This August, Penn Entertainment signed a licensing deal with the media giant ESPN to rebrand its Barstool Sportsbook to ESPN BET. The change became effective in mid-November when ESPN BET launched in 17 states.
The partnership marks ESPN’s official debut in the sports betting industry. After years of featuring betting-related content on its website, TV programs, and social media, ESPN has finally allowed its audience to place bets through its integrated digital products.
Diving Into the Deal
Penn will be paying ESPN $1.5 billion over the next decade, with the potential for another 10-year extension. ESPN also received $500 million worth of stock warrants to purchase Penn’s common shares, with the option to receive extra warrants based on the platform’s performance.
Meanwhile, Barstool Sports was sold back to its founder, Dave Portnoy. ESPN has replaced Barstool Sportsbook in 17 regulated states, including big markets such as Arizona, Colorado, Massachusetts, Michigan, New Jersey, and Pennsylvania.
Lofty Goals for ESPN BET
ESPN BET is entering an already developed and fiercely competitive sports betting industry with high expectations. The company hopes to reach up to 20% market share by 2027, which is fairly optimistic.
That said, they must first figure out how to counter the duopoly created by FanDuel and DraftKings, who, according to Odds Assist, hold nearly three-quarters of the sports betting market share across the US.
On the way to achieving its goal, ESPN BET will also have to squeeze past other industry leaders, such as BetMGM, Caesars, and BetRivers, who own most of the remaining market share.
They will also need to keep an eye out for other new industry entrants, such as Fanatics, which purchased PointsBet’s US operations earlier this year.
ESPN BET is currently operating with just around 2% market share, so it will take some serious effort to grow tenfold over the next few years. Reaching the 10% threshold will be a huge success, as it will make ESPN BET one of the top-performing sportsbooks in the country.
Still, none of its rivals seem to be overly concerned. FanDuel CEO Amy Howe points to “superior product experience” as the foundation of their successful sports betting operation.
Howe was interviewed at the CNBC Global Evolve virtual summit in November, saying: “At the end of the day, if your product doesn’t work, it doesn’t matter how great your brand is, you got to have a really phenomenal experience.”
It’s still too early to tell how the newly launched sportsbook is doing. We’ll have to wait until the year’s end to see the first revenue reports.
True tests for ESPN BET lie ahead. January will see the launch of sports betting in North Carolina, which will be the brand’s chance to face the competition on an equal footing.
How They’ll Try to Pull It Off?
A big advantage that ESPN BET has over other industry entrants is its affiliation with one of the biggest sports media houses in the country, which gives it plenty of advertising space. ESPN BET is constantly featured on ESPN programming during commercials, news shows, and live broadcasts.
The sportsbook’s latest advertising campaign features SportsCenter’s anchors, Scott Van Pelt and Elle Duncan. Meanwhile, it’s also getting exposure during the sports talk morning television program Get Up. Of course, mentions of ESPN BET won’t be limited to ESPN alone. The newly launched sportsbook is gaining traction on other programs, with its app endorsed by Pat McAfee on his show.
At the same time, ESPN will now allocate less space to its sports betting competition. The company had advertising deals with other betting brands, most notably DraftKings and Caesars, but these have now been discontinued for obvious reasons.
ESPN is a huge sports media company with mainstream appeal, and as such, it will look to incentivize casual sports fans and introduce them to the world of sports betting through its familiar branding.
ESPN chairman Jimmy Pitaro said that the company’s strategy is to give its audience a more streamlined way of enjoying sports betting: “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.”
