Penn briefs Wall Street on ESPN Bet launch

October 10, 2023 12:45 PM
Photo: Shutterstock
  • David McKee, CDC Gaming Reports
October 10, 2023 12:45 PM
  • David McKee, CDC Gaming Reports

Meeting at Global Gaming Expo with Truist Securities analyst Barry Jonas, executives of Penn Entertainment and ESPN said the two companies are largely ready for the November launch of ESPN Bet. Jonas huddled in Las Vegas with Penn CEO Jay Snowden and ESPN Vice President of Sports Betting & Fantasy Mike Morrison.

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Morrison insisted that ESPN was into the sports-betting sphere for the long haul. He pronounced himself comfortable with the Penn alliance, but despite “significant equity upside,” the network will not be venturing into igaming.

Also, Morrison “noted some limited spot media could be made available for other sports-betting competitors, though it would necessitate favorable economics for ESPN.” The network had previously been affiliated with DraftKings, sponsor of the morning football roundtable “Get Up.”

Snowden and Morrison predicted that next month’s inception of ESPN Bet would be almost fully implemented at launch. The hold percentages may not be as high as those of DraftKings and FanDuel. As for same-game parlay offerings, those “may not be as sophisticated initially,” Jonas chronicled.

Penn’s strategy for breaking into the front rank of online-sports-betting (OSB) providers entails leveraging ESPN’s brand equity and customer database. Penn is counting on integrating ESPN’s 200 million monthly viewers with its own proprietary tech stack. Snowden told Jonas that Penn’s success with theScore in Ontario “provided the template” for what it hopes to achieve in the U.S.

To wit, theScore has seen a 108 percent increase in customer retention in the past six months and a 32 percent crossover from OSB into igaming. “Mr. Snowden stated that customer retention would be driven through an integrated-product and customer-value proposition, and not through aggressive promotional activity.”

Snowden and Morrison also met at G2E with J.P. Morgan analyst Joseph Greff. His salient impression was that the ESPN/Penn alliance “is highly focused on making ESPN Bet work and is very engaged with PENN Interactive. To us, it sounds like the working relationship is starting strong, with meaningful buy-in from the folks in Bristol,” an allusion to ESPN’s Connecticut headquarters.

The two executives refrained from making cash-flow projections or discussing the amount of Penn’s investment over the next three years. Morrison did say that “the entire ESPN ecosystem” would be in play and any reference to odds making would be ESPN Bet-branded.

No definitive date has been set for the November launch and Greff was told that it was premature for ESPN Bet to be marketing itself or offering promotions. The analyst’s expectation is that marketing will begin a fortnight prior to the undetermined launch date.

As to where ESPN Bet would stack up with the competition, Snowden told Greff, “It won’t be the highest and won’t be the lowest, but will be competitive.” As paraphrased by Greff, Snowden added that “for those who use ESPN apps for sports information but don’t want to be bombarded with betting features, there will be an opt out.”

“Net-net, we don’t foresee a World War III promotional environment in an already competitive market,” Greff concluded. He adopted a wait-and-see stance on ESPN Bet, which he called “likely the biggest driver of the stock in the foreseeable future.” His rating on Penn stock remained “Neutral.”