Analysis: Market impact of ESPN/DraftKings deal, what's next for Penn?

Many involved with sports betting typically use 'rapid' or 'swift' to describe its efforts in showcasing new ventures, but perhaps the most transparent example of how fast-paced the industry repositions itself occurred on November 6.

In what has been a flurry of news surrounding prediction markets, Q3 results and takeaways from the Global Gaming Expo, ESPN and DraftKings seized headlines after announcing a new partnership just minutes after the media network terminated its agreement with Penn Entertainment, which helped launch the ESPN Bet sportsbook platform in 2023.

The split appears to have been cordial between both parties, but the conclusion of Penn and ESPN's collaboration equates to a disappointing result for a platform given the highest of expectations. At the start of 2025, FanDuel and DraftKings continued to dominate sports betting market share across the US, with the Flutter Entertainment-owned entity controlling 43% of the country's consumer base while DraftKings held firm at 25%.

The combined efforts of both Goliaths left little remaining for sportsbooks such as ESPN Bet, which never achieved a market share greater than 10% throughout its brief existence. ESPN stated it will slowly shut down its sportsbook operations in favor of integrating DraftKings odds and betting data, while Penn will reportedly focus attention on its iCasino vertical, as well as enhancing its theScore Bet platform.

What's next for Penn?

Penn President and CEO Jay Snowden outlined what lies ahead for the operator, and shed light on the decision to end its relationship with ESPN, having said, "When we first announced our partnership with ESPN, both sides made it clear that we expected to compete for a podium position in the space.

"Although we made significant progress in improving our product offering and building a cohesive ecosystem with ESPN, we have mutually and amicably agreed to wind down our collaboration. We plan to realign our digital focus on our growing iCasino business, while continuing to capitalize on our omnichannel advantage as the nation's leading regional retail casino operator."

Snowden also called attention to the upcoming regulated sports betting market in Missouri, making it appear as if theScore Bet would look to become the next operator to expand its services to the Show Me State. Similar to the strategic alignment of online sportsbooks with retail activations witnessed across Las Vegas, Penn may choose to utilize its land-based properties to expand its now independent sportsbook operations.

The operator's Q3 2025 results were quite polarizing based upon its future plans for online gaming expansion, as Penn generated a net loss of $865.1m throughout the period, but its North America iCasino business reported an all-time high quarterly revenue and grew nearly 40% year-over-year.

With theScore Bet currently maintaining four million users across North America, 2026 will surely be focused on growing the platform's market share and presence with US bettors, even while ESPN moves on to a new alliance with one of Penn's main competitors.

One also has to ponder if Penn had an inkling of ESPN's future strategy, especially given the brief timing in between the termination of the two's original agreement and ESPN announcing DraftKings as its new official sportsbook and odds provider.

Could it be possible Penn viewed working with a brand such as ESPN as a dead-end to improving market share? Despite ending its relationship with the media network just two years into a decade-long compact, the sample size in which Penn had to consider whether ESPN Bet could reach the same levels as a DraftKings or FanDuel was only growing by the day.

While many could peg the Pennsylvania-based operator with holding the short end of sports betting's latest partnership, it could be possible this was more of a natural progression to regaining independence on Penn's side. The quick turnaround on ESPN's part does signal an abrupt end to what has to be deemed as a failed partnership, however, even if it leaves Penn with a border future than first thought.

Said future could result in an even narrower sports betting presence than Penn had already mustered with ESPN Bet, especially if DraftKings is preparing to challenge FanDuel in a more direct line of fire. It remains to be seen how the loss of ESPN Bet will affect financial results or brand presence throughout Q4 and into 2026, but for the first time in two years, Penn can say it has full control of its own destiny in the sportsbook realm, no matter the amount of opportunity which may lie ahead.

Honeymoon phase

Partnering with a network such as ESPN was an obvious direction to follow for DraftKings, given the variety of platforms in which ESPN is able to market the operator's services, whether it be through television, radio, social media, etc. Morning shows such as Get Up and First Take will now feature rolling DraftKings odds and data, with ESPN surely prepared to integrate such activity within broadcasts for the NFL, MLB, NBA and NHL, all of which currently hold television rights agreements with the media network.

The excitement and allure of what collaborating with ESPN could hold for DraftKings was certainly a theme surrounding November 6's announcement, although it would be quite foolish to not point out the obvious presence DraftKings has already built throughout the country. At a 25% market share heading into 2025, DraftKings was the only operator even breathing the same air as FanDuel, with those trailing behind continuously making efforts to just keep pace with either entity.

Co-Founder and CEO Jason Robins seems to believe DraftKings has yet to broaden its horizons to a similar level as to what ESPN could offer, speaking on the new collaboration during a Q3 conference call held on November 7.

"A partner like ESPN is someone who can help advertise and engage your existing customers as well as helping onboard new ones, their trajectory is high, they are always searching for new deals, new apps, new launches. Being with a company that is aggressive and wants to grow allows you to grow alongside them," Robins said to investors and analysts.

Where DraftKings could look to grow its brand presence would be through television, as the 24/7 FAST channel debuted with Samsung in 2023 pales in comparison to the amount of FanDuel Sports Network platforms which have arrived to the scene since the operator's partnership with Main Street Sports Group.

Featuring partnerships with various professional sports franchises to broadcast games live on FanDuel Sports Networks, the operator has formed an unmatched familiarity with those viewing sports through a television set.

As its main competition prepares to expand such offerings, however, 2026 should provide the next chapter in what has been a storybook rivalry between FanDuel and DraftKings, with ESPN serving as a partial catalyst to the growth sure to be seen over the coming months.

Whether DraftKings is set to benefit from the groundwork laid by Penn in building ESPN's sports betting presence remains to be seen, but both operators find itself on a new path, one destined to re-shape the industry for years to come.