Penn Entertainment is ending its ESPN Bet sportsbook venture, less than three years after launching the high-profile partnership with the sports media giant.
The move comes after the underperforming sportsbook failed to capture significant market share, reportedly accounting for just 3% of the US market. Penn had been paying $150 million annually for ESPN’s media, marketing, and the exclusive right to ESPN Bet.
According to Penn’s third-quarter report, the original 10-year agreement, which was intended to run through 2033, included an option to terminate early if market share targets were not met. The companies had aimed for 10%-20% of the market within the first three years.
“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,” Penn President and CEO Jay Snowden said.
“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.
We plan to realign our digital focus on our growing iCasino business, while continuing to capitalise on our omnichannel advantage as the nation’s leading regional retail casino operator.”
theScore Bet Relaunch
Penn will replace ESPN Bet with itsScore Bet, planning a US relaunch by 1 December to align with the start of Missouri sports betting.
The ESPN Bet app will automatically update to theScore Bet on launch day. Snowden highlighted that theScore Bet will leverage connectivity with theScore media app, which boasts four million monthly North American users.
Penn acquired theScore in 2021 for $2 billion. The sportsbook previously ended its US operations in 2022 to focus on Canada.
This follows a previous costly venture with Barstool Sports, which Penn purchased but later divested after disappointing performance, before attempting the partnership with ESPN.
Financial Implications
Penn will pay Disney-owned ESPN $38.1 million in the fourth quarter and an additional $5 million for marketing related to theScore Bet and Hollywood Casino, according to an 8-K filing.
The company must discontinue use of the ESPN brand by 15 December, while Disney cannot license ESPN Bet for at least 15 months after 1 December.
“Together, ESPN and Penn created a truly unique offering with unparalleled integrations across our various media assets,” ESPN Chairman Jimmy Pitaro said.
“ESPN drove over 2.9 million new users into the Penn ecosystem, with a strong uptick in first-time bettors this fall.
We appreciate the collaboration we had with Penn and are now pursuing other media and marketing opportunities within this space.”
Penn retains the 2.9 million users acquired during the partnership. ESPN holds vested warrants to purchase nearly eight million shares at a strike price of $28.95.
Refocusing on iCasino
Snowden said theScore Bet will continue to funnel users to Penn’s Hollywood Casino iCasino app, with cross-selling to 33 million Penn Play programme members.
“Our OSB offerings will continue to provide top-of-funnel acquisition and cross-sell opportunities for our Hollywood-branded iCasino, which will remain integrated into our OSB product in states where legal, in addition to serving as a standalone iCasino app,” he said.
Penn plans a more efficient cost structure, with performance-based and regionally targeted marketing, freeing resources for strategic investments in high-return markets.
In the third quarter, Penn’s land-based business generated $1.4 billion in revenue. Online operations struggled, with revenues of $297.7 million and an adjusted EBITDA loss of $76.6 million, below expectations.
Still, Penn’s iCasino products showed growth, with a 40% year-over-year increase in quarterly revenue. Snowden highlighted that the business continued to see rising monthly active users.
New Partnerships and Media Strategy
This is Penn’s second failed media-driven sportsbook venture, following the divestment of Barstool Sports in 2023 after low conversion of its audience into betting customers.
Shortly after Penn announced the end of ESPN Bet, ESPN partnered with DraftKings to become its official sportsbook and odds provider from 1 December.
“Our betting approach has focused on offering an integrated experience within our products,” Pitaro said.
“Working with DraftKings, a leader in the space, will allow us to build upon that foundation, continue to super-serve passionate sports fans and grow our ESPN direct-to-consumer business.
We are excited about this new collaboration with DraftKings.”
DraftKings’ products, including sportsbook, daily fantasy, and Pick6 offerings, will integrate across ESPN’s ecosystem.
“ESPN’s unmatched visibility across the world of sports makes this collaboration a natural fit,” DraftKings co-founder and CEO Jason Robins said.
“Together, we’re delivering a seamless, engaging, and responsible experience that elevates how fans connect with live sports.”
ESPN Bet will transition into a sports betting content brand, featuring DraftKings Sportsbook integrations and programming such as “ESPN Bet Live.”