Back in August 2023, ESPN and PENN Entertainment announced a long-term, exclusive U.S. online sports-betting alliance. The idea was straightforward: PENN would operate a branded sportsbook called ESPN BET, while ESPN would promote the product across its platforms.

Fast forward to now, however, and both parties have mutually agreed to end their exclusive U.S. online sports-betting agreement.

“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, “Jay Snowden, CEO and President of PENN Entertainment, said in a statement. “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.”

The termination will take effect on December 1, 2025. Under the agreement, PENN will stop making outstanding payments to ESPN beginning in Q4 2025 and will gradually transition away from the ESPN BET branding and product in the U.S.

“Together, ESPN and PENN created a truly unique offering with unparalleled integrations across our various media assets,” Jimmy Pitaro, Chairman of ESPN, said. “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.”

To recap, the initial agreement gave PENN the exclusive rights to use ESPN’s name and branding for its online sportsbook in the U.S. In exchange, PENN agreed to pay $150 million per year and offer stock options to ESPN. The deal was designed to last 10 years, but it included a clause allowing either company to walk away after three years if ESPN BET failed to meet specific market share goals.

Now, with both sides agreeing to terminate the partnership early, the question naturally arises: Why are ESPN and PENN ending their long-term deal so soon?

PENN Entertainment’s CEO looks to grow the iCasino business

PENN Entertainment has been operating in 28 places across North America. The company owns and runs a mix of casinos and racetracks and online platforms for sports betting and casino games. On top of that, PENN runs a massive customer loyalty program called PENN Play™, which has over 33 million members.

And now, after the termination of their agreement with ESPN, PENN Entertainment CEO admitted that the company now plans to shift emphasis toward its growing iCasino business and other priorities.

“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 added. …”Our OSB offerings will continue to provide a top of funnel cross-sell opportunity for our Hollywood-branded iCasino, which will remain integrated into our OSB product offering in states where legal, in addition to serving as a standalone iCasino app.”

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In short, ESPN and PENN struck a big, bold betting deal in 2023, sure. But their product never reached the expected market share and became costly for PENN. The results? The deal has been terminated, and PENN has decided to refocus its digital efforts.