By Nick Giangreco – VP, SCCG Management
The ESPN Bet Strategy Shift
When Penn Entertainment struck its landmark 10-year, $2 billion deal with Disney to launch ESPN Bet, it seemed like a game-changing bet. By pairing Penn’s sportsbook infrastructure with one of the most recognizable names in sports media, the move was framed as a fast-track to relevance in the ultra-competitive U.S. online betting market.
But less than two years later, cracks are showing. ESPN Bet has failed to meet growth expectations, sliding from a promising 7% market share in its first full month (December 2023) to just 3.2% by March 2025, according to Casino Reports. Penn is now considering an early exit as soon as 2026—a decision that could redefine its digital ambitions.
ESPN Bet: Big Brand, Small Returns
Despite the star power of ESPN and Penn’s national reach, ESPN Bet hasn’t caught fire. The product launched in November 2023 with strong branding, high visibility, and promotional offers. But performance quickly tapered off, falling well short of Penn’s original projection to achieve 20% market share by 2027.
Instead, ESPN Bet lags behind:
- FanDuel – ~37% market share
- DraftKings – ~35%
- BetMGM – ~8%
- Caesars Sportsbook – ~5%
- ESPN Bet – 3.2%
Even with the ESPN name, Disney media muscle, and Super Bowl campaigns, the platform has not broken through. As Penn CEO Jay Snowden noted on a recent investor call, “We’re not on pace”—a frank admission that market reality has outpaced optimistic projections.
Option 1: Cut and Consolidate
One path forward would be to exit the ESPN Bet agreement entirely, take the loss, and refocus on Penn’s traditional strength: brick-and-mortar casinos. With 43 properties in 20 states, Penn’s physical footprint has consistently generated stable revenues. A back-to-core approach—emphasizing regional gaming, omnichannel loyalty, and operating efficiency—could restore shareholder confidence and trim digital overhead.
Option 2: Sell or Spin Off Digital Assets
Another strategic lever would be offloading Penn’s underperforming digital portfolio, including theScore, which Penn acquired in 2021 for $2 billion. TheScore has not become the engagement engine Penn hoped it would be. A divestiture could deliver short-term liquidity and allow Penn to reposition itself as a leaner, more profitable operator without the burden of a sprawling, low-margin digital division.
Option 3: Penn as the Acquisition Target
In a surprising twist, Penn itself could become an acquisition target. Boyd Gaming reportedly made an approach in 2024, with the aim of combining assets and potentially reshaping the U.S. sports betting landscape. Boyd owns a 5% stake in FanDuel, and any deal would bring operational synergies—but would also raise significant regulatory questions given FanDuel’s dominant position.
While a full acquisition of Penn would require shareholder approval and face complex scrutiny, the company’s casino assets and sports betting infrastructure make it an attractive, if challenging, target.
Option 4: Focus on Physical Strength, Not Digital Scale
Without a major turnaround, Penn may quietly shift emphasis to its reliable land-based business, where margins are clearer and market competition is more rational. Competing in the digital betting space requires billions in customer acquisition spend, cutting-edge tech, and an established base of loyal users—areas where FanDuel and DraftKings have a multi-year head start.
Why FanDuel and DraftKings Are Untouchable
If Penn exits ESPN Bet, it will join a long list of operators—including Barstool Sportsbook—that have tried and failed to crack the U.S. online betting code. That’s because FanDuel and DraftKings are in a league of their own, and unlikely to be displaced—or acquired.
Here’s why:
- Combined Market Share Exceeds 72%: As of Q1 2025, FanDuel (37%) and DraftKings (35%) together control over 70% of the national sportsbook market, leaving little room for newcomers to scale.
- Antitrust Roadblocks: A 2017 attempt to merge the two was blocked by the FTC. Any acquisition of either brand by a competitor would immediately face federal antitrust scrutiny.
- Public and Protected: DraftKings is publicly traded and would require significant premium value to entice shareholder approval. FanDuel is majority-owned by Flutter Entertainment, which has doubled down on its U.S. growth ambitions. Neither company is interested in selling.
- Regulatory Complexity: With state-by-state regulation, any M&A involving one of these giants would be legally burdensome and politically difficult.
Final Thoughts: ESPN Bet May Fade, But the Big Two Won’t
Penn’s ESPN Bet experiment was a calculated risk—one that may soon be deemed too expensive to continue. Whether Penn decides to walk away, sell off assets, or be acquired itself, one thing is clear: the digital sportsbook landscape is now a two-horse race, and that’s unlikely to change.
For Penn and any other would-be challengers, the lesson is sobering. In this game, branding alone isn’t enough—you need scale, infrastructure, and time. And DraftKings and FanDuel have already won that race.
