PENN Entertainment confirmed what everyone already knew: Its sports betting product, ESPN Bet, has fallen well short of expectations.
“Our market share and financial performance in sports betting to date has not met our expectations,” PENN chairman David Handler and CEO Jay Snowden co-wrote in a letter to shareholders ahead of its annual June 17 meeting, as detailed recently by Legal Sports Report. "Our Board and management team are moving swiftly and decisively to recalibrate execution and unlock the full value of this partnership.”
ESPN Bet launched in November 2023 with the goal of attaining a 10 percent market share within one year. As of March, the company estimated it only had a 2.35 percent share across 20 jurisdictions.
Early struggles
It seemed like a match made in heaven. PENN, a leading gaming company with a point to prove after its disastrous union with Barstool Sportsbook, and ESPN, the self-proclaimed worldwide leader in sports.
The modern landscape of sports coverage directly or indirectly crosses over with sports betting more times than not.
Commentators of live sports events often read in-play odds, such as spreads and points totals; betting odds are referenced on sports debate shows and betting-focused programs have been created to facilitate the development of the legal sports betting ecosystem.
Still, the partners have not found a way to make their seemingly match-made partnership as successful as they’d hoped.
Rather than run and hide, PENN said it is ready to up the stakes to help deliver a top-flight sports betting platform — but with the caveat that either side could back out of the deal at the third anniversary of the partnership in August 2026, per LSR.
“While our initial integrations have expanded reach and driven customer acquisition, we recognize there’s more work to do to deliver on the full potential,” read PENN's letter. “As mentioned on our Q4 earnings call, we are optimistic that our joint efforts with ESPN will deliver improved results over the coming quarters, but we maintain optionality and control of our future in this vertical if this does not prove to be the case.”
Why is ESPN Bet failing to latch on?
ESPN Bet’s slow beginning is a direct response to its missed opportunities.
ESPN at first seemed reluctant to incorporate its sports betting odds into its online and digital content. It also attempted to keep the ESPN and ESPN Bet apps totally separate instead of capitalizing on its existing audience.
In April, PENN debuted a new ESPN in-app feature dubbed "Mint Club."
As summarized by LSR, "Mint Club offers users who link their media and sports betting accounts a personalized experience across both apps, including real-time bet tracking, exclusive promotions, and customizable scoreboards, according to Penn. ESPN Bet wagers will now appear within the “Scores” section of the ESPN app, allowing users to follow active bets and parlays alongside live games."
The question now is if its planned changes will come too late. FanDuel and DraftKings have only grown more powerful as the dominant legal sports betting platforms in America, and they, along with BetMGM and Caesars, comprise the core four sportsbooks.
Fanatics and bet365 have also emerged as two of the most innovative and robust “new” sportsbooks.
Fanatics offers its customers FanCash, which can be used to shop at the Fanatics marketplace or to fund future wagers, for every bet, win or lose. It also has competitive odds, whereas ESPN Bet has been accused of juicing its lines.
In February, PENN reported fourth-quarter EBITDA of $110 million in losses. That was down year-over-year, but its overall losses grew from $403 million to nearly $500 million.