- ESPN and Penn Entertainment terminated their $2 billion sports betting partnership after just two years due to poor market performance.
- ESPN immediately announced a new multiyear partnership with DraftKings, which will become the exclusive sportsbook and odds provider starting December 1.
- DraftKings stock surged 8% on the news while Penn Entertainment stock rose 10% as investors viewed the deal’s termination positively for both operators.
BRISTOL, Conn. — ESPN and Penn Entertainment announced Thursday they are terminating their sports betting partnership after just two years, bringing an unexpected end to a 10-year, $2 billion agreement that launched with significant fanfare in August 2023.
The dissolution comes after ESPN Bet failed to capture meaningful market share in the competitive online sportsbook landscape, holding only low single-digit percentages in most major states—far below the 20% market share the companies had targeted by 2027.
New Partnership Takes Shape
The network wasted no time announcing a replacement, revealing a multiyear agreement with DraftKings that takes effect December 1.
The deal makes DraftKings the exclusive official sportsbook and odds provider for ESPN, marking a return to a similar arrangement the companies had prior to 2023.
DraftKings will be integrated throughout ESPN’s platforms, including a dedicated betting tab within the ESPN app that will provide access to the operator’s sportsbook, daily fantasy, and Pick6 offerings.
ESPN’s betting approach has focused on offering an integrated experience within its products, according to Chairman Jimmy Pitaro.
Working with DraftKings allows the network to build upon that foundation, continue to super-serve passionate sports fans and grow ESPN’s direct-to-consumer business.
Financial Impact and Market Performance
Under the original Penn Entertainment agreement, ESPN was to receive $150 million annually in cash payments, along with approximately $500 million in warrants to purchase Penn common stock.
Those payments and warrants will cease in the fourth quarter, with Penn owing $38.1 million in remaining fees plus $5 million in advertising support for the transition.
Market reaction to the announcement was notably positive for the legal sports betting operators involved.
DraftKings shares surged 8% on Thursday following the partnership announcement, while Penn Entertainment stock rose 10% despite losing the ESPN partnership.
Investors appeared to view the termination of the underperforming agreement as beneficial for Penn’s future strategic direction. Disney shares declined 1.4% amid the transition.
Stock Movement After Partnership Shift
| Company | Stock Movement | Thursday Performance |
|---|---|---|
| DraftKings | Increased | +8% |
| Penn Entertainment | Increased | +10% |
| Disney | Declined | -1.4% |
The termination of operations under the ESPN Bet brand represents a significant strategic shift for both companies.
Penn Entertainment will rebrand its U.S. sportsbook as theScore Bet, leveraging its existing operations in Ontario.
Meanwhile, DraftKings’ second-place position in the market—trailing only FanDuel—positions the renewed partnership to potentially deliver the results ESPN initially sought.
