PENN Entertainment shareholders are happy after the sports and media company announced a $1.5 billion partnership with Disney's ESPN to create a sports betting company.
PENN shares rallied by double-digits Wednesday, helping cut the 7% drop in the stock this year.
PENN, which will pay the media giant's sports arm $1.5 billion in cash over ten-years to rebrand its current sportsbook and relaunch as ESPN BET this fall in the 16 legal betting states PENN is licensed.
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While ESPN will be granted $500 million of warrants to purchase around 31.8 million common shares of Penn stock in exchange for media, marketing services, brand and other rights provided by the sports media giant.
Other gambling stocks including Draftkings, MGM and Caesars fell on the news.
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As part of the deal, PENN sold Barstool Sports back to founder Dave Portnoy.
"PENN Entertainment and Barstool Sports have gone our separate ways," Portnoy said in a video on X, formerly known as Twitter. "As of this moment, while you are watching this video, I have purchased back Barstool Sports from PENN. That is right: For the first time in a decade, I own 100% of Barstool Sports."
Portnoy said he has "nothing but the most respect" for the PENN team. However, Portnoy admitted being associated with PENN didn’t allow for the content the platform was used to making.
"The regulated industry probably not the best place for Barstool Sports and the type of content we make," Portnoy said. "PENN was able to broker an unbelievable deal with ESPN. We wish them nothing but the best in their endeavors. It’s truly a win-win.
"For the first time in forever, we don’t have to watch what we say, how we talk, what we do. It’s back to the pirate ship. By the way, I’m never going to sell Barstool Sports. Ever."
PENN paid an estimated $388 million for total control of Barstool Sports in February after initially buying a 36% stake in the company in February 2020, per Fortune. Penn and Barstool Sports announced their sports betting partnership in early 2020.
Meanwhile, shares for ESPN parent company Walt Disney are little changed this year, trailing the 17% jump for the S&P 500.
The company will report earnings Wednesday after the closing bell.
FOX Business reporter Scott Thompson contributed to this report.
