ESPN Bet Termination ‘Increasingly Likely,’ Says Analyst

• Penn Entertainment isn’t making enough strides in online sports betting
• Recent ESPN Bet user acquisition may be trending below expectations
• Penn, ESPN can mutually opt out of their deal in August 2026

Football season is prime time for sportsbook operators to build their client bases, but Penn Entertainment’s (NASDAQ: PENN) ESPN Bet is struggling to do so, perhaps making termination of the gaming company’s relationship with the sports media giant all the more likely.

That’s the take of Stifel analyst Jeffrey Stantial, who, in a new report to clients, notes that despite improved integrations between other ESPN offerings and the sports betting app, analysis of state-level online sports betting (OSB) data indicates ESPN Bet handle pulled back quarter over quarter in the July through September period with only modest improvement into the start of football season.

While initial handle share pullback was attributed to retention/monetization issues, we suspect recent user acquisition may also be pacing below expectations as Sensortower shows ESPN Bet’s share of OSB app downloads down Y/Y in July/August and up only narrowly in September,” observes Stantial.

Calling Penn “a best-in-class regional brick & mortar operator,” Stantial reiterated a “hold” rating and $19 price target on the stock.

ESPN Bet Termination Could Be on the Table

Penn reports third-quarter results on November 6, and while Stantial acknowledges it might be too early for CEO Jay Snowden and team to get into specific strategy details regarding the fate of the ESPN Bet, the OSB app simply isn’t making the progress Penn and its investors hoped for, indicating pulling the plug on it could be a plausible outcome.

“While likely still too early for management to update on strategy, stable handle share despite product/integrations improvement supports our view that termination of the ESPN partnership is the most likely scenario when the mutual opt-out option comes in late 2026,” adds the analyst.

In a March note, Stantial said “the most value-accretive outcome” for Penn entails terminating the ESPN Bet agreement and selling theScore, likely resulting in the company being out of the OSB business altogether.

ESPN Bet Death Would Remove an ‘Overhang’

Analysts, investors, and Penn critics have long argued that the operator’s sports betting missteps, including Barstool Sports and ESPN Bet, have forced market participants to focus on a negative element while ignoring positives in the Penn investment thesis.

Those bright spots include impressive iGaming growth and solid ramp-ups at some of the operator’s recently revamped regional casinos.

“For the stock, we see an increasingly interesting setup as recent OSB handle trends support potential termination of the ESPN Bet relationship potentially removing a key overhang and allowing investors to more cleanly focus on PENN’s Retail & iCasino businesses – where we observe sustained healthy S.S. gross gaming revenue (GGR) growth,” concludes Stantial.