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Read Full BioESPN Bet will shut down, as PENN Entertainment announced during its Q3 earnings call that it will terminate its partnership with ESPN.
PENN revealed that it would bring an end to the venture when reporting its Q3 results. PENN CEO & President Jay Snowden stated, “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.”
“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.”
Snowden said that PENN now plans to focus on theScore Bet as its digital betting platform in the U.S and Canada. PENN also paid $2 billion to acquire theScore. The venture has had mixed fortunes, and PENN was forced to lay off 75 workers this summer in an effort to advance its online strategy.
It plans to pivot its online betting operations to theScore in conjunction with the launch of sports betting in Missouri on December 1.
All outstanding payments to ESPN will cease in the fourth quarter of 2025. Leading up to and following the termination date, ESPN said it will work with PENN to facilitate a transition from ESPN BET to theScore Bet.
PENN’s Sports Betting Failures Attract Investor Criticism
The collaboration with ESPN has failed to deliver returns on the $1.5 billion PENN paid to launch the sports betting platform. This outlay followed a failed $550 million investment in Barstool Sports. It eventually sold the company back to its founder, Dave Portnoy, for $1.
The continued failures of PENN’s sports betting investments have attracted much criticism from investors. PENN’s stock price has continued to stagnate amid a lack of capitalization on the growth of online sports betting. Its price remains at under $17, a 15% drop from this time last year. The share price was over $130 just a few years ago.
PENN had pinned a lot of hope on ESPN Bet and had set a goal of obtaining a 20% market share in sports betting by 2027. This has never looked like a realistic target. It lowered its expectation to 4.7% earlier this year, after dropping to 2.3% in April and May.
The launch of a new Fan Center before the start of the NFL season has failed to deliver any meaningful change in the platform’s fortunes.
PENN Focuses on iGaming, Sports Betting Struggles
In its Q3 results, PENN noted a loss of $0.22 per share, significantly more than the $0.10 estimated by analysts. Revenue was up 4.8% from the prior year to $1.717 billion. However, a net loss of $864.6 million has been damaging. This led to an Adjusted EBITDA loss of $76.6 million.
Snowden attributed the poor performance in the online sports betting (OSB) segment to customer-friendly sports results. He stated, “Gaming revenues and Adjusted EBITDA in the quarter came in below expectations due to customer-friendly hold across our digital operations and lower than anticipated OSB volumes.”
On a positive note, the company experienced a 40% growth in its iGaming sector. This will be an area of focus going forward. Snowden added, “PENN’s iCasino forward approach has clear long-term alignment to our core business, which will focus on cross-sell opportunities across our ecosystem and enhanced connectivity to our 33 million member PENN Play loyalty program.”
The company had slightly beaten expectations in its Q2 results, but that trend has not continued into Q3. Whether theScore can deliver long-awaited returns from its sports betting investments remains to be seen.
