Sports network ESPN, which is owned by entertainment giant Disney (DIS), is ending its partnership with gambling firm Penn Entertainment (PENN) earlier than planned and has signed a new deal with DraftKings (DKNG). Therefore, starting in December, sports betting company DraftKings will become ESPN’s exclusive sportsbook and odds provider. ESPN Chairman Jimmy Pitaro said that the company wants to offer a more connected experience within its apps, and working with DraftKings will help serve sports fans better and grow ESPN’s streaming business.
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With this deal, DraftKings will power ESPN’s betting tab on mobile devices. DraftKings CEO Jason Robins said that ESPN’s wide reach and reputation make this partnership a natural fit, and DraftKings will bring in its technology to improve the betting experience. As a result, shares of DraftKings are up at the time of writing. Notably, ESPN had previously partnered with Penn in 2023 to rebrand Barstool Sportsbook into ESPN Bet. Because Disney doesn’t want to run gambling operations directly, partnerships are the only way ESPN can be involved in the growing online sports betting market.
Although the original deal with Penn was set for 10 years, it included an option for either side to exit after three years if certain goals weren’t met. However, on Thursday, ESPN and Penn said that they have agreed to end the deal after just two years. Penn will now rebrand its sportsbook again as theScore Bet. As part of the split, Penn’s $150 million yearly payments to ESPN will stop, and ESPN will no longer hold the right to buy shares in Penn that were part of the original agreement.
Which Gaming Stock Is the Better Buy?
Turning to Wall Street, out of the three stocks mentioned above, analysts think that DKNG stock has the most room to run. In fact, DKNG’s average price target of $50.27 per share implies more than 78.8% upside potential. On the other hand, analysts expect the least from DIS stock, as its average price target of $140.07 equates to a gain of 27.6%.
