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Investing.com -- DraftKings Inc. (NASDAQ:DKNG) stock surged 8% on Thursday after Walt Disney Co. (NYSE:DIS) announced the sports betting company as ESPN’s new official betting partner, replacing Penn Entertainment Inc. (NASDAQ:PENN).
The multiyear agreement makes DraftKings the official betting site and odds provider for Disney’s ESPN sports networks. Beginning December 1, users will be able to access DraftKings’ sportsbook, daily fantasy contests, and other products directly through ESPN’s digital platforms.
As part of the deal, DraftKings will operate a dedicated betting tab on the ESPN app and promote ESPN’s recently launched online service to its customer base. Financial terms of the partnership were not disclosed in Thursday’s announcement.
The new arrangement follows Disney’s decision to terminate its previous 10-year, $2 billion agreement with Penn Entertainment. That partnership, which aimed to leverage ESPN’s brand in the growing sports betting market, ended after failing to capture significant market share during its two-year run.
Interestingly, Penn Entertainment shares also responded positively to the news, rising 10% on Thursday despite losing the ESPN partnership. This suggests investors may view the termination of the underperforming agreement as beneficial for Penn’s future strategic direction.