Penn Entertainment’s $1.5 Billion Gamble on ESPN Bet Ends In Disaster

Just two years after announcing a 10-year, $2 billion sports betting partnership with ESPN, Penn Entertainment is planning to shut down its ESPN Bet app next month.

If you add up the money that Penn Entertainment has spent with Barstool Sports and ESPN over the last five years, the company has now lost more than $1.5 billion in its efforts to compete with FanDuel and DraftKings. In fact, CEO Jay Snowden stated that Penn Entertainment sold Barstool Sports back to Dave Portnoy for $1 because he believed ESPN would give them a better chance of reaching a 20% market share.

However, after spending two years and hundreds of millions of dollars on licensing and marketing fees, ESPN Bet currently owns just 3% of the U.S. online sports betting market. That makes ESPN Bet the seventh or eighth most popular U.S. sportsbook.

Penn’s evisceration of shareholder capital will serve as a case study for generations of business students. Snowden personally made at least $120 million in compensation over the last four to five years, despite Penn Entertainment’s stock declining roughly 90%, from an all-time high of $136 per share in March 2021 to $15 per share today.

But more importantly, Penn’s decision to ditch ESPN offers a rare glimpse into where the sports betting market is headed (and why the next wave will look very different).