The countdown is on for Penn Entertainment as it sets about challenging for a Top 3 spot in the U.S. sportsbook charts.
Listening to Penn CEO Jay Snowden during the ESPN Edge conference last Thursday, it was impossible not to wonder whether ESPN Bet would be the first betting-media joint venture to solve what has been one of the industry’s longest-running mysteries.
The theory says media and sports betting should be shoo-ins for launching successful sportsbooks with their highly relevant content and target audience, but many have tried and so far none has succeeded in becoming a truly dominant sports betting operator.
Whether newspapers or broadcasters, most have struggled in their sports betting ventures. Think Fox Corporation shuttering Fox BET recently or a few years ago The Sun, the UK’s biggest selling tabloid, investing, and losing out, heavily in its SunBets venture. Despite major advertising budgets and content campaigns, none was able to direct large swathes of readers towards their betting websites.
Sky Bet showed that it could be done, but the brand existed long before it became a market leader and its rise in the UK was the result of a confluence of factors that created a perfect storm.
Its Request-a-Bet product, which started life on Twitter (as was) with punters asking it to price up markets they were interested in, marked it out as a truly original brand. No other operator had done anything like that before and it led to the bet builder/same game parlay products that have been so good for bookmakers’ margins.
Expanding on the ESPN Bet project, Snowden’s arguments sounded compelling. Explaining how Penn would replicate the strategy that has made theScoreBet the market leader in Ontario, he spelled out his vision for a fully integrated media-sports betting app.
“Picture you’re on theScore or ESPN app, you’re checking the stories Sunday morning before the game kicks off at one o’clock. You see what the money line is, the point spread, the over-under and you can actually put together your betslip while you’re in the media app.”
He added that ESPN Bet will be the only fully integrated media-sports betting app in North America.
As proof of the success of the integration, Snowden said 28% of the 3.2 million monthly users who visit theScore are aged 25-34 and 73% of the wagers recorded by theScoreBet in Ontario are placed from “the media (app) ecosystem”.
By way of comparison, ESPN gets nearly 600 million site visits per month, with more than 50% of the visitors aged 25-44. “So think about that, if it translates similarly in the U.S., the hundreds of millions of people, Americans that are part of that ESPN ecosystem,” Snowden added.
If ESPN Bet gets “anywhere close” to the 73% figure, “you will see a tremendous amount of crossover and as I said earlier, sports bettors in America today view sports betting as a major piece of the sports entertainment experience. Having $5 on a parlay creates extra engagement.”
Mike Morrison, ESPN VP for sports betting and fantasy, backed up Snodwen’s vision by saying sports fans should anticipate much more integration of betting features and information into ESPN’s content.
“We talk a lot about incorporating content across our ecosystem. You’ll begin to see a deeper leaning (into betting) editorially, in particular what it means in terms of the game both in pregame shows and signature shows such as Sports Center.”
Realistic share gains?
The focus will be on providing a betting experience that is seamless, and Snowden added that “what the (sports) fan wants” is “a betting experience as part of their sports consumption that is frictionless”.
“So you can be in any of the ESPN apps and put together wagers and have that happen without feeling like you’re having to cheat on ESPN and go bet with somebody else. You can do that all within the same family.”
As Snowden commented at the time of Penn’s third quarter results, the aim will be to build “market share over time and not have a giant shotgun on day 1 and then you slowly leak market share”, with digital breakeven/profitability timeline set for 2025.
Penn is aiming for around 20%-25% share in the next three years, which is way above the low single digits its Barstool Sports brand ended up with this year. The JMP analysts picked up on this when they said “the success of the partnership will hinge on its ability to sustain market share after the initial launch driven by its product/tech”.
They added that they were optimistic about Penn’s ability to retain players, but, just as they increased the group’s near term “market share assumptions to high-single digits”, they also noted that such a figure would be “well under the projected assumptions” laid out by Snowden.
If a fully integrated media-sports betting ecosystem ESPN Bet will be key to its success, having full buy-in from ESPN, with SportsCenter anchors Scott Van Pelt and Elle Duncan set to front an initial advertising campaign, is another vital component of the project.
As the Macquarie analysts noted, ESPN’s promotion of “the new brand via odds attribution, editorial integrations, sponsorships across its 100m+ monthly unique visitors, 25m+ ESPN+ subscribers and 11m fantasy sports database” should enable Penn to bring in new players to the ecosystem.
However, it’s also worth pointing out that the likes of DraftKings and FanDuel have seen off stiff competition before and are confident their products will win out in the long term. Jefferies also noted that ESPN Bet is beginning a journey “where success is determined beyond our current forecast horizon”. Equally, just as FanDuel’s overall market share seemed impregnable not that long ago, DraftKings’ recent catching up and overtaking of its great rival shows what can be achieved with time and dedication to product.
And for those taking a longer view, ESPN recently acquired the remaining 33% stake it did not own in Comcast’s streaming service Hulu for $8.6bn, which could be the first step towards ESPN Bet becoming the first (and only?) company to offer a fully integrated, first rate single-screen viewing-sports betting experience. But first Snowden and Penn have to deliver on ESPN Bet in the next three years.