Penn National has been the RC Cola of the sports betting world. No matter what it does, it can’t take market share away from the Coke and Pepsi a/k/a DraftKings and FanDuel of the industry.
The massive 10-year, $2 billion deal with ESPN to create ESPN Bet was supposed to change that. It hasn’t.
Via Eric Fisher of FrontOfficeSports.com, that could result in Penn National pulling the plug seven years early.
During a Thursday morning conference call with analysts, Penn National CEO Jay Snowden mentioned the possibility of exercising a three-year exit from the decade-long commitment.
“When we announced our partnership, both sides made it very clear that we expected to compete for a seat at the podium. And we’re not on pace right now to do that,” Snowden said, per Fisher. “We have tremendous plans in place for 2025 and 2026. But if, for whatever reason, we’re not hitting the levels that we need to, then obviously as you’re approaching the third anniversary, you have a three-year clause in that contract that both sides will have to do what’s in their best interests. And so that’s always out there.”
In the fourth quarter of 2024, Penn National’s interactive division, which includes the ESPN Bet online business, lost $109.8 million. Overall the company missed forecasts with $1.67 billion in revenue and $133.8 million in net losses.
The company also faces a proxy fight by shareholders to claim three board seats, based on allegations of “reckless spending.” Among the misadventures was buying Barstool Sports for $551 million before selling it back to founder Dave Portnoy for $1.
Despite the money ESPN gets from the partnership, the arrangement freezes the company out of sponsorships with more lucrative brands. Which opens the door for ESPN competitors to do those deals instead.
Still, if the 10-year deal is bad for Penn National, it’s possibly good for ESPN. The bigger question is whether ESPN could do better with a new partner — and whether ESPN is concerned that its brand will be undermined by association with a company that is struggling.
