PENN Entertainment and ESPN BET face arguably the most important season of any U.S. sportsbook operator.
It seems no regulated sportsbook in American history faces a more critical fall football season than PENN Entertainment’s ESPN BET. One year after PENN announced a 10-year, $1.5 billion deal with the nation’s most prominent sports media brand, the results have not come close to either company’s lofty expectations.
Predictions of nearly 20% market share and positive earnings are further from reality than when PENN announced the deal. Instead of a springboard to becoming a market leader, this fall may determine if ESPN BET makes it past its second anniversary.Like more than a dozen gaming companies in the wake of the 2018 Supreme Court ruling that overturned the federal wagering ban, PENN invested heavily in the new horizon of legalized sports betting. A regional casino owner with no Las Vegas Strip or Atlantic City properties, company officials saw online gaming as a key to countering an aging customer base and dwindling in-person visits to non-destination resorts that was accelerated by the COVID-19 pandemic. Instead of an eponymous brand, PENN spent several hundred million dollars on Barstool Sports to market its sportsbook. It doubled down with a more than $2 billion investment in theScore and its in-house tech platform. Within a few years, many competitors including Wynn and Churchill Downs had cut their losses and shuttered their sportsbooks. By 2022, FanDuel and DraftKings had formed a de facto duopoly. Combined with MGM and Caesars, the nation’s two most prominent casino brands, this quartet had roughly 80% market share. Instead, PENN doubled down – again. The company jettisoned Barstool, selling it back to founder Dave Portnoy for $1, then committed another 10-figure investment, this time with ESPN. Growing pains were expected in the months after the switch. But the pain has been more than most would have expected. ESPN BET is seeing low-to-mid single-digit market share in nearly all 18 states where it operates. Most states have market share less than or equal to what they saw with Barstool. This has helped lead to a precipitous drop in PENN stock and an increase in public shareholder criticism about the company’s online sports betting arm. The 2023 football season could be waived off as a warm-up. No such grace will be shown if ESPN BET falls short again in 2024.The ESPN brand is clearly its most impressive asset. PENN will capitalize on this by further integration into ESPN’s popular sports app and, company officials said during Thursday’s call. By the end of August, ESPN BET will also be integrated into the ESPN Fantasy Sports app, putting company betting odds in front of more than 12 million players this fall. ESPN BET will also launch in New York, the nation’s highest-grossing competitive sports betting market. Though the state’s 51% tax on net gaming revenue, in a market also dominated by DraftKings and FanDuel, makes profitability difficult, PENN officials believe this will give them another boost to the more than 10 million New Yorkers who regularly consume ESPN content. By the end of the month, PENN will offer an improved ESPN BET home page, a parlay carousel, and a dark mode. It will follow its rivals and feature a player referral program and offer early win payouts.The company noted it is third in online sports betting hold percentage across a handful of key competitive markets. In Illinois, it is already second in the percentage of parlays as a percentage of total handle. ESPN BET is also among the top-third among all sportsbooks in percentage share of weekly active users. Customers’ total time spent on the app has increased in each of the past three quarters. Still, these indicators are relatively small positives for a company that is still losing tens of millions of dollars each month and far from reaching its market share goals, let alone catching its two strongest rivals.If you choose to make use of any information on this website including online sports betting services from any websites that may be featured on this website, we strongly recommend that you carefully check your local laws before doing so. It is your sole responsibility to understand your local laws and observe them strictly. Covers does not provide any advice or guidance as to the legality of online sports betting or other online gambling activities within your jurisdiction and you are responsible for complying with laws that are applicable to you in your relevant locality. Covers disclaims all liability associated with your use of this website and use of any information contained on it. As a condition of using this website, you agree to hold the owner of this website harmless from any claims arising from your use of any services on any third party website that may be featured by Covers.
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