ESPN Bet’s Early Results Are In — And It’s Not Pretty
Penn Entertainment’s stock price was in freefall yesterday morning after the company reported its first-quarter earnings.
While Penn was able to match expectations with $1.61 billion in overall revenue, the company’s new ESPN Bet sportsbook fell far short of expectations. In total, the sportsbook brought in $208 million, which was roughly 12% below Wall Street’s estimates.
![Penn Entertianment](https://mickeyblog.com/wp-content/uploads/2023/08/Screenshot-2023-08-08-at-16-04-04-Penns-sports-betting-business-posts-head-turning-fourth-quarter-profit.png)
![Penn Entertianment](https://mickeyblog.com/wp-content/uploads/2023/08/Screenshot-2023-08-08-at-16-04-04-Penns-sports-betting-business-posts-head-turning-fourth-quarter-profit.png)
Photo: CNBC
“ESPN Bet continued to attract new users this quarter while maintaining a disciplined approach to promotions and marketing expenses; however, our financial results were impacted by lower-than-expected hold and spend per user,” said PENN CEO Jay Snowden in a press release.
![Jay Snowden](https://mickeyblog.com/wp-content/uploads/2024/05/Jay-Snowden-1024x683.jpg)
![Jay Snowden](https://mickeyblog.com/wp-content/uploads/2024/05/Jay-Snowden-1024x683.jpg)
Photo: CNBC
“While we are pleased with the early ESPN Bet adoption and engagement results, our focus heading into this football season will be on enhancing our product offerings, including a refreshed home screen and expanded parlay offerings. Simultaneously, with our partners at ESPN, we will reveal additional ESPN Bet media integrations within their digital media app and industry-leading fantasy product. We believe our enhanced product offering and media integrations will result in superior experiences for our customers, leading to higher retention, share of wallet, and spend per user.”
ESPN Bet Launched Last November
Penn launched ESPN Bet last November after agreeing to a 10-year $2 billion agreement with the Worldwide Leader in Sports.
To facilitate the agreement, PENN sold Barstool Sports back to its founder, Dave Portnoy, for just $1 and transformed the Barstool Sportsbook into ESPN Bet.
![Dave Portnoy](https://mickeyblog.com/wp-content/uploads/2024/05/Dave-Portnoy.jpg)
![Dave Portnoy](https://mickeyblog.com/wp-content/uploads/2024/05/Dave-Portnoy.jpg)
CHICAGO, ILLINOIS – NOVEMBER 8: Barstool founder and CEO Dave Portnoy is seen before the Florida Atlantic Owls and Loyola (Il) Ramblers game in the Barstool Invitational at Wintrust Arena on November 8, 2023 in Chicago, Illinois. (Photo by Michael Hickey/Getty Images)
Interestingly, Penn’s online revenue was actually down year over year, meaning that the Barstool Sportsbook outperformed the newer ESPN Bet.
A Slow Start
While some analysts have pointed to the fact that ESPN Bet is new, and the Barstool Sportsbook was well established by Q1 of 2023, that does not tell the story.
![ESPN BET](https://mickeyblog.com/wp-content/uploads/2023/10/ESPN-BET-Logo-Primary-1352x1080-1-e1697666076330-1024x505.jpg)
![ESPN BET](https://mickeyblog.com/wp-content/uploads/2023/10/ESPN-BET-Logo-Primary-1352x1080-1-e1697666076330-1024x505.jpg)
Photo: ESPN
Barstool Sportsbook users’ accounts were automatically transferred over to ESPN BET, which should have theoretically given the newer sportsbook a head start. The decrease year-over-year, then, tells a darker story for PENN.
Does the “ESPN” Name Matter?
While ESPN is undeniably the foremost sports network, whether or not that will translate to users in the gambling sphere remains to be seen. Penn was counting on the name recognition and cross-promotional opportunities that came along with the ESPN name to increase their market share.
![ESPN](https://mickeyblog.com/wp-content/uploads/2024/04/2024-espn-logo.jpg)
![ESPN](https://mickeyblog.com/wp-content/uploads/2024/04/2024-espn-logo.jpg)
Photo: ESPN
For gamblers, however, it remains unclear whether or not the ESPN name holds any weight. Both DraftKings and FanDuel are well-established, recognized brands that have become synonymous with sports gambling.
Veteran sports gamblers, meanwhile, do not care about what Stephen A. Smith’s pick of the day is. They want good lines and strong boosts.
![ESPN BET](https://mickeyblog.com/wp-content/uploads/2023/10/ESPN-BET-Logo-Secondary-300x300-1.jpg)
![ESPN BET](https://mickeyblog.com/wp-content/uploads/2023/10/ESPN-BET-Logo-Secondary-300x300-1.jpg)
Photo: ESPN
After divesting itself of Barstool for a dollar and spending billions to bring ESPN into the gambling sphere, so far, PENN has little to show. While it is still obviously early in ESPN Bet’s life, the initial results are not great.