Chavdar Vasilev is a journalist covering the casino and sports betting market sectors for CasinoBeats. He joined CasinoBeats in May 2025 and reports on industry-shaping stories across the US and beyond, including legislative debates, market...
Read Full BioWith PENN Entertainment’s ESPN Bet struggling to grow its market share and meet initial expectations, the operator might decide to abandon the partnership with ESPN. That’s according to Stifel Financial analyst Jeffrey Stantial, who wrote in a memo to clients that the company is increasingly likely to walk away from the partnership when the mutual opt-out window opens in late 2026.
“Stable handle share despite product/integrations improvement supports our view that termination of the ESPN Bet partnership is the most likely scenario when the mutual opt-out option comes in late 2026,” Stantial wrote.
He added that “recent user acquisition may also be pacing below expectations as SensorTower shows ESPN Bet’s share of OSB app downloads down Y/Y in July/August and up only narrowly in September.”
This is not the first time Stantial has noted a breakup of the deal. In March, he wrote that “the most value-accretive outcome” for PENN is to terminate the agreement and sell theScore. In July, he stated that there is an “increasing probability” of the operator exiting the partnership.
The remarks echo a growing belief among analysts that PENN’s media-partnership strategy — from Barstool Sports to ESPN Bet — has failed to deliver a profitable or competitive digital business.
Why the Exit Route is Possible
Several signals back up Stantial’s view:
- ESPN Bet’s market share remains small and below expectations. Various industry trackers suggest it is hovering around 3% of the US online sports-betting handle (and roughly the same or slightly lower for revenue share). That’s much below Penn’s original target of around 20% by 2027.
- PENN itself reportedly forecast a 4.7% share by the end of 2025, after dropping to 2.3% in April and May.
- Despite product enhancements (like the FanCenter personalized hub launched in early August), the economics haven’t yet materially improved. The digital interactive division achieved record revenue in Q2 2025 (about USD $316 m) but still reported significant losses.
- The three-year opt-out clause (late 2026) offers an exit option if market share doesn’t improve. That’s something Stantial now emphasizes as likely rather than improbable.
A Costly Media Experiment
PENN announced the ESPN Bet partnership in August 2023 for reportedly $1.5 billion. With that, the company also ended its Barstool Sports deal.
PENN first acquired a 36% stake in Barstool in 2020, hoping to tap into younger demographics. It then bought the remainder in February 2023. After regulatory scrutiny and a steady decline in market share, PENN sold Barstool back to founder Dave Portnoy for $1, taking a half-billion-dollar hit.
Analysts blasted the sequence. One Craig‑Hallum analyst wrote, “It is hard to defend this sale process as maximizing the asset’s value for shareholders.”
PENN described the ESPN pivot as a reset, leveraging a mainstream media brand with built-in trust and reach. However, the new venture has not fared better than Barstool.
As Stifel’s Stantial pointed out, ESPN Bet’s share of online-sports-betting downloads has stagnated despite heavy promotional spend, while competitors FanDuel and DraftKings have consolidated their market dominance.
Investor Drama: HG Vora Turns Up Heat
The turbulence has drawn scrutiny from activist investor HG Vora Capital Management, which owns a significant stake in PENN. Earlier this year, the firm pushed for leadership and strategic change.
In a 2025 investor presentation, HG Vora accused PENN of “poor strategic decisions, failed transactions, and poor execution.” It argued that nearly $4 billion in shareholder capital had been wasted on failed digital ventures, such as Barstool and ESPN Bet.
HG Vora sought to nominate new board members. It also filed suit after PENN reduced the number of board seats open for election.
PENN fired back, accusing HG Vora of “false claims and mischaracterizations,” while defending its compliance-driven decision-making and board structure.
However, the public spat underscored investor frustration with years of underperformance — PENN’s stock has fallen by over 70% from its 2021 peak.
The Brighter Spot: Hollywood Casino App
While its sports betting ventures have failed to gain traction, PENN’s iGaming app has quietly emerged as a bright spot.
In August 2025, PENN expanded the Hollywood Casino standalone iCasino app to West Virginia. The Mountain State became the fourth state for the standalone app, following Pennsylvania, Michigan, and New Jersey.
According to PENN’s Q2 2025 earnings, monthly active users climbed 49% year-over-year, while net gaming revenue rose 29%.
Meanwhile, retail players who also use the app increased their theoretical retail play by 19% in Pennsylvania and 28% in Michigan. Additionally, online play in those states jumped by 133% and 242%, respectively.
PENN described the app as “additive rather than cannibalizing” to its retail business. That’s a contrast to the ESPN Bet project, where digital losses continue to overshadow the stability of its brick-and-mortar operations.
