Penn Entertainment expects ESPN Bet to debut in 17 states on Nov. 14, pending final regulatory approvals. If all goes to plan, the sportsbook will be available in Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia.
The new product replaces Barstool Sportsbook after Penn cut ties with the brand and its owner, Dave Portnoy, a few months ago. Penn then announced a 10-year branding deal with ESPN. Penn paid $1.5 billion in cash and allowed ESPN to purchase $500 million in Penn stock (Penn Entertainment 25,27 -2,77%).
The primary reason for the high price is ESPN’s user database and reach. The sports channel is among the most recognized and watched in the US. Penn estimates that the ESPN ecosystem has over 200 million multiplatform monthly users in the US. ESPN’s reach also includes:
- No. 1 sports app, with a 4.6 rating out of 2.8 million reviews on the App Store
- No. 1 social following in sports, with over 370 million followers
- No. 1 fantasy sports app, with 12 million users
- Top linear sports network
- Top direct-to-consumer (DTC) sports platform
During Penn’s Q3 earnings call, CEO and President Jay Snowden said that Penn and ESPN have worked tirelessly to prepare for the Nov. 14 launch. He added that the sportsbook will be deeply integrated into the ESPN ecosystem. The first evidence of that is ESPN’s switch from using Caesars and DraftKings odds to ESPN Bet odds.
What Do We Know About the App?
ESPN viewers got a first look at ESPN Bet through a teaser featuring SportsCenter anchor Scott Van Pelt. While the ad did not reveal any app features, it showed the cohesiveness between the two apps (ESPN and the sportsbook). Meanwhile, Penn’s Q3 earnings presentation revealed more information and a sneak peek on what to expect from the app. Some features include:
- Parlay+: wide range of same-game parlays
- Quick Bets: provides bettors with an enhanced live betting experience
- Featured Bets: will leverage ESPN’s brand name benefits
- Shareable Bet Slips: will allow users to share their bets on social media and engage with the sports community
Other features that will come later include:
- Standalone 6-pack odds (Spread, Total, Moneyline)
- Personalized bet modules and content
- Integration with ESPN Fantasy
- Customized notifications and bet tracking
On the technology side, ESPN Bet will not use Barstool’s old platform. Many have said that the platform was outdated and was the reason for not capturing higher market share. Instead, ESPN Bet will be powered by the same technology platform as theScore Bet in Ontario (also owned by Penn). Snowden praised the platform and said it has been driving “an impressive performance” in the Canadian province.
Barstool users should also note that they must download the new app. Penn says there shouldn’t be friction, as users’ account information and wallet will transition to ESPN Bet.
Penn Anticipates Heavy Spending in Busy Season
A launch on Nov. 14 will allow ESPN Bet to take advantage of a busy sports schedule, especially around football. The sportsbook will be live in time for Thanksgiving week, which starts with ESPN-broadcasted Monday Night Football. The game will be a rematch of last season’s Super Bowl between the Kansas City Chiefs and Philadelphia Eagles and will likely draw significant viewership. The week also includes many significant college football rivalry games.
Snowden said Penn would spend aggressively on promos to ensure that ESPN Bet captures higher market share during the busy period. He expects the heavy spending to continue into Q1 2024 with the Super Bowl and March Madness.
Penn CFO Felicia Hendrix added that the ESPN Bet launch will be the primary driver of anticipated losses for the company’s Interactive division. In Q4 2023, she estimates an EBITDA loss of $100 million to $150 million. In the next three years, Penn anticipates that the division will post around $300 million in EBITDA losses, with the majority coming in the first two years.
Penn Expects ESPN Bet To Help Hollywood Casino
In addition to ESPN Bet, Penn Entertainment expects to introduce its new Hollywood Casino app soon, which will be integrated into the sportsbook app. Hollywood Casino is already live in Pennsylvania, and Barstool Casino users in Michigan, New Jersey, and West Virginia should expect the new app in the near future.
In the previous Q2 earnings call, Snowden said the company’s goal is a 16% market share in iGaming. ESPN Bet will play a major role in that growth with its large customer database. In the Q3 call, Snowden used theScore Bet and Ontario as an example of successful media integration and cross-marketing.
According to Snowden, 73% of Penn’s total handle in the province comes from users within theScore Media’s ecosystem. Additionally, over 50% of sports betting users crossed over to the iGaming product. Other successful year-over-year highlights of media integration include:
- 105% increase in sports betting revenue
- 54% increase in iGaming revenue
- 21% increase in sportsbook active monthly users
- 74% increase in iGaming active monthly users
- 44% more players are converting from sports to iGaming
Snowden believes that with the same technology as theScore Bet, ESPN Bet provides one of the best blueprints for success in the US.