ESPN on Tuesday announced a 10-year deal with Penn Entertainment, a casino company, to create an online sports betting brand called ESPN Bet, catapulting the sports entertainment network into the lucrative world of online gambling.

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” and other promotional tools, Penn said in a news release. Penn will also give ESPN options to buy $500 million in Penn stock, the news release said.

Jimmy Pitaro, the chairman of ESPN, said in the news release that he believed ESPN’s strong brand, combined with Penn’s technology and experience running a sports book, provided a “tremendous opportunity to serve the ever-growing number of consumers interested in betting.”

Jay Snowden, Penn’s chief executive, called the deal “transformative” and said it would help Penn continue to evolve into a “North American entertainment leader.”

Penn and ESPN declined to comment further on the transaction, saying more information would be announced Wednesday during Penn’s quarterly financial earnings call with investors.

As part of the transaction, Penn is selling Barstool Sports, a sports media company, back to its founder, David Portnoy. Penn bought full control of the company from Mr. Portnoy this year, after acquiring a partial stake in 2020. And the Barstool Sportsbook brand was the name of Penn’s online sports book, which was struggling to compete with rivals like DraftKings and FanDuel. ESPN Bet will now replace that branding.

In a brief Twitter video, Mr. Portnoy celebrated the news that he was back in control of Barstool, which he founded in 2003.

“For us, for Barstool, for the first time in forever, we don’t have to watch what we say, how we talk, what we do,” he said. “It’s back to the pirate ship.”

Mr. Portnoy said he and Penn had both underestimated “just how tough it is for myself and Barstool to operate in a regulated world.” He referred to challenges stemming from gambling regulators and from news articles about him, by outlets including The New York Times and Business Insider, detailing allegations of misogynistic behavior and sexual misconduct.

ESPN and Penn are teaming up in a sports gambling world that has exploded in popularity. Five years after the Supreme Court overturned a law prohibiting most states from legalizing sports betting, more than half have legalized it, and Americans have legally bet more than $220 billion on sports since 2018.

Advertisements and paid sponsorships encouraging people to wager on sports games have permeated broadcasts, including ESPN’s. The network had long been mulling the best way to get in on this cash bonanza and already had two smaller deals with Caesars Entertainment and DraftKings.

ESPN, which is owned by Disney, is synonymous for many people with sports entertainment. But although the company is still profitable, its costs have been soaring, and cable cord-cutting has hurt revenue as the network tries to adjust to the streaming era. ESPN laid off a group of high-profile broadcasters in June, and Robert A. Iger, Disney’s chief executive, has said he is considering selling a minority stake in the company.

Darren Heitner, a lawyer and the founder of the sports law firm Heitner Legal, said the expensive partnership was risky for Penn, given that it is valued at only about $3.8 billion. But the Barstool branding did not appear to give Penn’s sports betting site the lift it had expected, he said, so pivoting to a bigger brand like ESPN made sense.

“It’s a second bite at the apple for Penn,” Mr. Heitner said. “ESPN’s reach is just so far larger than Barstool, and the brand equity that’s been built over decades of time will only help Penn.”

The deal allows ESPN to rake in a large sum of money related to gambling without — in keeping with Disney’s family-friendly brand — becoming a sports book itself. The deal “should make shareholders of Disney happy, particularly given a lot of questions surrounding whether ESPN continues to be a strong vehicle for the Disney brand as a whole or whether it should be spun off,” Mr. Heitner said.