Penn Entertainment’s split from Barstool and new partnership with ESPN have attracted so much attention that relatively little has been made of its plans to rekindle its Hollywood Online Casino brand. The ESPN branding will only apply to sports betting, so having parted ways with Barstool and its founder, Dave Portnoy, Penn needed a new name for its online casino—or an old one.
During a Q2 earnings call, Penn Entertainment CEO and President Jay Snowden said the company would turn its attention back to the Hollywood brand, which graces many of its retail properties. He added the company would integrate the Hollywood online casino into the ESPN Bet app.
The Hollywood Casino app has been live since 2019 in Penn’s home state, Pennsylvania, as a separate skin alongside Barstool Casino. The transition will be easy here, with Barstool customers having their accounts transferred to the Hollywood skin.
Meanwhile, Michigan, New Jersey, and West Virginia players should expect Hollywood Casino to replace Barstool in the next few months. Penn expects ESPN Bet to go live in November, so the Hollywood Casino launch in those states should also be around that time. The change will likely be largely cosmetic, with player accounts unaffected.
Big Promises for Hollywood & ESPN Bet
Snowden believes ESPN’s following will help ESPN Bet and Hollywood Casino gain significant market share. The Barstool brand was primarily focused on its sportsbook, which holds around 5% market share in multiple states.
Meanwhile, the online casino has received less attention and holds less market share. In Michigan, for instance, it accounts for roughly 3.2% of all-time online casino revenue in the state. In other major markets like Pennsylvania and New Jersey, numbers aren’t available for individual operators, but Barstool’s share is likely even smaller.
But Snowden said Penn doesn’t plan to be a 4% or 5% player. According to him, that range is unacceptable to both Penn and ESPN, and the company aims to get closer to market leaders. Penn announced an ambitious plan of 20% sports betting market share and 16% in iGaming.
That would require beating everyone but FanDuel and DraftKings in sports betting and those two plus BetMGM in iGaming. It would also mean pulling some players from those leaders since their collective share of the market is so large.
Penn to Focus on the Online Hollywood Brand
According to Snowden, the deal with ESPN and separation from Barstool creates an excellent opportunity to focus on the Hollywood brand and its online casino. Hollywood Casinos account for two-thirds of Penn’s retail properties, and the company has poured significant investment into building the brand.
Snowden believes that investment in retail properties could bolster the online casino. Penn’s rewards program, Penn Play, has about 27 million members, many of them Hollywood casino players. Targeting those users could significantly increase the online casino’s revenue. It’s a strategy that has worked for Caesars and MGM, at least.
Snowden said the Hollywood casino would be initially integrated into the ESPN Bet app, like the current Barstool app. That will give the online casino extra reach and exposure. However, Penn plans for a standalone casino app in the future, which is becoming something of a bandwagon for the US online casino industry.
Penn might even offer more than one such product. Snowden suggested that one app could focus on slots and another on table games.
ESPN Deal Could Bring Many New Users to Hollywood Casino
Penn’s move away from Barstool is not surprising to many. Portnoy is a controversial figure whose antics were arguably damaging to Barstool’s ability to expand its customer base. Penn’s efforts to distance the gambling brand from Portnoy as a person were not entirely successful.
Penn says Barstool has brought them 1.5 million unique users, mainly from a desirable younger demographic. However, Barstool has not attracted many older customers. The ESPN partnership could change that. Snowden calls ESPN “an everything brand” with a lot of affinity across different generations.
While Penn has an extensive database of 27 million, ESPN’s reach dwarfs it. Some of the sports media reach includes:
- Over 370 million social media followers
- Over 25 million ESPN+ subscribers
- Over 100 million monthly digital unique visitors
- Over 11 million fantasy app users
Also, Penn will receive an on-air promotion, which means advertising up to 1.9 million people during prime time. While ESPN Bet will get the majority of exposure, integrating Hollywood Online Casino into the sportsbook app could bring millions of new users to the online casino by cross-promoting.
Is 16% Market Share for Online Casino Too Ambitious?
Penn’s lofty goal of 20% sports betting market share by 2027 would mean quadrupling from its current average of 5%. Though ESPN is the most-watched sports channel in the US and has a substantial reach, getting to these numbers will take a lot of work.
The 16% iGaming market share goal would likely mean increasing its current customer base by an even larger multiple. Given Barstool Casino’s middling performance, some might consider it unrealistic. Even with an integrated app and many new users coming from ESPN Bet, it will take a lot to catch up to industry leaders like BetMGM, DraftKings, and FanDuel, which control most of the iGaming market share.
BetMGM says it holds the leading position with its 27% market share. DraftKings contests that and claims it has surpassed BetMGM, and the race is at least close. FanDuel is also not far behind, with about 23% market share. Unless most of the small operators go out of business, there isn’t much room for Hollywood Casino to grab 16% without directly battling those giants. In Michigan, the current fourth-place operator, BetRivers, has just 6%.
The company could benefit from retail customers crossing over to digital products, but aside from Pennsylvania, most Hollywood casinos are in states with no iGaming. Penn has multiple properties in midwestern states like Illinois, Indiana, and Ohio. If some of them (possibly Indiana) pass iGaming bills in 2024 or 2025, it could benefit Penn as players there are familiar with the brand.
But beyond that, the company would need a superior product to grow. Barstool’s recent technology upgrade announcement was one step in that direction. Beyond that, enhancements in promotions, ads, and game portfolio are essential for Hollywood Casino to become more than a small operator.
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