A major development could be on the horizon for the future of California sports betting.
ESPN, the sports media goliath owned by Disney, has agreed to a sports gambling licensing deal with Penn Entertainment worth around $1.5 billion, according to multiple reports. The fallout from this partnership is expected to be substantial and far-reaching. And given ESPN’s and Disney’s ties to The Golden State, the legalization of sports betting in California could be among the ripple effects of this latest development.
Granted, this isn’t a guarantee. On the contrary, so much remains up in the air. Many, in fact, have started to wonder whether a California sports betting bill will be left off the 2024 general election ballot altogether at this rate.
Still, there’s no denying that the agreement struck between ESPN and Penn Entertainment could end up impacting how California approaches sports gambling debates in the coming months and years.
Here’s Everything You Need to Know About ESPN’s Entry into Sports Betting
Before we get into how this deal might impact sports betting throughout California, we first need to understand the terms of the agreement itself. And to that end, The Boston Herald recently unpacked all the important details:
Disney-owned ESPN has licensed its brand for use in a sports betting app, striking a deal in which it will receive $1.5 billion and other considerations from Penn Entertainment. In return, Penn will rebrand its existing sports betting app as ESPN Bet, which ESPN has agreed to promote across its online and broadcast platforms in order to generate ‘maximum fan awareness’ of the app. Penn also announced that it sold Barstool Sports, an irreverent sports media site, back to its founder Dave Portnoy. Penn took a 36 percent stake of Barstool Sports in February 2020 for about $163 million and subsequently acquired the remainder of the company for about $388 million in February 2023. Neither Penn nor Portnoy disclosed terms of the divestment deal.”
Perhaps the biggest takeaway from all of this: It’s clear that ESPN is serious about their interest in sports betting. Grabbing a $1.5 billion windfall is no doubt huge given how much the company has struggled amid increasing amounts of cord-cutting in recent years. But allowing ESPN Bet to be promoted across “online and broadcast” platforms is even more telltale. ESPN would not be so tightly entangling themselves to the ESPN bet brand if they didn’t view this as a long-term investment in the sports betting industry.
Penn’s sale of Barstool Sports, meanwhile, says just as much about the seriousness of this endeavor. Though no specific number has been released, multiple reports indicate they basically unloaded their stake in the Barstool Sports brand for basically nothing. There is no way Penn takes that kind of bath on their initial investment if this partnership with ESPN isn’t the real deal.
Is California Sports Betting a Stronger Possibility Following the Inception of ESPN Bet?
Technically, the formation of ESPN Bet shouldn’t have a profound impact on any one market more than another. But the case of California is a different story.
Disney predominantly works out of The Golden State these days. They flirted with relocating more of their main operations to Florida, but their ongoing dispute with Governor Ron DeSantis led them to double-down on their West Coast footprint. And as Disney has increased their presence in California, so has ESPN. Many of their most popular shows now air out of their Los Angeles studio, and a bunch of their top talent is routinely expected to fly out to the West Coast and make regular hits on those shows.
This raises the question: Would ESPN really cannonball into the sports betting industry if they thought California was going to remain on the sidelines much longer? Plenty of experts within the industry don’t think they would. That, in turn, would seem to indicate the company might know something we don’t about next year’s round of legislative meetings.
Then again, this could merely be a coincidence. Sports betting at large is more popular than ever. It makes sense that the self-proclaimed Worldwide Leader in Sports would attempt to capitalize on an ascending industry. Others, meanwhile, have posited that this has almost nothing to do with California sports betting—or sports betting, period. ESPN is struggling to exist in an era that features far fewer cable subscriptions. Profits are down. Their streaming service, aptly named ESPN+, has not generated the traction or revenue many had hoped. The company has started cutting expensive talent loose as a result and, subsequently, started looking for ways to buoy the bottom line.
This search has led to talk about ESPN selling ownership stakes to the very professional sports leagues they cover. Most agree that’s not a great idea. Entering the sports betting market creates its own moral dilemma. Linking up with organizations they’re supposed to independently report on could be a disaster. Nevertheless, Penn Entertainment’s $1.5 billion commitment suggests there could be something brewing in the California sports betting debate. They have aggressively tried to compete with the top online sportsbooks in the United States, a process that has so far proven fruitless. They’re unlikely to sync up with a company based out of a state that has zero chance of offering legal sports gambling anytime soon. So, at minimum, the ESPN-Penn deal should be seen as a slightly positive omen for the outlook on sports betting in California.
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