Disney Makes DraftKings ESPN's New Sports-Betting Partner

- The Walt Disney Company has signed a new multi-year agreement to make DraftKings Inc. the official betting site and odds provider for its ESPN sports network. This will replace its previous agreement with casino operator Penn Entertainment Inc.

According to a statement released by both companies on Thursday, starting December 1, players will be able to access DraftKings' sportsbook, daily fantasy contests, and other products through ESPN sites.

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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 were not disclosed.

Disney and Penn announced today that they are terminating their 10-year-old, $2 billion ESPN Bet agreement after failing to gain significant market share over the past two years. The venture was intended to allow Disney to capitalize on the rapidly growing sports betting market by leveraging its ESPN brand and to encourage Penn to expand beyond its land-based casino business.

Penn will make a final payment of $38.1 million to ESPN. The sports network will retain approximately 8 million warrants to purchase Penn shares at a price of $28.95 per share. Penn recorded an $825 million impairment charge in its interactive business in the third quarter.

DraftKings shares rose 2% in early trading in New York, while Penn shares fell 5.5%. Disney's performance remained largely unchanged.

Wyomissing, Pennsylvania-based Penn spun off its Barstool Sports business and signed a contract with ESPN after tangling with Barstool's controversial founder, Dave Portnoy, over regulatory issues. The Barstool deal resulted in a $923.2 million loss for Penn through 2023. The company added two activist investors to its board earlier this year who had been critical of its online strategy.

Despite other attempts to break into this business, DraftKings and FanDuel, a division of Flutter Entertainment, dominate the $13.7 billion sports-betting market.

Of late, ESPN Bet has struggled to introduce popular features offered by other