The biggest name in U.S. sports broadcasting is putting its money on the lucrative gambling industry, launching an online betting platform that will initially be available in 17 states.
ESPN teamed with Penn Entertainment, a provider of sports content and casino gaming experiences that previously launched the sportsbook for Barstool Sports, to create the betting service, dubbed ESPN Bet.
Penn said in August it will pay ESPN $1.5 billion for rights to the sports media giant’s name and to operate the betting platform under a 10-year deal. ESPN will also receive about $500 million to purchase shares in Penn and has agreed to promote ESPN Bet across its online and broadcast channels, according to the deal.
The betting platform went live for signups on Thursday, but still needs approval from gaming commissions in each state.
ESPN is plunging into the sports wagering business as parent company Disney looks to boost profits across the entertainment giant. Yet while gambling has exploded as a growing number of states legalize it, the broadcaster will face entrenched competitors in the form of DraftKings and FanDuel, which control roughly 80% of the online sports betting market,
“ESPN and Penn believe they can infiltrate this market,” Andrew Brandt, a sports business professor at Villanova University, told CBS MoneyWatch. “They want to make it like one-stop shopping where you go to check the score and there’s your betting opinions right there. They think they can offer a better product.”
The states that first will offer ESPN Bet are:
- New Jersey
- West Virginia
Creating ESPN Bet is a strategic move for both Penn and ESPN. The broadcaster wants to grow revenue by serving sports gambling fanatics, while Penn was looking for a new sports betting partner after severing its partnership with Barstool, Brandt said,
For both companies, what’s at stake is grabbing a piece of the rapidly growing sports gambling industry. Revenue at DraftKings, FanDuel, Caesars Sportsbook and BetMGMas more fans with time on their hands placed bets.