U.S. sports network ESPN has partnered with casino operator Penn Entertainment (PENN) to launch a new sports betting app ahead of the upcoming NFL football season.
ESPN, which is owned by the Walt Disney Company (DIS), is licensing its brand for sports betting as the broadcaster pushes into the growing online gambling business.
Under terms of the exclusive agreement, Penn Entertainment will have a 10-year right to use the “ESPN Bet” name and brand within the U.S.
Penn said it plans to rebrand its Barstool sportsbook and app as ESPN Bet starting this autumn. The company will continue to operate as “theScore Bet” within Canada.
Penn also said it’s selling all its Barstool Sports subsidiary back to David Portnoy, who founded the sports and pop culture media company.
Penn Entertainment will make cash payments totaling $1.5 billion U.S. to ESPN over the life of the 10-year deal and grant ESPN $500 million U.S. of warrants to purchase Penn stock.
The casino operator can extend the current deal with ESPN for another 10 years by mutual agreement with Walt Disney.
Penn Entertainment estimates that the deal could generate between $500 million U.S. and $1 billion U.S. in annual earnings.
ESPN is trying to generate new sources of revenue as consumers cancel traditional cable-TV services. However, ESPN has needed to proceed cautiously with sports betting because of perceptions that its involvement with gambling could tarnish the family-friendly image of Disney.
Sports betting is a growing business in the U.S. This June, North Carolina and Vermont became the latest states in the U.S. to legalize sports gambling, bringing the total to 37.
A record 50 million Americans placed a wager on this year’s Super Bowl, spending $16 billion U.S. to gamble on the outcome of the big game, according to the American Gaming Association.
Penn Entertainment’s stock has declined 27% over the last 12 months to trade at $24.84 U.S. per share.
Walt Disney’s stock has declined 19% over the past year to trade at $88.13 U.S. a share.