Penn Predicts ESPN Wager Will Begin Prior to Thanksgiving Football Matches
Penn Entertainment reported its third-quarter results yesterday. Analysts and investors were particularly interested in the company's comments about the highly anticipated launch of ESPN Bet.
The Pennsylvania-based regional casino operator announced that ESPN Bet, their new online sportsbook brand, would "simultaneously launch" in 17 states on November 14. This means the mobile app will be accessible to bettors in those areas before the Thanksgiving football games.
This timing is significant because Thanksgiving Week is traditionally known as "Rivalry Week" in college football, and this year includes a rematch of the most recent Super Bowl between the Kansas City Chiefs and the Philadelphia Eagles on Monday Night Football.
The clarity regarding ESPN Bet's debut is seen as one of the main reasons why Penn's shares, which had been struggling, increased by 14% on Thursday, with volume more than three times the daily average.
In connection with the launch, ESPN will initiate an initial wave of exclusive integrations targeting their 200 million loyal fans across their linear and digital platforms, including an advertising campaign featuring SportsCenter anchors Scott Van Pelt and Elle Duncan, explained Penn CEO Jay Snowden in a statement.
Snowden also noted that there would be "even deeper platform and media integrations with ESPN over the upcoming months."
ESPN Bet: Penn's Best Chance in the Sports Betting Industry
Following struggles in gaining market share through the Barstool Sportsbook brand, Penn parted ways with Barstool Sports in August, declaring a partnership with ESPN to pioneer a new venture in the sports gambling industry.
Under the agreement, Penn will pay ESPN $1.5 billion over ten years for the use of their brand; however, there are opt-out clauses after three years if certain financial and market share objectives are not met. Penn is also giving ESPN $500 million in warrants, allowing the network to purchase around 31.8 million shares in the casino company. Since August, ESPN has been exclusively using odds provided by Penn in their broadcasts.
Since the announcement in August, analysts have been cautious about the potential success of the ESPN Bet concept, with some questioning whether consumers would change their behavior and embrace a new sportsbook this late in the game.
Stifel analyst Steven Wieczynski wrote in a note: "For now, we continue to view ESPN Bet as a possibility. Does the strategy work? Certainly. But will consumers change their habits now? Have they grown accustomed to using specific apps?"
ESPN Bet Could Boost Penn's Interactive Unit's Profitability
ESPN Bet could potentially help Penn improve profitability in their interactive segment, which investors are demanding of iGaming and online sportsbook operators. The new mobile sportsbook might incur losses of up to $150 million in the current quarter. However, this might improve next year.
During the call, Snowden said, "At a high level, you should expect the Interactive losses to be at their peak between Q4 and Q1."
Snowden added that Penn's online division is projected to continue recording losses throughout all four quarters of 2024.
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Source: www.casino.org
