ESPN Bet’s Quick Collapse: A Two-Year, $300M Failure

• • ESPN Bet closed after just two years because it entered the market too late when DraftKings and FanDuel already dominated the industry.
  • PENN paid ESPN $150 million annually but failed to attract enough users to meet market share goals, leading to an early exit from their partnership.
  • ESPN has moved on to partner with DraftKings as its official betting provider while PENN rebranded its platform as theScore Bet.

NEW YORK - ESPN Bet closed its doors on December 1 after just two years, showing why timing matters so much in the fast-moving sports betting industry. Disney's sports empire and PENN Entertainment had a ten-year collaboration that ended after just two years, demonstrating that even the most well-known sports brand cannot triumph over a late entry into a crowded industry.

A sobering story is revealed by the figures. With 44% and 34% of the market, respectively, DraftKings and FanDuel have established a dominant position in the USA online sportsbooks industry. Despite the prestige of holding one of the most reputable names in sports, ESPN Bet was unable to break into that competition.

The platform never fully overcame the problematic legacy of Barstool Sportsbook, a failing endeavor that PENN had given up on in 2023. ESPN stated that 2.9 million new customers joined the PENN ecosystem as a result of the rebrand, but those numbers concealed more serious issues with user retention and market penetration.

Timing Proves Fatal

The launch time is the fatal error, according to industry analysts. The result might have been different if ESPN had entered the market when the Supreme Court opened the floodgates in 2018. Rather, ESPN Bet showed up five years late to a party where the best USA sports betting sites had already been established, taking the player base.

Disney was apparently unhappy having its brand plastered across a betting platform due to growing gambling scandals involving major sports leagues, and the product itself was reportedly inferior to more established rivals.

For the licensing rights, PENN paid ESPN $150 million a year; the agreement included an early termination clause in the event that market share goals were not reached. When it became evident that ESPN Bet would never achieve the 20 percent market share in states with online sports betting that PENN management had predicted, that escape route was put into play.

ESPN has now switched to DraftKings as its new official source for betting odds. This is a safer arrangement that keeps the network involved in the gambling discussion without the operational challenges. The setback is another costly lesson in the harsh math of market share warfare for PENN, which rebranded its product as theScore Bet.