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Walt Disney Co. signed a new multiyear deal to make DraftKings Inc. the official betting site and odds provider for its ESPN sports networks, replacing a venture it had with casino operatorPenn Entertainment Inc.
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Starting on Dec. 1, players will be able to access the DraftKings’ sportsbook, daily fantasy contests and other products through the ESPN sites, according to a statement Thursday from the two companies.
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DraftKings will operate a betting tab on the ESPN app and promote ESPN’s recently launched online service to its customers. Financial terms of the agreement weren’t disclosed.
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Disney and Penn announced earlier today that they are ending their 10-year US$2 billion ESPN Bet agreement after failing to capture a significant market share over the past two years. The venture was a way for Disney to use its ESPN brand to capitalize on the fast-growing market for sports betting and for Penn to expand beyond its land-based casino business.
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Penn will make a final payment of US$38.1 million to ESPN. The sports network will retain nearly 8 million warrants to purchase Penn stock at a price of US$28.95 a share. Penn recorded a US$825 million impairment charge in its interactive business in the third quarter.
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DraftKings shares rose two per cent at the start of trading in New York while Penn declined 5.5 per cent. Disney was virtually unchanged.
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Penn, based in Wyomissing, Pennsylvania, had jettisoned its Barstool Sports business and signed on with ESPN after running into regulatory issues with Barstool’s controversial founder Dave Portnoy. Penn recorded a US$923.2 million loss on the disposal of Barstool in 2023. The company added two activist investors who had been critical of its online strategy to the board earlier this year.
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Despite many attempts by others to crack the business, the US$13.7 billion sports-betting market is dominated by DraftKings and FanDuel, a division of Flutter Entertainment.
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ESPN Bet, a relatively late entry, struggled to come out with the popular features other operators offered. The business was a distant seventh place in the mobile sports-betting market in the US with a less than 3% share, according to data from Alfonso Straffon, an independent analyst.
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The ESPN Bet brand will continue to be used as a site for ESPN programming.
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Penn will retain the ESPN Bet database of 2.9 million customers. The company will transition those users to the Score Bet brand starting Dec. 1. Penn acquired the Canadian company Score Media and Gaming Inc. for US$2 billion in 2021. Management said that rather than the broad national marketing it deployed with ESPN Bet, its future spending will be more targeted, particularly in states where it owns casinos.
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“We had aspirations, we had goals to be a podium player, it didn’t work out,” Penn chief executive Jay Snowden said on a conference call with analysts. “We’re moving on from that. And they are too.”
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