ESPN Bet will be no more in a matter of days after ESPN agreed to terminate its deal with gambling and hospitality giant PENN Entertainment.
On Thursday, ESPN and PENN agreed to mutually part ways, ending their online sports betting agreement early after securing a 10-year deal in 2023. The pact also included terms allowing PENN to end the partnership after the third year of ESPN Bet operations.
PENN paid ESPN roughly $1.5 billion in cash to launch the ESPN Bet brand. It also included $500 million of warrants for ESPN to purchase around 31.8 million shares of PENN stock. The deal also provided PENN with rights to use the ESPN brand for media and marketing.
Early termination for ESPN Bet
PENN has decided to part ways with the ESPN Bet brand only two years after launch. PENN secured the right to terminate the deal if “specific market share performance thresholds were not met.” Earlier this year, ESPN Bet held a roughly 3% U.S. market share.
By comparison, FanDuel currently holds a roughly 44% market share, according to data provided by H2 Gambling Capital. DraftKings’ market share hovers around 34%.
“When we first announced our partnership with ESPN, both sides made it clear that we expected to compete for a podium position in the space,” said PENN CEO Jay Snowden. “Although we made significant progress in improving our product offering and building a cohesive ecosystem with ESPN, we have mutually and amicably agreed to wind down our collaboration.”
ESPN’s now-nixed deal provided PENN with rights to ESPN media, marketing services and branding. Now, PENN will leverage its expertise to focus on its online casino business and relaunch its theScore Bet brand in the U.S. TheScore Bet is currently a licensed operator in Ontario, with PENN acquiring the brand in 2021 in a deal valued at around $2 billion.
The plan is to sunset the ESPN Bet app on Dec. 1 and transition it over to theScore Sportsbook.
“Our online sports betting offerings will continue to provide a top-of-funnel cross-sell opportunity for our Hollywood-branded iCasino, which will remain integrated into our online sports betting product offering in states where legal, in addition to serving as a standalone iCasino app,” added Snowden.
Second failed relationship for PENN
PENN and ESPN Bet worked together to launch ESPN Bet after PENN cut ties with Barstool Sports. PENN and Barstool Sports worked together to launch Barstool Sportsbook in 2020.
That year, PENN purchased a 36% stake in Barstool for $163 million. PENN would later acquire the remaining 64% of Barstool nearly three years later for around $388 million.
PENN ended its partnership with Barstool in 2023 to work with ESPN. The terminated deal resulted in PENN selling Barstool back to its founder, Dave Portnoy, for $1.
ESPN moves on to a new operator partner
ESPN is no longer collaborating with PENN but the entertainment giant is teaming up with DraftKings for a new partnership. The “Worldwide Leader in Sports” secured a deal with DraftKings, making the Boston-based operator an official sportsbook and odds provider of ESPN. The deal begins on Dec. 1 and includes in-app integrations for ESPN.
Starting Dec. 1, ESPN will provide DraftKings-powered odds and betting content on its platforms. The two companies will also team up to promote responsible gaming.
