(Reuters) -Casino operator PENN Entertainment and ESPN have agreed to end their exclusive U.S. online sports betting partnership, effective December 1, the companies said on Thursday.
The move cuts short a 10-year deal signed in August 2023, under which Walt Disney's majority-owned ESPN got $150 million annually and warrants for PENN stock in exchange for marketing services and exclusive right to the ESPN BET brand in the U.S.
Separately, Disney has struck a multi-year agreement to make DraftKings
its official betting site and odds provider for the ESPN sports networks, Bloomberg News reported on Thursday, citing statements from both companies.
Disney, ESPN and DraftKings did not immediately respond to Reuters requests for comment.
PENN and ESPN have "mutually and amicably" agreed to wind down the collaboration and PENN plans to realign its digital focus on the growing iCasino business, CEO Jay Snowden said in a statement.
"We will operate with a more efficient cost structure, including replacing fixed media spending ... the realignment will free up resources to strategically invest in the North American markets."
Payments from PENN to ESPN will stop in the fourth quarter of 2025, the companies said.
They will work together to rebrand the existing U.S. online sports betting (OSB) platform from ESPN BET to theScore Bet by December 1.
PENN will remain an ESPN advertising client and ESPN will retain vested warrants that give it the right to buy almost 8 million shares of PENN stock at about $28.95 per share, while all unvested and performance warrants will be forfeited.
PENN said it would retain the customer information for the nearly 3 million people who signed up for ESPN BET, including 300,000 new users from the recent football season.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Sahal Muhammed)
