By Marc Lawrence, PlaybookSports.com — One of the leading sports gambling stocks fell sharply on Wednesday after media giant ESPN took a large step into the online betting world.
Shares of DraftKings sank 10.9% after Penn Entertainment announced that it had signed a 10-year deal with ESPN.
Stock analysts will tell you the stock sank after the company reported monthly users for the quarter that fell short of estimates. The company raised its revenue forecasts for 2022.
The fact of the matter is it plummeted because ESPN is now the white elephant dominating the sportsbook room. Penn will rebrand its sportsbook with ESPN as ESPN Bet.
Weirdly, Penn was partnered with Barstool Sports as a sportsbook, but sold it back to Barstool founder and owner David Portnoy for $1 – yes, one dollar – so that it could partner with ESPN Bet instead.
Portnoy sold his stake in Barstool to Penn for $387 million. That should give you a better indication of how big the ESPN deal is for Penn.