ESPN deal gives Penn potential to reposition U.S. OSB business, says Jefferies

After Penn Entertainment (PENN) announced an exclusive agreement with Disney’s (DIS) ESPN to secure the ESPN Bet Trademark for online sports betting, or OSB, with an initial 10-year term and option to extend for 10 years upon mutual agreement, Jefferies said the deal gives Penn the potential to reposition its U.S. OSB business to gain share over time. However, issues remain as to the magnitude of share given the later entry, as well as the competitiveness of product advancement, says the analyst, who adds that “it is fair to focus on the cost of entry thus far for PENN, given the investment and returns thus far.” The firm, which notes that Penn concurrently sold Barstool back to founder Dave Portnoy, expects to hear more details during Penn’s Q2 earnings call and keeps a Hold rating on Penn shares.