ESPN launches sportsbook in partnership with Penn Entertainment

Disney's ESPN is launching a betting sportsbook, putting the sports amusement portion deeper into the wagering world.

U.S. gambling institution Penn Entertainment said it is partnering with ESPN to rebrand and relaunch its sportsbook arsenic ESPN Bet. It's the archetypal clip ESPN's marque volition beryllium connected a sports betting platform.

ESPN Bet volition instrumentality implicit Penn's Barstool Sportsbook and go ESPN's exclusive operation. It volition motorboat this autumn successful the 16 legalized betting states.

ESPN had been looking for a spouse successful the sports betting concern for sometime. Last fall, erstwhile CEO Bob Chapek said that portion ESPN volition ne'er instrumentality bets itself, it wanted to spouse with a gambling company.

The woody gives ESPN different gross watercourse arsenic cord-cutting weighs connected the accepted TV business. Meanwhile, the woody allows Disney to enactment up currency arsenic it loses wealth connected its streaming portion and is apt to acquire Comcast's involvement successful Hulu aboriginal adjacent year.

Disney CEO Bob Iger besides precocious signaled connected CNBC that the institution is looking for a strategical spouse and unfastened to offloading its cable-TV networks.

The deal, announced Tuesday, gives Penn the exclusive close to the ESPN Bet trademark successful the U.S. for 10 years, which whitethorn beryllium extended different 10 years if the 2 travel to a communal agreement.

As portion of the deal, Penn volition wage ESPN $1.5 cardinal successful currency implicit the 10-year period. The statement besides grants ESPN astir $500 cardinal of warrants to bargain astir 31.8 cardinal Penn communal shares that volition vest implicit the aforesaid period.

ESPN volition besides person the enactment to designate 1 non-voting committee perceiver to Penn's board, oregon aft 3 years, designate a committee subordinate taxable to definite regulatory approvals and a minimum ownership threshold.

Penn volition beryllium divesting its banal successful Barstool to laminitis David Portnoy. Penn became sole proprietor of Barstool successful February erstwhile the institution completed its acquisition of Barstool for $388 million.

Through the latest agreement, Penn volition person the close to 50% of the gross proceeds that Portnoy receives successful immoderate aboriginal merchantability oregon different monetization of Barstool.

Penn's banal was up astir 20% successful after-hours trading Tuesday, portion Disney was somewhat up. Disney and Penn some study net connected Wednesday.

Penn said successful Tuesday's merchandise the woody volition adhd an estimated $500 cardinal to $1 cardinal successful yearly semipermanent adjusted net imaginable successful its interactive segment.

In March year, Penn reported that its sports betting concern turned a profit successful the last 3 months of the fiscal year, the archetypal U.S. sports gambling institution to bash truthful during that period. Typically it's harder for a sportsbook to station a nett during the 3rd and 4th quarters due to the fact that companies walk much connected selling and promotions during the shot season.

At the time, Penn had attributed the profitability to its selling attack and relying connected cross-platform promotion from Barstool.

— CNBC's Alex Sherman contributed to this report.