Published on: October 21, 2025, 01:39h.
Updated on: October 21, 2025, 02:12h.
- Penn Entertainment is falling behind in the online sports betting sector
- Recent user growth for ESPN Bet is not meeting expectations
- Penn and ESPN can mutually decide to terminate their agreement in August 2026
The football season offers an ideal opportunity for sportsbook operators to expand their customer base, yet Penn Entertainment’s (NASDAQ: PENN) ESPN Bet appears to be encountering challenges in this regard. This situation raises the possibility of terminating their partnership with the sports media powerhouse.
Stifel analyst Jeffrey Stantial posits that, despite better integration with other ESPN services, an analysis of state-level online sports betting (OSB) data reveals that ESPN Bet’s engagement declined from the previous quarter during the July to September timeframe, showing only marginal improvement with the arrival of football season.
“While the initial decline in engagement was seen as a sign of retention and monetization issues, we suspect that recent user acquisition has also not met expectations, as Sensortower indicates that ESPN Bet’s share of OSB app downloads dropped compared to last year in July and August, with only a small uptick in September,” remarks Stantial.
Referring to Penn as “a premier regional physical operator,” Stantial upholds a “hold” rating and sets a $19 price target for the stock.
Possible Termination of ESPN Bet Partnership
Penn is set to release its third-quarter results on November 6. While Stantial acknowledges that it may be premature for CEO Jay Snowden and his team to share detailed strategic insights regarding the future of ESPN Bet, it appears that the OSB app has not made the anticipated gains, suggesting that discontinuation may be a viable option.
“Although it may still be too soon for management to provide update on strategy, the stability in handle share despite product enhancements suggests that the termination of the ESPN partnership is the most likely outcome when the mutual opt-out option arises in late 2026,” adds the analyst.
Penn’s online sportsbook has struggled to capture its desired market share as its third anniversary approaches in August 2026. At that juncture, either the gaming company or ESPN can choose to exit the agreement—a point highlighted by Penn CEO Jay Snowden during their fourth-quarter earnings call in February. In simple terms, unless significant market share gains materialize, ESPN Bet’s existence may be limited to just another 10 months.
In a note published in March, Stantial indicated that “the most beneficial outcome” for Penn is to terminate the ESPN Bet partnership and divest theScore, likely resulting in the company completely exiting the OSB industry.
The End of ESPN Bet Would Remove a Constant Concern
For some time now, analysts, investors, and critics of Penn have expressed that the company’s missteps in the sports betting landscape, notably with Barstool Sports and ESPN Bet, have shifted focus toward negative aspects, overshadowing the positive elements within the Penn investment story.
Positive factors include robust growth in iGaming and successful performance at various recently updated regional casinos.
“From the perspective of the stock, we perceive an increasingly compelling scenario as recent trends in OSB handle support the potential termination of the ESPN Bet collaboration, enabling investors to concentrate on PENN’s Retail & iCasino sectors—where we observe steady positive growth in S.S. gross gaming revenue (GGR),” Stantial concludes.