Disney (NYSE:DIS) is moving into the sports betting business, with ESPN inking a licensing deal with casino operator Penn Entertainment (NASDAQ:PENN).
ESPN has signed a licensing deal with Penn to create ESPN Bet, a sportsbook for audiences in the United States.
Penn will rebrand its sportsbook to ESPN Bet this fall in the 16 states where it is currently licensed as part of a 10-year exclusivity deal. ESPN Bet will include a mobile app, website, and retail locations, according to a statement.
Penn will pay ESPN $1.5 billion over the 10-year span and grant the company $500 million worth of share purchase warrants.
The move is ESPN’s first sports gambling operation, although gambling content has become an increasing focus on its various platforms in recent years.
Penn is licensed in Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Louisiana, Massachusetts, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia.
The deal sent Penn shares up more than 18% after the bell Tuesday.
Meanwhile, shares of rival sports betting company DraftKings are down more than 8% to $28.95.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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