It might be time to start singing the hymns for ESPN and its sportsbook.
After signing a deal with sports betting giant Penn National in 2022, ESPN BET has floundered to a horrific market share of just 2.35 percent throughout the sports betting landscape.
Penn National had planned for ESPN BET to have a 20 percent market share by 2027.
The two partnered on a 10-year, $2 billion licensing agreement to use the ESPN name, as well as have access to talent and TV programming advertisement.
“When we announced our partnership, both sides made it very clear that we expected to compete for a seat at the podium. And we’re not on pace right now to do that,” Penn National CEO Jay Snowden said in an earnings report. “We have tremendous plans in place for 2025 and 2026.
“But if, for whatever reason, we’re not hitting the levels that we need to, then obviously, as you’re approaching the third anniversary, you have a three-year clause in that contract that both sides will have to do what’s in their best interests. And so, that’s always out there.”
Penn National can opt out of its 10-year deal with ESPN BET after the third year in 2026.
This is the second massive brand partnership that Penn National and Snowden have put together for the betting giant, the first being a failed Barstool Sports deal.
PENN infamously sold Barstool Sports back to founder Dave Portnoy for $1 in one of the boldest, albeit joke-worthy, moves in the business world over the past decade.
PENN stock has declined 32.69 percent over the past two years as the deal increasingly looks like a failure for all parties.
A crux of the issue is ESPN’s lack of urgency or unwillingness to integrate ESPN BET at a high level across all chanels.
It took three years to integrate ESPN BET with its prized ESPN app, making the transition from its highly lucrative app to the betting platform impossible prior to the 2024 football season.
ESPN’s main app, which is well known for its video content, scores, stats, and articles, had more than 23 million unique monthly users as of May 2024, by far the most in the mobile sports category, with MLB At-Bat having just 3.5 million and CBS Sports boasting 3.3 million.
The sports powerhouse has been criticized for slow-rolling integration on its website and in the app, while it appeared that talent was limited in what they could say or do.
Another bizarre choice was ESPN BET’s unwillingness to offer sign-up bonuses in the most critical state, New York, despite other sportsbooks like FanDuel and DraftKings choosing to do so.
New York taxes sportsbook winnings at 51 percent, leading to PENN’s decision to not offer bonuses for new users.
Penn National has only been able to convert 0.1 percent of ESPN app users to its betting platform, certainly far less than expected.
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Penn National’s online betting business lost $109.8 million in just the fourth quarter of 2024.
Should PENN opt out of its deal, ESPN could opt to jump into bed with FanDuel or a betting giant like DraftKings; the two companies combined own 70 percent of the US online betting market share.
ESPN would likely be better off having a new partner anyway.
Its sportsbook has encountered troubles in the past, oddly grading parlays as pushes with legs that are voided due to cancelations, rain-outs or other.
Fan outrage was so immense that ESPN BET had to change its rules regarding the matter.
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