Penn Entertainment and ESPN have agreed to end their sports betting partnership after failing to meet their market share performance targets.
Penn Entertainment agreed a 10-year deal with ESPN in August 2023, giving Penn the exclusive right to the ESPN BET trademark for online sports betting in the United States in exchange for $150 million a year in cash payments and warrants to purchase Penn shares.
Penn said in a statement Thursday that the agreement will now be terminated on 1 December 2025 under a clause which allows either party to terminate the deal after the third year if specific market share performance thresholds have not been met.
“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 Jay Snowden, CEO and president of Penn Entertainment.
“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. We plan to realign our digital focus on our growing iCasino business, while continuing to capitalize on our omnichannel advantage as the nation’s leading regional retail casino operator.”
Following the termination of the ESPN Bet deal, Penn will rebrand its US online sports betting (OSB) offering to the ScoreBet brand which it operates in Ontario, Canada.
“Our OSB offerings will continue to provide a top of funnel cross-sell opportunity for our Hollywood-branded iCasino, which will remain integrated into our OSB product offering in states where legal, in addition to serving as a standalone iCasino app,” Snowden added.
Jimmy Pitaro, chairman of ESPN, commented, “Together, ESPN and Penn created a truly unique offering with unparalleled integrations across our various media assets. ESPN drove over 2.9 million new users into the Penn ecosystem, with a strong uptick in first time bettors this fall. We appreciate the collaboration we had with Penn and are now pursuing other media and marketing opportunities within this space.”
Shares in Penn Entertainment Inc. (NASDAQ:PENN) closed 1.05 per cent higher at $16.35 per share in New York Thursday, and were up a further 8.87 per cent at $17.80 per share in pre-market trading following the ESPN Bet announcement and release of the company’s third quarter results.