ESPN Bet always faced an uphill battle when it came to trying to break the hold that DraftKings and FanDuel have on the American sports betting landscape. And that reality is now hitting the platform hard.
Penn Entertainment came to an agreement with ESPN to license the brand in 2023 as the gaming giant moved on from Barstool Sports branding. After years on the outside, it finally got ESPN into the sports betting game, but would it be too little too late with DraftKings and FanDuel holding so much of the market share?
Increasingly, the answer appears to be yes.
During the Penn earnings call on Thursday, there was no way to run from the challenges currently facing ESPN Bet in the marketplace.
Less than 0.1% of ESPN app users have linked an ESPN BET account, per figures from today’s $PENN earnings call
— Ryan Butler (@ButlerBets) February 27, 2025
((VERY)) rough, rounded estimates of a few select combined US sportsbook/iCasino platform monthly active user totals as of the start of 2025:
FanDuel: 4 million
DraftKings: 3.5 million
BetMGM: 1 million
ESPN BET: 350,000
BetRivers: 200,000— Ryan Butler (@ButlerBets) February 27, 2025
Penn Entertainment CEO Jay Snowden admitted that ESPN Bet is “not on pace” to hit their goals and offered an ominous warning. He said that when the third year of their partnership comes up in 2026, “both sides will have to do what’s in their best interests” in mentioning a clause in their contract according to the transcript at Seeking Alpha:
And just taking a step back, when we announced our partnership with ESPN in the summer of 23, both sides of this partnership made it very clear that we expected to compete for a seat at the podium. And we’re not on pace right now to do that. So, I would just say that, our expectations as we’re moving through 2025 are that we’re continuing to show improvements in both the sports betting business, of course, on the online gaming business as well. And if we’re not hitting the levels that we expect to as we move through the year and you approach the end of the calendar year, then you’ve got levers operationally.
Obviously, there’s a lot of dollars in the marketing category of our digital business. We’ve got a cost structure that right now is built for us to be a scale player because that’s where we expect to be. That’s where ESPN expects us to be. But if you’re not trending that direction, then obviously you’re not going to be operating a business from a cost structure standpoint at a scaled level. So, we have levers at our disposal.
Of course, as you get into 2026, you hit the third anniversary of our relationship with ESPN. And both sides expect to be in a really good place. I mean, we are heads down, laser focused. We have tremendous plans in place for 2025 and 2026. But if for whatever reason we’re not hitting the levels that we need to, then obviously as you’re approaching that third anniversary, you have a three-year clause in the contract that both sides will have to do what’s in their best interests.
You would be hard pressed to find anyone who would call the Penn Entertainment ESPN Bet partnership a success at this point. Even though ESPN has built in advantages of having the WorldWide Leader in Sports as a promotional vehicle with the most watched network and most visited websites, it still hasn’t been enough to break through the reign of DraftKings and FanDuel in the consciousness of American sports bettors.
While Penn’s stock wasn’t tangibly affected by the earnings call today, perhaps recent losses have already baked in the grim future facing ESPN Bet. Given how much investment there has been in promoting the platform already, it’s hard to imagine anything that can turn around its fortunes. And as Jay Snowden indicated today, it may already be time for ESPN and Penn to think about what is going to happen when they inevitably decide to go their separate ways.
After opting out of their MLB deal because the economics were no longer working, it could very well be that ESPN faces a similar path with their betting platform.
