ESPN is changing its online sports gambling strategy by ending its partnership with Penn Entertainment.
The companies announced Thursday that they were ending an agreement under which ESPN offered a stake in Pennsylvania, which operated the sports betting app ESPN Bet. The app will no longer feature the familiar red ESPN logo. It will operate under a new name.
ESPN said it will partner with DraftKings, a leading sports betting company that will provide odds and other game-related data for the Walt Disney Co. unit's programming. and its digital platforms. ESPN staff will use DraftKings odds starting December 1st.
The app simply didn't meet its financial goals in a highly competitive business that operates in the 31 states where online gambling is legal, according to people familiar with the ESPN-Penn agreement.
In 2023 Penn agreed to pay $1.5 billion in cash over the next 10 years. for the rights to use the ESPN name in its application. As part of the deal, ESPN promoted the product on its programming and provided access to on-air talent. ESPN had the option to purchase up to 31.8 million Penn shares for $500 million over a 10-year period.
“When we first announced our partnership with ESPN, both parties made it clear that we expected to compete for a spot on the podium in this space,” said Jay Snowden, CEO and President of Penn Entertainment. “While we have 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.”
The deal ended shortly after an FBI investigation led to the arrest Miami Heat player Terry Rozier who allegedly withdrew from the game, claiming injury, in order to win one of his bets.
ESPN's decision is not related to recent news, as the company has been in talks with DraftKings about a new partnership for months. But not having ESPN's name on the betting app will keep the brand out of the fire if the NBA's case escalates.
Starting in December, the DraftKings app will be integrated exclusively into ESPN platforms.
The companies said they would “collaborate to advance their shared commitment to responsible gaming by devoting significant resources to training, customer awareness and promotion of responsible gaming through campaigns and integrations.”
DraftKings will provide a betting tab in the ESPN app, and its customers will receive special offers on ESPN's recently launched direct-to-consumer streaming product.
DraftKings operates in 28 states, as well as Washington, D.C. and Ontario, Canada, and has more than 10 million customers across all of its products.
