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PENN Reaches Agreement To Launch ESPN Bet; Portnoy Buys Back Barstool

Bill Speros for Bookies.com

Bill Speros  | 7 mins

PENN Reaches Agreement To Launch ESPN Bet; Portnoy Buys Back Barstool

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ESPN has entered the online sports betting space. And it will never be the same. 

In a deal that could be worth as much as $2 billion, ESPN BET will launch this fall as the front-facing sports book brand of Penn Entertainment. Meanwhile, Barstool Sports founder Dave Portnoy bought back the company he founded as a sports betting newspaper in Greater Boston back in 2002. 

Penn completed its purchase of Barstool Sports in a two-step, $388 million deal this past February. Penn rocked the media and gambling landscape three years ago when it initially purchased 36% of Barstool for $163 million. 

However, the relationship between Barstool and Penn could not flourish in the regulated betting space. 

"Back to the Pirate Ship"  Portnoy said in a video posted on X. "A regulated industry not the best place for Barstool sports and the type of content we make." 

ESPN BET: Long-Awaited Step By ESPN

The Worldwide Leader has embraced gambling since the PASPA decision in 2018 that opened the door for legal sports betting nationwide. The company has had several agreements with various sports book operators on its shows. This deal will end all of that. 

And it will alter the sports betting landscape, providing the first real threat for DraftKings and FanDuel in their battle for overall dominance. ESPN Bet will be the one and only sportsbook used by the platform, which has become a stand-alone entity on the Disney spreadsheet. 

The ESPN brand should give Penn a boost. The company's stock price rose after the announcement. Since its partial acquisition of Barstool was first completed, Penn has seen its digital footprint and revenue soar. The Barstool audience has grown more than 200% since it joined with Penn. 

It boasts more than 200 million followers on its various platforms. Penn’s retail sportsbooks were rebranded under the Barstool banner and the Barstool Sportsbook betting app was subsequently launched. The Barstool Sportsbook app is available in 16 states.

Struggles In the Regulated Space

PENN Reaches Agreement To Launch ESPN Bet; Portnoy Buys Back Barstool 1

Portnoy and Barstool struggled in the regulated space. The company was unfairly treated by regulators in several states because of its controversial content. Barstool's focus shifted to gambling-rated content, in a push away from sports, entertainment and consumer-focused entities like the “One-Bite Pizza” app made famous by Portnoy’s video reviews. 

Barstool sponsors the Arizona Bowl and live streamed the game in December. It also offers regular streams of "Rough N Rowdy" fights and produces about a dozen regular podcasts. It offers promotions for new customers who sign up to its sportsbook app, and it's expected to be among those that offer Massachusetts sportsbook promo codes from mid-March.

Penn was founded as PNG in 1982. It owns 43 properties and is worth about $5.03 billion. In addition to its long-term acquisition of Barstool, the company spent $2 billion to buy Score Media in 2021. TheScore is one of the top sports information sites in Canada. Its betting app is also available in Colorado, Indiana, Iowa and New Jersey.

Portnoy, 45, and his partners initially sold a majority of Barstool to The Chernin Group in 2016. Portnoy’s presence was both a magnet for controversy and a principle driver of Barstool's success. Barstool enjoys a loyalty among its audience unique in the sports, entertainment and digital space. 

Multiple accusations of sexual misconduct have been levied against Portnoy, all of which he denies. Despite the allegations and rumor that regularly surrounds “El Presidente,” he’s never been charged with a crime or faced any civil actions based on those allegations. 

During the COVID-19 pandemic, Portnoy launched a fundraising effort that raised more than $39 million for 348 small business, mostly restaurants, harmed by both the pandemic and its related shutdowns. 

Big Changes Ahead For Barstool's David Portnoy?

The move Tuesday closed a chapter that did not go as planned for either side. Penn wanted a bigger return from Barstool in terms of market share. Portnoy and his fans were often left frustrated by the rules of various state regulators and the fears that something on the site would cause Penn problems elsewhere.

In terms of what changes to expect at Barstool, Portnoy said last February: “Nothing. Literally nothing.” 

That turned out not to be true.

Penn Entertainment's subsidiary Penn Interactive owns the Plainridge Park Casino (PPC) in Plainville, Massachusetts and now operates a Barstool-branded retail sportsbook at the same site. 

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Penn CEO Jay Snowden offered a peek into how Barstool will operate under full ownership by Penn during a December 20 hearing with the Massachusetts Gaming Commission. 

Before that hearing, Snowden defended Barstool, its employees, its responsible gaming practices and blasted a New York Times story critical of the company and Portnoy.

In an in an eight-page letter, Snowden also cited data from Google Analytics that claimed 85% of Barstool’s audience on its owned digital platforms is over the age of 25, and that analytics also showed that 90% of its Facebook audience and 70% of its Instagram audience is also over 25. 

“To be clear, neither Mr. Portnoy nor anyone else at Barstool has any control or decision-making authority over the operations of either the retail or online operations of Barstool Sportsbook. All decisions, directions, and influence over the operations of sports betting are made entirely by PENN team members who are authorized to do so and are licensed to do so as required. Barstool is solely PENN’s media and marketing partner and will continue to operate as such once PENN acquires 100% of Barstool in February 2023,” Snowden wrote in his letter. 

According to a “Reporting Structure – Barstool Sports” informational chart that accompanied Snowden’s letter to the MGC, several notable Barstool personalities including Dan Katz and Portnoy are considered “talent represented through loan out companies.” 

PPC's Massachusetts license application got bogged down over concerns about past sports betting violations incurred by Barstool and Penn, in addition to the sexual misconduct accusations against Portnoy.

Commissioners had Portnoy and Barstool on their radar even before sports betting was legalized in the Bay State last August, first raising concerns in the third quarter of 2021.

PPC's two days of license hearings in Massachusetts lasted nearly 10 hours and were far more acrimonious and antagonistic than those held for the other two Bay State casinos (Encore and MGM Springfield) or their affiliated Massachusetts betting apps

The ties between Penn and Barstool Sports kept the MGC from granting a permanent license despite the fact that Plainridge Park Casino has been operating in the Commonwealth for seven years. It also made Barstool Sportsbook’s license temporary and conditional on the company cooperating with a full investigation by the Commission’s Investigation and Enforcement Bureau. 

During the hearing on December 20, Penn agreed to prohibit anyone not 21 or over from attending any of Barstool's College Football Shows. At the same hearing, Penn said it would pay a $250,000 fine levied by Ohio regulators following an incident at the University of Toledo last fall when the company violated the Buckeye State’s rules on marketing to people under 21. 

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About the Author

Bill Speros for Bookies.com
Bill Speros
Bill Speros is an award-winning journalist and editor whose career includes stops at USA Today Sports Network / Golfweek, Cox Media, ESPN, Orlando Sentinel and Denver Post.