Why ESPN Bet Failed in a Market Dominated by DraftKings and FanDuel
ESPN Bet will officially shut down on Dec. 1 after a two-year run. In its renewed push into sports wagering, ESPN has struck a multi-year partnership with DraftKings. With the sports betting market growing rapidly, the sudden shuttering of a venture backed by such a well-known brand has raised eyebrows.
ESPN Bet is operated by PENN Entertainment, a casino and entertainment company, through a licensing agreement. The app lets fans place wagers across a wide range of sports and teams, while integrating ESPN’s news, scores and analysis.
Nearly a quarter of Americans (22 percent) have an online sports betting account, with primary users being men ages 18 to 49, according to a Siena Poll survey. The U.S. sports betting industry generated $13.7 billion in revenue last year, up from $11 billion in 2023, according to the American Gaming Association. The nascent industry has continued to gain momentum since the Supreme Court legalized sports betting in 2018. Today, 38 states offer some form of legal sports betting.
What exactly went wrong with ESPN Bet?
Industry experts point to several factors behind ESPN Bet’s collapse. A leading argument is timing: the product simply arrived too late. With DraftKings and FanDuel firmly entrenched at the top of the sports betting market (commanding 44 percent and 34 percent of the market, respectively), breaking the duopoly has become increasingly difficult.
“If ESPN had started in 2018, there’s a better argument it could have won at the end of the day,” Dustin Gouker, a gambling industry consultant, told Observer. “But it would have depended on lots of other variables, including the sports betting product itself, which many would say was subpar with PENN until recently.”
Ross Benes, a senior analyst with eMarketer, said ESPN Bet was “a mess from the start.”
ESPN Bet is the successor to PENN’s Barstool Sportsbook, launched in 2020 through a partnership between PENN and Barstool Sports and shut down in 2023 after PENN sold the brand back to its founder, Dave Portnoy. “There was the whole Barstool Sports thing and it was unclear where that was going,” Benes told Observer.
“Barstool wasn’t great at converting users in partnership with PENN. ESPN was bigger, but was arguably more ineffective as the top of the marketing funnel for the sportsbook,” Gouker said. ESPN chairman Jimmy Pitaro said the rebranding “drove over 2.9 million new users into the PENN ecosystem.” ESPN Bet reached 1.1 million users during its first week in November 2023. Before the rebrand, Barstool Sportsbook had just more than 72,000 registered users in Pennsylvania, the first state where it launched, in 2023.
ESPN maintains deep relationships with major sports leagues, including the NFL, NBA, MLB and NCAA, through broadcast and media rights agreements. While leagues have increasingly embraced sports betting, that momentum has been complicated by scandals. The NBA is currently under investigation for some of its talent allegedly getting illegally involved in gambling. Benes said it’s likely ESPN and its parent company, The Walt Disney Company, are being cautious, making it easier to outsource sports betting to an established operator like DraftKings. “They don’t want to have something called ESPN Bet while their top partners are being investigated.”
ESPN Bet had been intended to “compete for a podium position in the space,” PENN Entertainment CEO and president Jay Snowden said earlier this month, when announcing the termination of the partnership. Snowden added that PENN plans to rebrand its U.S. sports betting offering to theScore Bet, which currently operates in Canada, and will “refocus” its digital strategy on the company’s growing iCasino business.
Under their initial deal, PENN agreed to pay ESPN $150 million a year for use of the sports network’s name. The partnership had a 10-year term, but included a clause allowing either party to terminate the agreement after the third year if “specific market share performance thresholds were not met.”
Most observers agree the termination hurts PENN more than Disney financially, particularly since ESPN alone generates billions of dollars from sports rights deals. In 2024, Disney reported $91.4 billion in revenue, making a $150 million loss comparatively small.
“When you think about it, $150 million is way less than it costs to produce one Marvel movie,” Benes said.
