Penn Forecasting Modest Improvement for ESPN Bet

A step forward is always better than a step backward in the investment game, and the parent company of ESPN Bet recently announced it believed its mobile sports betting entry could be poised for modest gains during this football season.

Baby Steps

Penn Entertainment is making a concerted effort to reinvigorate ESPN Bet by utilizing ESPN’s digital platform to promote ESPN Bet with odds readily available and an interactive platform between the two apps. It has been a long process in the making, but one that will give ESPN Bet the exposure it desperately needs to attract a portion of the sports media giant’s tremendous viewership.

ESPN Bet has approximately 3% of the national market share, approximately what they had with their now-defunct Barstool Sports, but the company believes a modest improvement will manifest during the critical NFL and college football seasons due to improved synergy between the two apps.

CFO Felicia Hendrix announced during Thursday’s earnings call that she expects “modest” sports betting market share improvement to 3.4% in the third quarter and 4% in the fourth quarter. Any improvement would be welcome news, and although increasing its customer base by less than a percentage point is not groundbreaking, it is a baby step in the right direction.

Snowden Keeps Options Open

Penn Entertainment’s foray from a retail gaming powerhouse to a lackluster mobile sports betting app has fascinated onlookers and industry insiders.

Spending $650 million to enter the market as Barstool Sports, only to dissolve the sportsbook and sell the entity back to its founder for $1 due to a demand from Disney-owned ESPN, which received $2 billion over 10 years from Penn to lease the brand as ESPN Bet, has all the makings of a business class staple in what not to do when running a corporation.

Moreover, Penn investors are far from fascinated and far more frustrated with Penn’s management, which has seen its stock tumble from $121 per share in 2021 to $18/share as of this writing. The agreement between Penn and ESPN has an opt-out clause in August 2026, which remains a very real possibility unless the mobile sports betting entry can gain traction and viability in the fiercely competitive digital sports betting market.

Still, Penn Entertainment’s entry in the online casino industry, the Hollywood Casino app, has benefited and shown steady improvement. Cross-selling from its ESPN Bet app has increased active user accounts and remains a beacon of light in the digital world for Penn.

But the true test of Penn’s stamina in the online market remains with its investments in the mobile sports betting market. Integrating its ESPN Bet platform with ESPN’s is critical to its success.