right to half of any proceeds made by Portnoy if he sells the company again. However, Portnoy has said he will not relinquish ownership.
In March 2022, Barstool opened a sports bar in Center City at 1213 Sansom St. to promote Barstool's sportsbook, as fans could watch all the games on which they placed bets.
