• Disney has terminated its ESPN Bet partnership with Penn Entertainment after the venture failed to meet US sports betting market share targets.
• DraftKings is the new official ESPN betting partner in a multi-year deal, becoming the odds provider for the sports network starting 1 December.
• Penn Entertainment will pay a $38.1 million final payment to ESPN and recorded a staggering $825 million impairment loss on its interactive division.
• Penn will pivot its 2.9 million ESPN Bet users to its Score Bet brand, abandoning its national US sports betting strategy for a more targeted, casino focused approach.
• The DraftKings ESPN deal solidifies the market duopoly, as DraftKings and FanDuel control a combined 72% of the US sports betting market.

Disney Scraps ESPN Bet, Taps DraftKings as New Partner

Walt Disney Co. has officially terminated its high profile, ten year, $2 billion ESPN Bet partnership with casino operator Penn Entertainment Inc. In a swift pivot, Disney immediately announced a new multi year agreement with DraftKings Inc., which will become the exclusive official betting site and odds provider for ESPN sports networks.

According to the joint statement, the new DraftKings ESPN partnership will begin on 1 December. ESPN users will gain access to DraftKings betting services and daily fantasy tournaments. DraftKings will also take over management of the betting tab within the ESPN mobile app and promote its online gambling services to the network’s massive audience.

Penn Entertainment’s Failed National Strategy and $825M Impairment

The collapse of the Penn ESPN deal has been attributed to the platform’s failure to capture a significant US sports betting market share. The 2023 agreement stipulated that Penn needed to capture at least 10% of the US sports betting market by 2026. After an initial launch in November 2023, the ESPN Bet platform briefly hit 7% market share before losing momentum, dropping to just 3.2% by May 2025.

The financial fallout for Penn Entertainment has been catastrophic. The company reported a massive $825 million impairment loss in its interactive division in the third quarter. As part of the termination, Penn will make a final payment of $38.1 million to ESPN. In a conference call with analysts, Penn CEO Jay Snowden conceded defeat, stating, “ We had ambitions, we had goals to be the leader, but it didn’t work out. We’re moving away from that. And so are they.“

The New Landscape: DraftKings ESPN Deal and Penn’s Score Bet Pivot

The deal’s termination has immediate consequences for the US sports betting market. Penn Entertainment’s stock fell 5.5% on the news, while DraftKings‘ shares rose 2%. Penn announced it will now abandon its costly national marketing campaigns and focus on a more targeted, regional strategy in states where it owns land based casinos. The 2.9 million ESPN Bet customers will be migrated to the Score Bet platform, a brand Penn acquired for $2 billion in 2021.

The new DraftKings ESPN deal solidifies the duopoly that governs the US sports betting landscape. Market data shows DraftKings holds about 37% of the US sports betting market share, with FanDuel at 35%. This leaves the remaining 28% to be split among all other operators, including BetMGM, Caesars, and now Penn’s Score Bet.

Expert Analysis: Penn’s $2bn Gamble Fails to Break the Duopoly

The collapse of the Penn ESPN Bet venture is a costly and historic failure, serving as a powerful lesson in the brutal realities of the US sports betting market. Penn Entertainment wagered $2 billion on the hypothesis that the ESPN brand, one of the most powerful in all of sports media, could successfully break the DraftKings FanDuel duopoly. The staggering $825 million impairment loss is the final, disastrous answer to that hypothesis. The venture’s inability to hold a market share above 3.2% proves that even a household name like ESPN cannot simply buy its way into a market dominated by operators with vast, pre existing DFS customer databases and billions in established marketing spend.

The new DraftKings ESPN partnership is a classic “rich get richer” scenario, a move that borders on anticompetitive. It provides the US sports betting market leader, DraftKings, with an unparalleled and exclusive customer acquisition funnel via ESPN’s massive audience. More critically, it simultaneously removes a key competitor and marketing asset from the board, crippling Penn’s national ambitions. For Penn Entertainment, the pivot to Score Bet and a casino-first state level strategy is a necessary and costly retreat. This ESPN Bet failure will likely be remembered as the moment the window closed for any new operator hoping to challenge the DraftKings FanDuel duopoly through a national brand-led strategy.

This pivot in the Disney gambling partnership also speaks volumes about Disney’s own evolving strategy. The Penn ESPN deal was a 10 year, high risk commitment to build a new market leader. The new DraftKings ESPN deal is a multi year licensing agreement with the current market leader. Disney has clearly shifted from a high risk, equity building strategy to a more stable, lower risk licensing model. It still gets to monetise the ESPN brand from the US sports betting boom but sheds the immense financial and reputational risk of being tied to a failing partner. This indicates Disney is more interested in secure, predictable revenue from online gambling than in being a market disrupting kingmaker.