Better Late Than Never

The Penn-ESPN partnership is no more, which marks Penn's second failure in the online sports betting space. The question now is: Will the third time be the charm?

Massive news this week (well, one of the massive news stories, anyway), with Penn and ESPN officially dissolving their partnership, effective December 1, per a joint press release:

“PENN Entertainment and ESPN today announced that they have mutually agreed upon the early termination of their exclusive U.S. online sports betting (“OSB”) agreement, effective December 1, 2025.”

The news wasn’t a surprise by any stretch of the imagination, as Penn has hinted at the possibility during recent quarterly earnings calls. What was a surprise was Penn’s sports betting ambitions over the past half-decade.

Penn’s Online Story

In the online arena, Penn was a role player; the middle reliever who comes in to eat up some innings. It rightly realized it didn’t have an online brand and sought to remedy that. But after the Barstool acquisition in 2020, the company landed firmly in the spotlight, and I don’t think anyone understood how maligned the Barstool brand was in the eyes of some regulators and gambling media, as Barstool (and Penn by association) were immediately branded with a scarlet letter. It got a major, national brand, but it also got the baggage that came with it.

To its credit, Penn backed its controversial partner to the very end. Still, by the time it sold Barstool back to founder Dave Portnoy for $1, it was clear that no amount of money could change the regulatory perception of the brand, and that the two corporate cultures simply didn’t mix.

As I wrote when the relationship was dissolved in 2023:

“It’s pretty clear that Penn and Barstool entered the relationship with the best intentions and wanted it to work. Based on its unique sports-driven content and user engagement, Barstool thought it possessed the perfect recipe for sports betting success. Penn was the chef that could put it all together.

“The result was something less than a Michelin-star restaurant… The marketing approach was narrow, eschewing affiliates and traditional marketing and instead focusing on Barstool’s social media audience and Penn’s database. And then there was the tension as two radically different corporate cultures collided.

“The divorce stems from a widening rift between Penn and Barstool as the landscape continued to evolve into a more sanitized and less seat-of-the-pants Barstool-like approach. Increased regulatory scrutiny in Ohio and Massachusetts, shifting goalposts around responsible gambling, and the firing of Mintzy, which appeared to be a tipping point event for the partnership. It was becoming evident that neither side knew how to interact with the other, and both lacked authenticity.”

Looking back, Barstool thrust Penn into a spotlight it didn’t seem prepared for. Penn believed the brand recognition (acquired brand recognition) was the silver bullet that would carry the day, while its online competitors were focused on product and marketing spend.

It could have leveraged its Hollywood brand or the brand it acquired in 2021, theScore, which came along with its sports betting tech stack, and is the brand it will shift to after ESPN Bet. However, it believed it needed something flashier to compete with FanDuel and DraftKings.

The Bigger Mistake

The failure of the Barstool Sportsbook was a bad look for the company and left the spotlight shining on a now-empty stage, and Penn decided to bring on the biggest, cleanest act it could find: ESPN. It was bringing on Jerry Seinfeld to quell a religious crowd after they were offended by Sam Kinison’s set. Barstool’s brand didn’t materialize into a competitive sportsbook, but surely ESPN would?