By Nick Devor

DraftKings will become the official sportsbook and odds provider for ESPN, the two companies announced Thursday, a welcome piece of good news for DraftKings shareholders ahead of the company's earnings report due Thursday afternoon.

Walt Disney, ESPN's parent company, will scrap its previous betting partnership with Penn Entertainment. The company's sportsbook venture, ESPN Bet, will become a "sports betting content brand," according to a press release.

DraftKings will be folded into ESPN's app, continuing the network's approach that "has focused on offering an integrated experience with our products," ESPN Chairman Jimmy Pitaro said in the release.

An exclusive partnership with one of the biggest sports brands in the country is a positive note to end a dismal quarter for DraftKings' stock. Shares closed at a 52-week low of $27.92 on Wednesday, a 38% drop from when the company last reported earnings in August. Shares were up 1.1% Thursday morning on the ESPN news.

The sportsbook faces multiple questions heading into its earnings report this afternoon and shareholder call Friday morning. Wall Street analysts expect quarterly earnings of $1.2 billion, representing year-over-year growth of 6% for the quarter, with earnings expected to fall 7.6%, according to FactSet.

While the ESPN deal is likely to bring more visibility to the already-ubiquitous betting brand, it may do little to assuage the Street's worries around the broader sportsbook business.

Bank of America analysts on Tuesday downgraded DraftKings stock to neutral from buy and knocked their price target from $48 to $35, citing the "borderline relentless flood of bad news" for the firm and the fact that DraftKings sports bettors are consistently winning more of their wagers than the company expects them to.

Aside from those perennial concerns, prediction markets are likely to be hottest topic of discussion during the earnings call on Friday morning.

By offering federally regulated event contracts, prediction markets like Kalshi and Polymarket have circumvented the state regulations and tax issues to effectively offer sports betting nationwide. That threat to DraftKings' business has spooked investors and prompted the company to get into prediction markets itself.

In late October, DraftKings announced an acquisition of Railbird Technologies, which operates a federally licensed exchange that can sell event contracts, prediction markets' signature offering. DraftKings will use that exchange as the basis of its new venture, DraftKings Predictions, "a forthcoming mobile application that will allow customers to trade regulated event contracts on real-world outcomes across finance, culture, and entertainment," according to a press release announcing the sale.

Whether DraftKings event contract offerings will expand to include sporting events remains unclear. Investors and analysts will be looking for more answers during the earnings call on Friday.

Write to Nick Devor at nicholas.devor@barrons.com

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November 06, 2025 11:04 ET (16:04 GMT)

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