Penn Entertainment Ceases ESPN Bet Operations, Plans US Relaunch of theScore Bet
Penn Entertainment is making a significant move by ending its partnership with ESPN Bet earlier than planned, a decision driven by the company’s failure to meet its market share ambitions. This marks another costly chapter for Penn in its attempt to forge a major media collaboration in the sports betting industry. The partnership, which was highly publicized, is now coming to an abrupt close less than three years after its inception, following a costly investment of $150 million annually and a disappointing 3% share of the US market.
According to Penn’s third quarter report released on Thursday, both companies agreed to terminate their agreement amicably. Originally set for a decade, the deal was supposed to run through 2033, with Penn paying ESPN for media rights, marketing, and exclusive access to ESPN Bet. The deal included an option for either side to exit after three years if certain market share targets were not achieved. The initial goal was to capture between 10% and 20% of the market within that timeframe, but those targets proved elusive.
Penn’s President and CEO, Jay Snowden, reflected on the situation, stating, “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. 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.” He further explained that Penn plans to shift its focus toward its growing iCasino business, emphasizing their strength as a leading regional retail casino operator and their omnichannel strategy.
In light of this change, Penn is preparing to relaunch its theScore Bet product in the United States. The new version is targeted for launch by December 1, aligning with the start of sports betting in Missouri. Snowden mentioned that the app will automatically update from ESPN Bet to theScore Bet, and that the media app has a substantial user base of four million monthly users across North America. Penn acquired theScore in 2021 for $2 billion, but the sportsbook temporarily halted US operations in 2022 to concentrate on Canada’s market.
Penn’s previous foray into media partnerships, including its costly acquisition of Barstool Sports, ended similarly in disappointment. After investing heavily, the company sold Barstool back to founder Dave Portnoy for just $1 in 2023, following underwhelming results in converting its audience into a meaningful sports betting market share. Now, Penn is preparing to shift its focus from media collaborations to enhancing its core iCasino offerings and regional retail operations.
Financially, Penn will pay $38.1 million in the fourth quarter to Disney-owned ESPN, along with an additional $5 million to promote theScore Bet and Hollywood Casino. The company must cease using the ESPN brand by December 15, and Disney cannot license the ESPN Bet brand for at least 15 months following that date. ESPN’s chairman, Jimmy Pitaro, acknowledged the collaboration’s initial success, noting that “ESPN drove over 2.9 million new users into the Penn ecosystem,” and expressed appreciation for the partnership’s efforts.
Despite the end of this chapter, Penn retains the 2.9 million users gained through ESPN, and ESPN still holds warrants to purchase nearly eight million shares at a strike price of $28.95. Both companies will continue to collaborate on marketing and media initiatives, with ESPN announcing a new partnership with DraftKings to serve as its official sportsbook and odds provider starting December 1.
Snowden emphasized that Penn will continue to leverage theScore as a funnel to its Hollywood Casino iCasino app, aiming to cross-sell to its 33 million Penn Play members. “Our OSB offerings will continue to provide top of funnel acquisition and cross-sell opportunities,” he said, highlighting plans to operate more efficiently by shifting from fixed media spending to targeted, performance-based marketing that complements their casino footprint. This realignment aims to improve profitability and expand their presence across North American markets.
In the third quarter, Penn’s land-based operations remained stable, generating $1.4 billion in revenue, but online revenues fell short at $297.7 million, with an adjusted EBITDA loss of $76.6 million. Snowden attributed this to a “customer-friendly hold” and lower online sports betting volumes than expected. Nonetheless, he pointed out the positive momentum in the iCasino segment, which saw a 40% year-over-year increase in quarterly revenue and continued growth in active monthly users.
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This is not Penn’s first failed media partnership. The company previously invested heavily in Barstool Sports, acquiring full ownership in 2022 for a total of $551 million, only to sell it back to founder Dave Portnoy for just $1 in 2023 after underwhelming performance in the sports betting space.
Meanwhile, shortly after Penn’s exit from ESPN Bet, ESPN announced a new partnership with DraftKings, making DraftKings its official sportsbook and odds provider starting December 1. ESPN’s chairman, Jimmy Pitaro, highlighted the strategic value, saying, “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.” DraftKings will integrate its products across ESPN’s ecosystem, including sportsbook, daily fantasy, and the DraftKings Pick6 app, further cementing its presence in sports media.
