Penn Entertainment Inc. and Disney’s ESPN are cashing out on their 10-year deal, with their joint venture sportsbook ESPNBet not a hit in a crowded market.

But methinks there’s more to the story here. Let’s not forget that the NBA’s ongoing gambling conspiracy has the league looking around corners, bettors on tilt, and investors spooked.

The $13.7 billion US betting market (per the American Gaming Association) is cutthroat, with whales like Flutter Entertainment’s (FLUT) FanDuel Sportsbook and DraftKings SportsBook (DKNG) occupying considerable market share and new sportsbooks popping up every day.

DraftKings is taking over ESPN’s betting business from Penn, and will integrate with ESPN’s site and apps starting December 1st, according to a shared press release this Thursday on ESPN Press Room.

“We had aspirations, we had goals to be a podium player, it didn’t work out, We’re moving on from that. And they are too,” Penn CEO Jay Snowden explained, per Bloomberg.

However, there’s an alternative explanation—or at least another factor—at play. Pardon the excessive sports puns; it’s traditional.

NBA is facing a serious betting scandal.

Image source: Ezra Shaw/Getty Images

NBA betting scandal hurt ESPNBet

I wonder if an in-studio production gaffe has ever contributed to the end of a $2 billion deal before.

Now, correlation isn’t causation, but the bad optics of ESPNBet having to pull a live ad banner the day that the massive NBA gambling scandal (including FBI arrests of active players and coaches) juuuust might not be what a family-oriented brand like Disney wants.

If you haven’t seen the video yet, watch the “ESPNBets” ad on ticker on the bottom right. And keep in mind they are discussing the very serious m’kay (but actually) largest gambling conspiracy since the federal legalization of sports betting.

“ESPN slick removed the sports ticker that was showing their betting site during this segment about the FBI investigations [crying emoji x2],” writes @adryanashton on X.

To quote Scooby Doo, “Ruh-roh”. To quote Brigid Kennedy of Sports Illustrated:

While it was the right move, people saw the gaffe, and it proceeded to trend online. Seems like nothing, but even a tiny shift can push an already dissatisfied board to a final decision.

Regardless of whether this was the straw that broke the camel’s back, the financials that got both parties to this place were convincingly uninspiring.

Related: Big bet pays off for Fox Corp., latest ratings show

“ESPN Bet, a relatively late entry, struggled to come out with the popular features other operators offered,” Christopher Palmeri reports for Bloomberg. “The business was a distant seventh place in the mobile sports-betting market in the US with a less than 3% share, according to data from Alfonso Straffon, an independent analyst.”

ESPN should be in good hands with DraftKings, who aren’t going anywhere with their dominant share (accompanied by FanDuel) of the US betting market. The sports leader always needs to partner with sportsbooks rather than forming one themselves because their parent company, Disney, doesn’t want to run a gambling operation directly, TipRanks’ Vince Condarcuri explains on LinkedIn.

Penn Entertainment loses ESPN, Barstool, moves on to theScore Bet

ESPN is the second famous partner that Penn has parted ways with in the last five years. If this were a dating history, I wouldn’t say Penn are toxic, but I would say there are signs, and if you had to find a common denominator…

However, Penn have been nothing but gracious when parting ways. The final hammering out of details of this breakup was fairly amicable, and the separation with Barstool in 2023 was downright charitable. Penn famously sold Barstool Sports back to founder Dave Portnoy for $1, as detailed here by Axios.

Penn Entertainment ESPN and Barstool timeline

  • Jan. 2020: Penn Entertainment announces an exclusive partnership and acquires a 36% stake in Barstool Sports to launch Barstool Sportsbook. (Source: InGame ​)
  • Feb. 2023: Penn purchased full ownership of Barstool Sports, but six months later, sold Barstool back to founder Dave Portnoy for $1 in order to pursue a new partnership with ESPN. (Source: Awful Announcing )​
  • Aug. 2023: Penn and ESPN enter a 10-year, $2 billion agreement, rebranding Barstool Sportsbook as ESPN Bet and aiming to rival other major sportsbooks. (Source: The Verge )​
  • Nov. 2023: ESPN Bet officially launches.​ (Source: Yahoo Finance )
  • Nov. 2025: Penn and ESPN mutually agree to end their partnership early. Penn will rebrand ESPN Bet as theScore Bet, and ESPN will partner with DraftKings going forward. (Source: Fox Business )

As for this go-round, ESPN CEO Jimmy Pitaro spoke well of the Penn collaboration:

“Together, ESPN and PENN created a truly unique offering with unparalleled integrations across our various media assets. ESPN drove over 2.9 million new users into the PENN ecosystem, with a strong uptick in first time bettors this fall. We appreciate the collaboration we had with PENN and are now pursuing other media and marketing opportunities within this space,” Pitaro was quoted by Penn for their. Nov. 6th press release.

Penn will continue as an advertising partner of ESPN’s, and will keep the ESPN Bet customer database, which it will fold into Canadian sportsbook theScore Bet starting Dec. 1st. Penn acquired Score Media and Gaming Inc. (SCR) for $2 billion in 2021.

More Sports:

  • Peacock earnings force unexpected NBC pivot
  • NBC changes beloved NBA broadcast format, confuses fans
  • Bill Simmons demands change from sportsbooks after betting scandal

An interesting takeaway: Penn’s move to theScore indicates a significant course correction. They will evidently no longer be focusing on national marketing, as they were with ESPNBet. Instead, they will be more selective, zeroing in on states where they already have casinos (see their map).

ESPN will continue to integrate their online and mobile platforms with DraftKings, so it’ll be even easier to check your scores, then slip into placing a bet.

Joking, but not really – that’s exactly what they want, no matter what moralistic hyperbole their morning talk show hosts profess.

Related: NBC changes beloved NBA broadcast format, confuses fans