Penn Entertainment is working to steer its ESPN Bet sportsbook through a challenging period. 2025 is shaping up to be a defining year in its $2 billion (around €1.85 billion) partnership with Walt Disney.
Disney can take back the ESPN Bet brand from Penn Entertainment if the market share isn’t at least 10 percent by the end of 2026, as per a report by Yogonet. In 2023, the 10-year deal gives Penn exclusive rights to operate ESPN-branded betting in the US. However, a clause allows Disney to walk away after three years if Penn fails to meet specific market access targets. Analysts warn that Penn’s window to prove the partnership’s value is rapidly narrowing.
At present, ESPN Bet holds just 3.2 percent of the US online sports betting market—far behind market leaders DraftKings (37 percent) and FanDuel (35 percent). Following its November 2023 launch, ESPN Bet briefly surged to 7 percent but has since lost momentum.
Penn CEO Jay Snowden has previously said that a 10 percent market share would mark the point where the venture becomes truly promising. Anything below that, he suggested, lacks excitement. Penn is now targeting a modest recovery to 4.7 percent by the end of 2025, alongside a return to positive cash flow.
Penn fails to meet earning targets
However, investor sentiment continues to exhibit scepticism. The company has failed to meet earnings forecasts in five out of the past six quarters. The activist investor HG Vora Capital, which holds a 5 percent stake in Penn, is advocating for a strategic pivot back to the firm’s more stable casino operations.
It has strongly criticised the ESPN Bet agreement, the acquisition of TheScore, and the unsuccessful Barstool Sports initiative, deeming them among the most detrimental digital decisions in the industry’s recent history.
Although Disney has made no public indication that it intends to withdraw, some observers believe the entertainment giant could be re-evaluating its sports strategy. Earlier this year, Disney exited its long-standing licensing agreement with Major League Baseball’s streaming arm, BAMTech—fueling speculation that it may be pulling back from certain sports-related ventures.
End of the road in 18 months?
Disney CEO Bob Iger had previously described Penn’s offer as “better than any of the competitive offers by far.” However, rising interest rates and tighter financial conditions could make it harder to secure a new partner if Disney chooses to walk away.
Some bondholders argue that cutting ties with ESPN Bet could actually benefit Penn by helping reduce its $4 billion (€3.7 billion) debt load and allowing it to refocus on its 43 casinos and racetracks across 20 US states.
Despite ESPN Bet’s underwhelming performance, the ESPN brand still carries weight, thanks to its massive fantasy sports user base and long-standing market presence. Still, if Penn fails to turn things around, both companies risk significant reputational damage.
With 18 months left before Disney can legally exit the deal, the pressure is firmly on Penn to deliver—or face the possibility of yet another high-profile failure in the digital betting space.
