In the early evening on Aug. 8, businessman Dave Portnoy made a shock announcement: He had bought back 100% of his company Barstool Sports, which he had previously sold to casino operator Penn Entertainment for $551 million, effective immediately. "The regulated industry" is "probably not the best place for Barstool Sports and the type of content we make," Portnoy said in a video posted on social media. And while he wishes Penn "nothing but the best in their endeavors," "for the first time in forever, we [at Barstool] don't have to watch what we say, how we talk, what we do. It's back to the pirate ship." Penn will receive 50% of the proceeds should Portnoy decide to eventually sell his brand, but he claimed in the video that he will "hold it 'til I die."
Meanwhile, Penn also as part of the deal announced a $2 billion online sports betting partnership with the Disney-owned ESPN, which will see Penn rebrand its current Barstool Sportsbook (the operation created in conjunction with Barstool) as ESPN Bet. Overall, the deal marks quite the watershed moment for the family-friendly Disney, considering mouse house leadership has long resisted diving directly into the sports betting space. But given the size of the market and the opportunity it presents for a semi-washed-up sports network, company CEO Bob Iger has finally acquiesced.
Origin story
During his initial stint as Disney head honcho, Iger "expressed a real distaste for sports betting on the grounds that gambling couldn't coexist with Disney's pristine family image," according to Vox. He eventually let go of some of that aversion — at least enough to make marketing deals with sportsbooks — but he never quite warmed up to the idea. His short-lived replacement Bob Chapek, however, appeared much more interested in the pastime, which was growing in popularity at the time. Now, since Iger "returned to the top job last fall, he has been signaling he's become more comfortable with sports betting because his research tells him that's what young consumers want to do."
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ESPN, meanwhile, has long been clear in its intention to enter the sports gambling space, said The Athletic, but "the question was always at what level and in what form." In an interview with the outlet last year, ESPN chair Jimmy Pitaro said that a foray into the betting world represents a "growth opportunity" for the network. Research shows "it's something we need to be doing," he added. "It's something that our fans are expecting from us. So it's not a 'nice to have,' it's pretty much at this point a must-have."
A new deal
When Penn first began its two-part purchase of Barstool in 2020, its plan was to launch sportsbooks under the Barstool brand so as to target young consumers. But things soon got a bit troublesome for the casino operator. In both 2021 and 2022, Insider published two articles alleging sexual misconduct against Portnoy, claims the founder not only denied but later attempted to sue over. In 2023, Barstool was fined $250,000 by regulators for allegedly targeting customers under 21 with its advertising. And in May, Portnoy and Penn leadership clashed over the firing of popular Barstool personality Ben Mintz, who was caught (and later apologized for) saying a racial slur while reading rap lyrics on a live stream. "I hate the decision," Portnoy told The New York Post at the time. "But I don't deal with the things Penn deals with in terms of state regulators etc."
Now, Penn and Barstool have agreed to go their separate ways, and instead of leveraging Barstool's audience, Penn will leverage ESPN's. The network, meanwhile, "gets an annual cash infusion" to help keep it afloat in a "cord-cutting and cord-never universe" wherein Disney is evaluating what to do with its cable networks, per The Athletic and Axios, and Barstool is free from the constraints of a regulated industry and its corporate overlords. "It's truly a win-win," Portnoy said in his video announcement. (According to reports, he bought the company back for just $1.)
At its core, the shocking deal exemplifies just how big sports gambling is in the U.S. — and that's "Disney-doing-an-about-face big," Vox noted. The pastime is now legal in "more than 30 states — though notably not yet in California — and Americans have spent more than $220 billion on it since 2018."
