ESPN Banks off to a good start, analysts say
ESPN Bet, Penn Entertainment's (NASDAQ: ESPN ) recently launched mobile sports betting app, is off to a strong start in some states. However, this advantage can be supported by high ad spend.
Macquarie analyst Chad Beynon noted in a new client note that ESPN Bet is not available in Indiana, Iowa and Maryland, three of the 17 states where the app is available. states) generate a double-digit share of gross gaming revenue (GGR). share.
"From a handle share perspective, we estimate ESPN BET's share increased by ~500 basis points (previously ~1-2%)," the analyst wrote. "From a total addressable market perspective, these three The state's average handle increased 16% month over month, while New York, where ESPN BET does not operate, grew only 5%. It's also worth noting that these results cover only half of the month and come from more established and competitive states. We will continue to monitor incoming data but believe early signs are positive. "
New York is often the benchmark analysts use to measure the success of sports betting GGR. This is because it is the largest state where several online sportsbooks operate.
The start of ESPN betting could be good news for Penn
After years of failing to connect its prestigious brand with sports betting operators, ESPN announced in August that it would partner with the University of Pennsylvania to create ESPN Bet. Under the agreement, Penn will pay ESPN parent company Walt Disney (NYSE: DIS) $1.5 billion over 10 years.
The sports media giant also received $500 million worth of Penn warrants from the deal, which resulted in the area's casinos terminating their relationship with Barstool Sports, eliminating its Barstool Sportsbook brand. While Barstool Sports is well-known among Gen Z and Millennial sports fans, the brand has failed to gain traction in the sports betting space, garnering only a small market share in most states where the brand is available.
Although still in its infancy, ESPN Bet is doing better than Barstool Sportsbook. This could alleviate concerns about Penn's presence in the sports betting space and concerns that the company is paying too much to acquire the ESPN brand.
"November data for Iowa, Maryland and Indiana show ESPN BET's GGR share increasing significantly into the double digits. However, we found that retention rates were much higher during periods of higher promotional intensity, ” Beynon added.
Analysts have an "outperform" rating on Penn stock and a $38 price target, representing a 45.2% upside from Thursday's closing price.
More Highlights from ESPN Bet
Needham recently conducted a survey of hedge fund managers regarding ESPN Bet's November sports betting market share expectations. The average response rate was 7.3%. That's reliable, but data from Indiana, Iowa and Maryland suggest the number could be higher.
This is still far from the DraftKings/FanDuel stratosphere. But ESPN Bet appears to be off to a good start.
"We are cautiously optimistic that the consensus we are seeing could be slightly higher as we become more optimistic about the impact of promotions and the potential for the West Virginia data to be an encouraging sign, although there are a lot of assumptions here," Needham said.
Read also:
- Blackjack Casino Advantage: How to Beat the Odds
- Football 101: What is relegation in football?
- Vegas Restaurant Roundup: Sin City’s Lonely James Beard Finalist
- Wynn Macau caps brand payments to parent company at $140 million
Source: www.casino.org
