Beginning from a point of relative anonymity a half decade ago, the sports betting industry is starting to permeate every facet of the world of athletic entertainment.
It has been a meteoric — and, in many ways, ironic — rise to prominence for a business that, for many years, held an unsavory reputation because of purported under the bleachers bookies and a lack of regulation.
The latest hurdle that betting operators have cleared is joining the mainstream, not just with popular betting apps but also with established industry veterans like ESPN. Betting and entertainment media consortium PENN Entertainment embarked on a relationship with ESPN, the self proclaimed ‘Worldwide Leader in Sports,’ this summer, helping ESPN to open their own sportsbook, known as BET ESPN. Here’s a look at how that deal went down, and just how much of an impact it’s going to have on the sports gaming and entertainment industries.
Barstool and PENN: The Preview
This isn’t the first time that PENN has tied the knot with a sports media company. PENN Entertainment looked to shake up the world of sports and sports betting in 2020 when they acquired a 36 percent stake in media conglomerate company Barstool Sports. The betting and entertainment consortium, then known as PENN National Gaming, wanted to use the notoriety of Barstool’s upstart brand in order to help advertise their sportsbook product, creating a mutually beneficial relationship for both sides.
The bid never got off the ground as advertised, though, with Barstool mogul Dave Portnoy noting that his no holds barred reputation made it difficult for the duo to operate at times. “We got denied licenses because of me. You name it,” Portnoy said in a video release via Twitter. “So the regulated industry is probably not the best place for Barstool Sports and the type of content we make.”
Barstool’s reputation might not have helped, sure, but neither did the fact that the big launch took place at the end of January 2020, a little more than a month before the onset of the COVID-19 Pandemic. With an economic downturn taking place across the world as people stayed home under lockdown orders — and no active sports leagues to bet on — the ill-fated move came at the worst possible time.
Portnoy ended up buying Barstool back from PENN in August of this year, a couple days before PENN decided to try again with ESPN.
PENN and ESPN: The Reboot
The idea behind the marriage of PENN and ESPN is simple. ESPN is the biggest brand in the world of sports, the first app that pops up on the App or Google Play when you type in ‘sports.’ PENN wants to capitalize off of that name-brand recognition in order to jump start their casino business — when you consider the number of games and network shows they broadcast on a daily basis, an ESPN Bet Promo Code is going to reach millions more eyes than a comparable Barstool offering ever would — and ESPN stands to gain significantly from involvement with the growing industry.
PENN will pay ESPN $2 billion over the next two years for the rights to their sportsbook, $1.5 billion of that figure as a lump sum of cash. The other $500 million comes in the form of stock shares.
As of October 26, PENN’s market cap sat at $2.83 billion, so those shares amount to roughly one-sixth control of the company. When you consider how the sports gambling business has grown in recent years, it’s a move that could pay literal dividends for ESPN both now, and as PENN continues to secure a footprint in the industry.
For many years, betting operators enjoyed a place outside of the world of traditional sports media. The people making the lines paid avid attention to what’s going on in the various leagues they take bets on, obviously, but relied on their own know how and computer models in order to
Barstool Sports, similarly, for all the buzz they create, was never really an industry insider. Barstool employees weren’t getting credentials to cover games, or scooping breaking news on a wide scale basis.
ESPN, of course, does both of those things. As the worldwide leaders in sports, it’s their job to know the news before anyone else does and then breaking it to the masses.
One concern that has been raised regarding the marriage of ESPN and PENN is how bringing industry experts into the picture could influence business dealings, especially if they have advance warning of elements that could impact a game like injuries, trades and benching… and if that impacts their reporting. Of course, a licensing deal isn’t particularly involved in the day to day operation of a country, so those early concerns seem unfounded.