Penn Entertainment and ESPN have mutually agreed to the early termination of their exclusive U.S. online sports betting agreement, effective Dec. 1. Under the terms of the original deal, ESPN agreed to provide Penn with media, marketing services and the exclusive right to the ESPN Bet trademark in the U.S. in exchange for $150M per year in cash payments to ESPN and warrants to purchase common stock of Penn. The agreement had an initial term of 10 years, with the right for either party to terminate the agreement after the third year if specific market share performance thresholds were not met. Penn plans to rebrand its online sports betting operation in the U.S. to theScore Bet, with a target date of Dec. 1 to coincide with the expected launch of sports betting in Missouri, subject to regulatory approvals. All outstanding payments to ESPN will cease in the fourth quarter of 2025. Penn will continue to be an ESPN advertising client (ESPN).
ESPN Bet, a “relatively late entry” to the sports betting space, “struggled to come out with the popular features other operators offered.” The business was “a distant seventh place in the mobile sports-betting market” in the U.S. with a less than 3% share. Despite “many attempts by others to crack the business,” the $13.7B sports-betting market is dominated by FanDuel and DraftKings (BLOOMBERG NEWS, 11/6).
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