DraftKings reaches agreement to become official sportsbook and odds provider for ESPN

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2025/11/06: Penn Entertainment and ESPN terminate agreement; operator’s OSB business to rebrand at theScore Bet 2025/03/19: Galaxy Gaming reaches licensing agreement with IGT PlayDigital 2025/11/06: DraftKings reports revenue of US$1.14 billion in third quarter 2025/05/08: DraftKings’ revenue rises 20% year-over-year in first quarter

The Backstory

How the ESPN pivot set the stage

ESPN’s rapid turn from its short-lived sportsbook tie-up with Penn Entertainment to a deeper integration with DraftKings did not come out of nowhere. The shift followed Penn’s decision to unwind its 10-year ESPN Bet arrangement after concluding it was not on track to hit agreed market share milestones. On the same earnings call where Penn disclosed the breakup, the company said it would rebrand its U.S. online sportsbook as theScore Bet and refocus spend on markets with better returns. The timing cleared a path for ESPN to seek a partner with scale, tech and existing share, and for DraftKings to step into an exclusive role powering ESPN’s betting tab and on-platform odds across shows and digital. In effect, the dissolution of one distribution model created the opening for another that leans on a market leader’s product rather than a challenger’s brand build.

Penn framed the split as mutual and strategic. The company keeps the customer data it amassed, but exits an expensive commitment and gains control over pace, marketing and product priorities. That repositioning made room for ESPN to align with a sportsbook already operating at national scale and for DraftKings to extend its reach into one of sports media’s highest-traffic ecosystems.

Penn and ESPN terminated their betting pact, and Penn detailed a pivot to theScore Bet with a tighter cost focus and a renewed emphasis on omni-channel cross-sell.

Why Penn walked, and what it means for rivals

Penn said the economics of its ESPN Bet deal no longer made sense relative to the market share trajectory it observed through early football season. Shedding an annual fee burden and warrant expense, it argued, frees capital to chase profitable growth in Canada and U.S. iCasino-led states. The short-term effect is a vacuum in ESPN’s betting presence that a scaled operator can fill with proven acquisition funnels and a mature hold profile. The longer-term consequence is a consolidation of exposure among operators with robust tech stacks and broader product depth.

Penn also warned of rising competition from prediction markets and called for regulators and lawmakers to address an uneven playing field. If those products expand, operators with stronger compliance, data science and retention tools will be better positioned to defend share. A tighter ESPN-DraftKings integration moves in that direction, embedding betting utilities into a media platform while emphasizing responsible gaming campaigns and know-your-customer guardrails that Penn said are absent in prediction markets.

The reallocation of Penn’s marketing spend, and ESPN’s choice to partner with a leader rather than incubate one, together suggest a maturing phase in U.S. online betting where distribution scale and efficiency outrank celebrity branding.

DraftKings’ growth arc before the deal

DraftKings entered this partnership with momentum across customer counts, revenue and profitability metrics. In the second quarter, the company posted record revenue of US$1.51 billion, net income of US$158 million and adjusted EBITDA of US$301 million, citing efficient customer acquisition, sportsbook-friendly outcomes and a structurally higher hold. Monthly unique payers rose 6% year over year and average revenue per payer jumped 29%, reflecting improved hold and tighter promotional reinvestment. Management said full-year guidance would land toward the high end of its range, underscoring confidence ahead of new state launches. See DraftKings set a Q2 revenue record for detail.

The third quarter extended that trend, with revenue of about US$1.1 billion driven by healthy engagement and a higher structural sportsbook hold, partly offset by customer-friendly results. DraftKings lifted its 2025 revenue outlook to US$5.9 billion to US$6.1 billion and adjusted EBITDA guidance to US$450 million to US$550 million, a sign of improving unit economics. Read more in DraftKings’ third-quarter update.

Earlier in the year, the company reported first-quarter revenue up 20% to US$1.409 billion, aided by customer engagement, product enhancements and the impact of its lottery courier acquisition, Jackpocket. While Jackpocket temporarily diluted average revenue per payer, DraftKings said core ARPU still grew, and it trimmed 2025 guidance modestly due to March sports outcomes. See DraftKings’ first-quarter performance.

Inside the integration and why it matters

Under the ESPN arrangement, DraftKings’ sportsbook, daily fantasy and Pick6 will be woven into ESPN’s apps and shows, with DraftKings powering the betting tab and offering promotions tied to ESPN’s new direct-to-consumer subscription. The rollout begins Dec. 1, with a full buildout expected in 2026. ESPN BET transitions to a content brand, anchored by ESPN BET Live and dedicated social and digital channels that incorporate DraftKings’ odds and markets.

The integration gives DraftKings front-door access to high-intent sports audiences at scale while giving ESPN a turnkey betting engine and liability management framework. It also advances both parties’ responsible gaming commitments with prominent education placements. If execution matches the plan, DraftKings can push deeper cross-sell into iCasino and parlay formats and convert casual ESPN viewers into logged-in users via streamlined account creation and content-led prompts. For ESPN, every incremental bettor funneling through its app is also a prospect for its direct-to-consumer bundle, tightening the link between viewing and wagering.

The tie-up arrives as game suppliers and platforms stitch together content libraries to keep users engaged. On the casino side, suppliers are expanding table game portfolios through licensing deals such as Galaxy Gaming’s agreement with IGT PlayDigital, underscoring the importance of differentiated content as operators chase time-on-platform gains.

The stakes: market share, margins and regulation

For DraftKings, ESPN’s reach offers a lower-cost top-of-funnel that could sustain payer growth while preserving promotional discipline. The company’s recent results show higher sportsbook hold and improving ARPU, and the ESPN channel could reinforce both by surfacing context-rich markets and in-game prompts. The risk is cannibalization or rising revenue share costs if media placement fees escalate, but management’s maintained guidance into the second half suggests confidence.

For Penn, the exit reduces cash burn and complexity, while theScore Bet rebrand lets it align product, tech and brand under one roof. The company also keeps the ESPN-era customer database for cross-sell into regional casinos, an area it says delivers industry-high margins. Its warning on prediction markets foreshadows a policy fight that could reshape the competitive set; operators with strong compliance cases and media partners may have an advantage.

Regulators will watch how on-platform integrations handle advertising load, inducements and responsible gaming messaging. With a full integration targeted by 2026, the industry will learn whether embedding betting within a dominant sports platform converts viewers at scale without reigniting concerns over saturation. The upshot: distribution and product depth are converging, and the winners will blend both with disciplined spend and a credible policy posture.