5 hours ago
The ESPN Bet logo on a laptop arranged in New York, US, on Thursday, Feb. 22, 2024.
Gabby Jones | Bloomberg | Getty Images
Disney's ESPN is swapping out its sports betting partner.
In separate releases Thursday, the company said it was terminating its agreement with Penn Entertainment years earlier than planned and had signed an agreement with DraftKings to make it the exclusive official sportsbook and odds provider for ESPN.
Both changes take effect in December.
"Our betting approach has focused on offering an integrated experience within our products," ESPN Chariman Jimmy Pitaro said in a statement. "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."
Under the partnership, DraftKings will power ESPN's mobile betting tab.
"ESPN's unmatched visibility across the world of sports make this collaboration a natural fit," said DraftKings CEO Jason Robins in a statement. "As an innovative leader in digital sports entertainment, DraftKings is uniquely positioned to integrate our technology and products with ESPN's iconic brand and storytelling power."
ESPN inked its previous deal with Penn in 2023 after spending some time looking for a gambling partner. Disney had made clear in the past it would never take bets directly, making a partnership the only viable path for ESPN to get into the booming online sports gambling industry.
Sports betting has become an integral part of ESPN's direct-to-consumer streaming platform.
ESPN and Penn's partnership allowed for ESPN to rebrand and relaunch Penn's sportsbook — then known as Barstool Sportsbook — as ESPN Bet.
The agreement had a 10-year term but allowed for either ESPN or Penn to end the agreement after the third year "if specific market share performance thresholds were not met," according to the news release.
And on Thursday, Penn and ESPN announced they had agreed to wind down the partnership after just two years. Penn's sportsbook will be rebranded again as theScore Bet.
"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 in a news release.
"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 said.
Under the original deal, ESPN agreed to provide Penn with the exclusive right to its brand for the sportsbook, as well as media and marketing services. In exchange, Penn agreed to pay ESPN $1.5 billion in cash over the 10-year perio, and also granted ESPN about $500 million of warrants to buy roughly 31.8 million Penn common shares that would vest over the same period.
On Thursday the companies said Penn's $150 million in yearly cash payments will cease in the fourth quarter, as would the warrants to buy Penn's common stock.
