ESPN has agreed to a 10-year deal with Penn Entertainment to create a betting brand called ESPN Bet.
Penn will operate the online sports book and pay ESPN $1.5 billion in cash for the use of ESPN’s name, marketing, “access to ESPN talent.”
Penn also will give ESPN options to buy $500 million in Penn stock.
As part of the transaction, Penn is selling Barstool Sports, a sports media company, back to its founder, David Portnoy.
Penn was struggling to compete with DraftKings and FanDuel under the Barstool Sportsbook brand.
The deal allows ESPN to rake in a large sum of money related to gambling without becoming a sports book itself.