Due to failing to achieve market share targets, Penn Entertainment has terminated its partnership with ESPN Bet ahead of schedule and plans to relaunch theScore Bet sports betting platform in the United States. This change stems from underperformance, and both parties agreed to end the originally planned ten-year agreement, with Penn shifting resources towards online casino operations.
Background and Reasons for the Termination of the Partnership
According to the third-quarter financial report, the partnership between Penn and ESPN was originally set to last until 2033, but the agreement allowed termination after three years due to not meeting market share standards. The goal was to achieve 10% to 20% market share, but ESPN Bet only accounted for 3% of the U.S. market, costing the company $150 million annually. Jay Snowden, CEO of Penn, stated that despite product improvements, the partnership has ended amicably, and the company will focus on digital adjustments.
theScore Bet's Relaunch Plan
Penn plans to complete the transition by December 1, with the ESPN Bet app automatically updating to theScore Bet. The new platform will leverage the 4 million monthly active users of theScore media app to enhance connectivity. Penn acquired theScore for $2 billion in 2021, having previously suspended its U.S. operations, and is now refocusing on the North American market.
Historical Partnerships and Industry Impact
This is Penn's second termination of a major media partnership, with the company selling Barstool Sports back to its founder for $1 in 2023. Following this change, ESPN reached a new agreement with DraftKings to become the official sports betting provider. Penn retains the 2.9 million users acquired during the partnership period and emphasizes a 40% quarterly revenue growth in its iCasino business, aiming to enhance profitability through an efficient cost structure in the future.
