ESPN Bet quickly outperforms Barstool Sportsbook
Penn Entertainment's (NASDAQ: PENN) mobile sports betting app ESPN Bet has been live for about two months, and in that short time, national data suggests the app is outperforming its predecessor, Barstool Sportsbook .
The app launched on November 14 in 17 states. While not all of those states have provided data for November, let alone reporting for December, early indications from some confirm that ESPN Bet is making more money than Barstool Sportsbook.
Since its inception, ESPN Bet has achieved double-digit share of gross gaming revenue (GGR) in Indiana, Iowa and Maryland. Last month, ESPN Bet made $42.4 million in profits in Maryland, more than double the $16.4 million Barstool Sportsbook made a year ago. In Iowa, ESPN Bet generated $18.8 in December, well above the $7.2 million the previous app generated in December 2022.
Impressively, Maryland-based ESPN jumped to No. 3 in market share last month, behind FanDuel and DraftKings (NASDAQ: DKNG ).
Ad spending helps ESPN bet
A common concern when new entrants enter the highly competitive U.S. sports betting space is that the companies will spend heavily on promotions to attract new customers, but when the bonuses disappear, they will be less effective at retaining bettors. .
In fact, Penn has offered attractive promotions since launching ESPN Bet, but Bank of America analyst Shaun Kelley recently noted that the operator's ad spend is in Kansas, Kentucky and Maryland. This is acceptable. Jefferies analyst James Wheatcroft noted that the carrier is currently offering a $150 bonus for new customers, up from an initial bonus of $250.
Efficient spending is critical for Penn as regional casino operator ESPN will pay $2 billion in cash and stock over 10 years to leverage the sports network's brand.
Penn estimates that a relationship with a "global leader in esports" could boost long-term adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for its interactive gaming unit by $500 billion to $1 billion. Still, ESPN Bet is expected to lose at least $100 million this year, suggesting the app won't become profitable until 2025 at the earliest.
ESPN bets have a positive impact on the market overall
ESPN Bet and Penn's growing willingness to spend money to attract customers is being felt across the industry, reflected in increased ad spending.
"As expected, industry-wide ad reinvestment accelerated in November, driven primarily by the mid-month launch of ESPN Bet," Stifel analyst Jeffrey Stantial said. "However, we also see There has been a slight increase in spend into certain existing businesses (notably DraftKings), as well as continued above-industry reinvestment from Fanatics and bet365."
Some data points seem to indicate that ESPN Bet may have taken market share away from BetMGM and DraftKings immediately upon its debut in November. However, DraftKings notes that customer churn this month is normal and that ESPN Bet has the potential to grow the U.S. sports bettor market, which would have a positive impact on the industry as a whole.
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Source: www.casino.org
