Penn Breaks Ties With Portnoy & Barstool, Announces ESPN Bet Coming This Fall

The US sports betting industry is about to lose another brand, as Penn Entertainment has cut its ties with Barstool Sports and its controversial founder, Dave Portnoy. The number of products on the market will remain the same, as Penn announced a new deal to rebrand its Barstool Sportsbook product as ESPN Bet, starting this fall.

The deal will last for 10 years. Penn is paying $1.5 billion in cash and allowing ESPN to acquire $500 million in Penn stock. In addition to the branding rights, the sportsbook will receive on-air promotion and marketing services from ESPN.

Typically, user accounts and balances migrate seamlessly during such rebrandings. Bonus has received confirmation from Penn that this is the case: Existing Barstool Sportsbook users will be able to continue betting on ESPN Bet without needing to cash out or register a new account.

Penn’s relationship with Barstool Sports began in 2020 with a branding deal and a minority stake in the company. It completed its takeover earlier this year but has now sold Barstool back to Portnoy.

In total, Penn paid $551 million for the company. It’s unclear exactly what price Portnoy paid to get it back, but speculation is that it was “next to nothing.” As part of the deal, Portnoy has agreed to “non-compete and other restrictive covenants,” meaning that there will be no relaunch of Barstool Sportsbook in the US.

Portnoy and his fans are celebrating this turn of events as a win since he has his company back, plus a profit from having sold it. His critics see things differently, as many had been predicting from the start that tying its brand to a polarizing figure like Portnoy would backfire for Penn.

Regulation and Barstool Don’t Mix

On that point, at least, Portnoy and his detractors are on the same wavelength. In an “emergency press conference” on Twitter, he said:

We underestimated just how tough it is for myself and Barstool to operate in a regulated world […] We got denied licenses because of me. You name it. So the regulated industry is probably not the best place for Barstool Sports.

Aside from the controversies surrounding Portnoy himself, the Barstool brand is very popular with the college undergraduate demographic. Marketing of gambling products or even gambling-associated brands on campus is facing increasing regulatory scrutiny in the US.

Keeping Barstool Sports content separate from Barstool Sportsbook promotion proved too tricky a tightrope for Penn. For instance, it received a $250,000 fine in Ohio for having gambling promotions as part of the on-campus Barstool College Football Show at the University of Toledo.

ESPN’s Belated Sports Betting Debut

It is perhaps surprising that ESPN’s brand has taken this long to find its way into the sports betting space. Part of the reason may have been that it is owned by Disney. Early on, there were concerns that involvement with gambling could damage the company’s family-friendly reputation.

However, Disney did some research in 2021 that suggested this was a manageable risk so long as it was a brand partner and not an operator. By late last year, ESPN’s sports betting debut was almost inevitable. In September 2022, Disney CEO Bob Chapek told CNBC:

We at ESPN have the ability to do [provide frictionless sports betting to fans]. Now we’re going to need a partner to do that, because we’re never going to be a book, that’s never going to be in the cards for the Walt Disney Company. But at the same time, to be able to partner with a well-respected third party can do that for us.

The only remaining question was who that partner would be. Previous speculation had suggested that deals with DraftKings or Rush Street Interactive might be possible. However, since Barstool wasn’t working out, Penn and ESPN appear to have found two problems with a single solution.

Announcing the deal on Aug. 8, ESPN chairman Jimmy Pitaro said:

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. The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN.

Media Branding Deals Haven’t Been Hugely Successful

Since 2020, Penn has been very consistent in its strategy of partnering with sports media brands. Aside from Barstool Sports and now ESPN, it bought Score Media and Gaming in 2021 for $2 billion.

Penn withdrew TheScore Bet from the US market in July 2022 to focus on Barstool. However, it remains active as an Ontario sportsbook.

Sports betting and sports media seem like a natural fit. However, Penn’s competitors haven’t had much more success with that idea:

  • Sports Illustrated partnered with 888 to create SI Sportsbook, but they’re now turning their attention to iGaming, having failed to gain much traction in online sports betting.
  • Soccer streaming service Fubo attempted to carve its own path into US sports betting but had to pull the plug.

That said, ESPN isn’t just another sports media brand. It’s the most-watched sports channel in the US and was the sixth-highest-rated channel overall in 2022. So, if any such deal is going to pay dividends, this would be the one. If it fails, then Penn and the rest of the industry will have to accept that media deals alone can’t level the playing field with the likes of FanDuel, DraftKings, and BetMGM.

“Back to the Pirate Ship”

Where does all of this leave Portnoy and Barstool Sports? He won’t be able to re-enter the regulated sports betting market. At the same time, he has agreed that if he re-sells Barstool Sports, Penn will be entitled to a share of the proceeds.

Portnoy says he intends to hold on to the company for life and pass it on to his kids. Moreover, he says he expects the focus to be exclusively on content from now on. He describes this as going “back to the pirate ship” in that he and the company won’t be subject to quite as many rules or intense scrutiny.

About the Author

Alex Weldon

Alex Weldon

Alex Weldon is an online gambling industry analyst with nearly ten years of experience. He currently serves as Casino News Managing Editor for Bonus.com, part of the Catena Media Network. Other gambling news sites he has contributed to include PlayUSA and Online Poker Report, and his writing has been cited in The Atlantic.
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