ESPN’s Agreement with PENN Entertainment to Launch ESPN BET

On August 8, 2023, ESPN announced an agreement with PENN Entertainment (“PENN”) to launch ESPN BET, a branded sportsbook for fans in the United States. PENN Entertainment will rebrand its current sportsbook and relaunch as ESPN BET, effective this Fall in the 16 legalized betting states where PENN Entertainment is licensed. The rebrand includes the mobile app, website, and mobile website. In connection with the transaction, PENN Entertainment has agreed to grant ESPN warrants to purchase approximately 31.8 million PENN common shares that will vest ratably over 10 years, with the potential for ESPN to receive additional bonus warrants to purchase up to an additional approximately 6.4 million PENN common shares. ESPN is 80 percent owned by ABC, Inc., an indirect subsidiary of The Walt Disney Company. Cravath is representing The Walt Disney Company (“Disney”) in connection with the transaction.

The Cravath team is led by partners George F. Schoen and Daniel J. Cerqueira and includes associates Cole DuMond and Esther Kang on M&A matters; partners Andrew J. Pitts and Ryan J. Patrone and associate Obianuju A. Enworom on capital markets matters; partners Lauren Angelilli and Andrew T. Davis on tax matters; and partner Noah Joshua Phillips on regulatory matters. Anthony J. Grisafi also worked on tax matters.