Disney terminates agreement with Penn in favour of DraftKings
Walt Disney Co. has signed a multi-year agreement with DraftKings Inc., under which the platform will become the official betting site and odds provider for ESPN sports networks. This decision ends the collaboration with the previous partner, casino operator Penn Entertainment Inc.
According to a joint statement by the companies on 6 November, ESPN users will have access to DraftKings betting services, daily fantasy tournaments and other products starting 1 December. In addition, the operator will manage the betting tab in the ESPN mobile app and promote the newly launched online service to its audience.
Penn’s losses following the termination of the agreement
Walt Disney Co. and Penn Entertainment announced the termination of their ten-year, $2 billion agreement to launch ESPN Bet. Over two years, the partners failed to capture a significant share of the sports betting market, which led to the termination of the partnership.
For Disney, the project was an attempt to monetise the ESPN brand amid the rapid growth of the online betting market. For Penn, it was an opportunity to expand beyond its traditional casino business. However, Penn did not meet expectations: it recorded an impairment loss of $825 million in its interactive division at the end of the third quarter.
As part of the deal, Penn will make a final payment of $38.1 million to ESPN. ESPN will retain nearly 8 million warrants to purchase Penn shares at $28.95 per share. On the news, DraftKings shares rose 2% in early trading in New York, while Penn shares fell 5.5%. Disney shares were virtually unchanged, according to Bloomberg.
Penn’s management said it would focus on more targeted marketing in the future, especially in those US states where the company owns land-based casinos, abandoning the large-scale national campaigns conducted as part of ESPN Bet. ‘We had ambitions, we had goals to be the leader, but it didn’t work out,’ said Penn CEO Jay Snowden during a conference call with analysts. ‘We’re moving away from that. And so are they.’
2025 was a decisive year
In 2023, Penn signed a contract with Disney, granting exclusive rights to use the ESPN brand for betting in the US. The agreement stipulated that Penn would capture at least 10% of the online betting market by the end of 2026. However, after launching in November 2023, the platform briefly reached 7% before losing momentum. By May 2025, its market share had fallen to 3.2%, leaving it far behind the market leaders, DraftKings and FanDuel.
Snowden had previously stated that 10% was the minimum threshold at which the project would begin to show real potential. More modest figures, he said, would not justify the investment. The company hoped to recover its share to 4.7% by the end of 2025 and return to positive cash flow. This year has been decisive for ESPN Bet: the US sports betting market is estimated at $13.7 billion, and despite active attempts by new players, it remains under the control of DraftKings and FanDuel.
DraftKings holds about 37% of the market, while FanDuel holds 35%, making them the undisputed leaders in the industry. The remaining operators, including ESPN Bet, BetMGM and Caesars Sportsbook, share the remaining 28%.
Despite the partnership breakup, Penn will retain ESPN Bet’s customer base of 2.9 million users. Starting 1 December, the company will transfer these customers to the Score Bet platform, a brand acquired by Penn in 2021 for $2 billion.
This article was first published in Russian on 7 November 2025.
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