Penn looking at ESPN bet in New York, analysts say
Penn Entertainment (NASDAQ: PENN ) is actively exploring options to bring its new ESPN Bet mobile sports betting app to New York.
Following Truist Securities' recent 11th annual GLLR Summit in Boston, Truist betting analyst Barry Jonas noted that ESPN Bet remains one of the hottest topics in the industry, adding that Penn is looking for opportunities in New York based.
This is consistent with comments from Penn CEO Jay Snowden. When Penn and ESPN announced their partnership in August, Snowden noted that the operator was considering entering the New York sports betting market. This represents a reversal of his previous attitude towards the country.
So I’ve been struggling with this question, “Would you rather go there or not?” I think objectively you’d probably rather go there than not go, but this is one of those states where you don’t go there “nor do you Overwhelmed," Snowden said in 2021. “I think this will have a negative impact on EBITDA.”
New York is by far the largest sports betting jurisdiction in the United States by sales and revenue. But the high tax rate of 51% also makes it difficult for sports bettors to make a profit in the fourth-largest state.
How Penn is bringing ESPN betting to New York
When the New York Legislature approved online sports betting in 2021, it issued nine licenses to bookmakers, all of which have now been taken away.
In order for Penn to bring ESPN Bet to the state, policymakers would need to legislate to extend the above policy. Or Penn could wait until the current operator leaves the state or purchase an existing license from one of the companies.
Acquisitions can be difficult, but not impossible. But New York's five largest operators by name and revenue are unlikely sellers. These are FanDuel, DraftKings, Caesars Sportsbook, BetMGM and BetRivers. Fanatics, ranked No. 6, is also an unlikely seller as it is new to the state acquiring PointsBet U.S..
That leaves WynnBET, Resorts World Bet and Bally Bet as potential destinations for Penn and ESPN Bet. More critically, the parent companies of the three operators are vying for state-by-state casino licenses, and if they win that task, they likely won't give up New York's sports betting license.
WynnBet may be willing to sell its sports betting business if it doesn't get a New York casino license due to the significant downsizing of WynnBet's business earlier this year. But this is just speculation.
Other Penn, ESPN Betting Instructions
Truist's Jonas added that ESPN Bet could initially exceed Penn's projected losses of $100 million to $150 million, meaning it could take until 2025 for the sportsbook to become profitable.
The analyst also noted that the region's casino operator has yet to buy back shares under a $750 million buyback program announced a year ago. That's because the excess money is passed on to ESPN Bet.
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Source: www.casino.org
