Disney's ESPN inks $2.6b deal with Penn to launch sports betting business

Walt Disney's ESPN and casino-owner Penn Entertainment have agreed to jointly launch a sports betting business under the brand ESPN Bet, the two companies said on Tuesday.

Shares of Penn gained 20 per cent on the news, while those of DraftKings — one of the top fantasy sports and betting firms — fell nine per cent in extended trading.

Under the terms, Penn will pay ESPN US$1.5 billion (S$2.02 billion) in cash and offer about US$500 million worth of warrants to purchase its shares over an initial 10-year term in exchange for the brand, promotional services and other rights.

"We know they (audience) want both betting content and the ability to place bets with less friction from within our products," ESPN Chairman Jimmy Pitaro said.

Penn will rebrand its sportsbook service and relaunch it as ESPN Bet in the fall across the 16 legalised betting states where it has licences.

ESPN will have the option to designate a non-voting board observer or, upon completion of three years of the agreement, a board member, they added.

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