Even prior to the formal beginning of the 11th Annual Truist Securities GLLR Summit held in Boston last week, the talk was of the launch of ESPN Bet. It occupied the pre-conference investor dinner last Wednesday and four paragraphs of Truist Securities analyst Barry Jonas’s precis of the conclave, published today.
ESPN Bet is now live in 17 states and provinces and Penn Entertainment (a partner in the joint venture with ESPN) pronounced itself “very pleased” with the metrics of the app’s download, which now exceeds two million. They also expressed happiness with online reviews of their application, which stood at a 4.9- out of five-star ranking.
Investors expect a five percent market share for ESPN Bet, even though early financial results have not been reported. Wrote Jonas, “Early data suggests PENN is growing the market, including an encouraging number of female players (speaking to the power of the ESPN brand).”
Retention of customers remains to be seen. However, Penn execs were said to be “encouraged” by the fact that bettors were spending more cash on wagers, even as their promotional dollars ran out.
Penn and other sports-betting operators conceded that November had been a tough month in terms of hold, “adding another interesting ingredient to ESPN Bet’s mid-month launch.” Continued Jonas, “Initial wagering volumes have been strong and we believe promotional allocations have been ramping similarly.”
Jonas indicated that Penn’s negative return on investment from sports betting would increase in the fourth quarter, from an initially guided $100 million to $150 million. But he also believed that the timeline to profitability could be shorter, advancing from a previously stated fourth quarter of 2025.
The analyst’s own complaints about ESPN Bet, regarding the speed of cash withdrawals and parlay treatment of pushed legs, were said to be in the process of being addressed. Penn execs stated that they expected the application to be “industry standard” within the first quarter of next year.
ESPN will also introduce its Bet Mode in the media app in time for the Super Bowl. Longer term, the application will include a tie-in to ESPN’s existing fantasy-sports app.
Operation of ESPN Bet in New York state (from which ill-fated Barstool Sportsbook had been barred) was deemed “imperative.” Penn “believes ESPN Bet will be the sportsbook of the mass market,” Jonas wrote, reporting that the company is in active discussions to acquire an Empire State license from an existing operator and is optimistic of approval and entry sometime next year.
Already ESPN Bet has been aced out of an online license in Connecticut by newcomer Fanatics. Jonas attributed this to unfortunate timing.
Turning his attention to the recent Las Vegas Grand Prix, Jonas was dismissive of some negative press, but he also conceded that the event was “not A1.” Business was described as “robust for Vegas’s major players, driven by the high-end consumer. … But properties away from the track and less high-end did not fully benefit” from the race.
Among those walking back their financial forecasts relative to Formula One is Caesars Entertainment, which reportedly failed to achieve its projected five-percent cash-flow bump from Formula One weekend. Even so, Jonas predicted that future F1 races would “have wider appeal.”
Concerning the 2024 Super Bowl, Jonas prognosticated that it would offset the absence of the Con/Agg expo, a first-quarter tentpole. He foresaw little cannibalization from new (opening Wednesday) Fontainebleau, but some from Station Casinos’s Durango Resort, which debuted on December 5.
“Overall, gaming continues to hold up,” Jonas said of regional operations, even though “management teams have been scouring company data for trends of a softer consumer.” Consistent with Wall Street narratives since the post-COVID reopening, “The lower end and unrated player has softened, while the higher end remains strong.”
Several regional markets were described as facing headwinds during the present quarter. These included Detroit, where revenue has already been decimated by a 47-day casino strike; Council Bluff, Iowa, where Nebraska racinos are making inroads; and Chicago, where the launch of Bally’s Casino and others has heated up competition.
One anticipated tailwind is for Churchill Downs in Virginia. There, gray-market slot machines, a bane of the company’s existence, are slated to be removed by year’s end.
As for game makers, their prospects were described as flattish, with operator spending remaining stable in 2023. “Slot suppliers are looking to expand into new/slot-adjacent markets to find incremental install-base growth,” chronicled Jonas.
While there was talk of consolidation in the manufacturing sector, AGS was described as “clearly gaining traction” and Everi Holdings could see a comeback thanks to new product. However, six months into International Game Technology’s “strategic review,” Jonas had no new news to offer.
Other companies attending the summit included Accel Entertainment, Bally’s Corp., Century Casinos, Caesars Entertainment, Churchill Downs, DraftKings, Golden Entertainment, Light & Wonder, MGM Resorts International, Vici Properties and Wynn Resorts.
