• Loading stock data...
Friday, October 3, 2025

$2B ESPN Bet Deal in Trouble As Penn Mentions 2026 Opt-Out

ESPN and Penn Entertainment had major aspirations in 2023 to cut into the sports betting dominance of FanDuel and DraftKings. That’s not happening, and the $2 billion deal is under more pressure than ever.

ESPN Bet
ESPN

The $2 billion bet by Penn Entertainment to create a large-scale sports betting brand through ESPN is showing more struggles. Some investors are now growing restless, and maybe Penn Entertainment is, too.

Penn Entertainment said Thursday it posted an adjusted fourth-quarter loss of $109.8 million from its interactive division that includes ESPN Bet’s online business. Penn Entertainment’s overall results, meanwhile, $1.67 billion in revenue and $133.8 million in net losses, missed analyst forecasts.

Those broader financial results follow the relatively meager standing ESPN Bet still holds in many key states. In the most recent data available, ESPN Bet ranked seventh in revenue in New York, Illinois, and New Jersey—the top three individual states for sports betting. In these key locales, ESPN Bet generally holds 1% to 2% of the market in terms of revenue, a far cry from the 20% share that Penn Entertainment and ESPN ultimately intend to garner by 2027.

Now nearly two years into the deal between Penn Entertainment and ESPN, sports betting leaders FanDuel and DraftKings continue to dominate the industry, and neither behemoth has seen any meaningful reduction in its market power. 

Penn Entertainment president and CEO Jay Snowden acknowledged the uphill climb in an earnings call Thursday morning with analysts.

“We have more work to do to unlock the full potential and value of our partnership with ESPN,” Snowden said.

He then continued, and suggested that Penn Entertainment could even exercise an opt-out clause in its 10-year ESPN deal that is available in 2026.

“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,” Snowden said. “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.”

A Coming Reckoning?

Before that could happen, though, Penn Entertainment is also facing an activist investor effort to claim three board seats due to heavy dissatisfaction with the company’s interactive strategy. HG Vora Capital is seeking to reform what it calls “reckless spending,” in part through media partnerships like the one with ESPN.

“The company’s interactive strategy has been an abject failure due to a pattern of overpaying, overpromising, and not delivering,” said Parag Vora, HG Vora founder and portfolio manager.

Penn Entertainment previously spent $551 million purchasing Barstool Sports before selling the company back to founder Dave Portnoy for $1 to help finalize its ESPN partnership.

Snowden did not directly address the proxy fight Thursday, but the company has said it is “committed to creating long-term value for shareholders.” Penn Entertainment shares were essentially flat in early Thursday trading, but remain less than one-sixth of their value compared to early 2021. 

Ironically, the situation bears some similarity to a separate, and ultimately unsuccessful, effort last year by activist investor Nelson Peltz to assume multiple Disney board seats. Among Peltz’s objections was ESPN’s digital strategy, now heightening with the pending debut of a direct-to-consumer service.

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

Grand Slam Track
exclusive

Investors Keep Grand Slam Track Alive With 8-Figure Lifeline

The league paid athletes half of what they’re owed Friday.
Caitlin Clark
exclusive

Caitlin Clark Will Not Join Second Season of Unrivaled

The Fever star struggled with several injuries in her second WNBA season.
exclusive

Opendorse Is Taking Over Parts of Failed NIL Collective Operator SANIL

SANIL abruptly shut down its operations this week.
Caitlin Clark

Caitlin Clark Backs Napheesa Collier in Fight With WNBA

Clark had her exit interview on Thursday after an injury-riddled season. 

Featured Today

Kōloa Rum Company Rum Rusher

Panthers Bubbly, Jets Wine, Manning Whiskey: The Sports Booze Boom

A sommelier dives into the sports booze trend—and tries Jets wine.
Nov 17, 2024; Pittsburgh, Pennsylvania, USA; Pittsburgh Steelers fans wave Terrible Towels against the Baltimore Ravens during the fourth quarter at Acrisure Stadium
September 26, 2025

Steelers’ Irish Roots Are Deeper Than NFL Dublin Game

The Steelers have history and the foundation for a future in Ireland.
FARMINGDALE, NY - SEPTEMBER 23: Rory McIlroy of Team Europe hits out of the rough on the first hole during the 2025 Ryder Cup at Bethpage State Park on Tuesday, September 23, 2025 in Farmingdale, New York.
September 25, 2025

Ryder Cup in New York: Record-Setting Hopes and Fan Concerns

Organizers anticipate record attendance and revenue, but worry remains about fan behavior.
FARMINGDALE, NY - SEPTEMBER 22: Cameron Young of Team USA hits his tee shot on the third hole during the 2025 Ryder Cup Practice Round at Bethpage State Park on Monday, September 22, 2025 in Farmingdale, New York.
September 23, 2025

U.S. Ryder Cup Players Will Be Paid. Not Everyone Is Pleased

Americans are receiving a $200,000 stipend, and not everyone is pleased.
Sep 27, 2025; Athens, Georgia, USA; Georgia Bulldogs running back Josh McCray (2) runs against Alabama Crimson Tide linebacker Nikhai Hill-Green (41) and defensive back Keon Sabb (3) in the second half at Sanford Stadium.
exclusive

College Football Viewership Is Up Double Digits. Here’s Why

Average game viewership is up by more than 10% so far.
Georgia Bulldogs quarterback Gunner Stockton (14) throws the ball during the first half of a NCAA college football game against Alabama in Athens, Ga., on Saturday, September 27, 2025.
October 1, 2025

Alabama-Georgia Draws 10.4M Viewers, Drives Record CFB Season Pace

ABC drew 10.4 million viewers for Alabama-Georgia.
The NBC Sports broadcast team works Michigan State's football game against Boston College on Saturday, Sept. 6, 2025, at Spartan Stadium in East Lansing.
October 2, 2025

NBC Sports, Peacock Stay on YouTube TV With Long-Term Deal

The broad-based agreement keeps NBC channels with the key distributor.
Sponsored

How Soccer Star Jozy Altidore Became a Buffalo Bills Owner

Jozy Altidore discusses building a business legacy off the field.
Green Bay Packers wide receiver Christian Watson (9) pulls down a touchdown reception against Dallas Cowboys cornerback DaRon Bland (26) in the fourth quarter during their football game Sunday, November 13, at Lambeau Field in Green Bay, Wis.
September 24, 2025

Packers-Cowboys Game Is Getting Super Bowl–Like NBC Treatment

The network will bring its pregame show to Dallas.
Sep 18, 2025; College Park, Georgia, USA; Indiana Fever forward Aliyah Boston (7) reacts as the Fever defeat the Atlanta Dream during game three of round one for the 2025 WNBA Playoffs at Gateway Center Arena at College Park.
September 19, 2025

Fever Upset of Dream Brings Ratings Boost to WNBA Semis

The Indiana Fever will face the Las Vegas Aces in the semifinals.
September 17, 2025

Fever Ratings Fall Without Clark, but Rest of WNBA Game 1s Surge

The Indiana Fever game drew 47% fewer viewers this year.
Sep 14, 2025; Kansas City, Missouri, USA; Philadelphia Eagles wide receiver DeVonta Smith (6) makes a reception defended by Kansas City Chiefs cornerback Trent McDuffie (22) during the fourth quarter of the game at GEHA Field at Arrowhead Stadium.
September 16, 2025

Eagles-Chiefs Super Bowl Rematch Sets Early NFL TV Ratings Mark

Several new milestones are established with the big early-season matchup.