Three months after PENN Entertainment unveiled ESPN BET to U.S. betting markets, the company’s top executive told investment analysts Thursday that it is now looking forward to improving the online sports betting product even as it prepares to launch ESPN BET North Carolina next month.
Those remarks by PENN President and CEO Jay Snowden came after the company released its 2023 fourth-quarter financial report. That report featured a mix of good and bad news for the Pennsylvania-based gaming operator, which announced last August it would jettison the Barstool Sportsbook brand and repackage its online sports betting app with the name of the country’s top sports media outlet in a $1.5 billion deal over 10 years.
Among the highlights Snowden shared was that ESPN BET generated more than 1 million app downloads over the first two months, a number Snowden didn’t think the app would reach for a year. That helped the new brand become the No. 3 sports betting operator with a 7% market share.
There is a downside to that, at least in the short term, as Snowden noted ESPN BET’s promotional spend was “much higher than we anticipated.” In the financial report, PENN reported a net loss of $358.8 million for the quarter. However, the PENN leader noted that promotional spending was slowing down – the new app launched in 17 states in November – as the new year started.
“People are weaning off those early promos,” he explained. “They’re dipping into their wallets, making deposits and continuing to play with us.”
There could be spikes in promotional activity, especially as ESPN BET launches in NC along with other North Carolina sports betting apps and as the NCAA Tournament tips off next month. Still, Snowden said those events would be the exception and not the norm moving forward as promotional spending is expected to be about 3% of its handle. Last November, it was about a third of the amount wagered.
Opportunity In North Carolina
North Carolina will be the first new market for ESPN BET since its November rollout. In addition, it will mark the first time it gets to launch simultaneously with other operators in a state. With that comes an opportunity, especially since the app’s share of weekly active users is closer to double the 7% market share in terms of handle.
“We believe that if we can be at 7% handle market share in the early days with these things that we know are sort of that first inning or second inning of a game, we feel really good about where those are going to take us over the course of the next 12 months, 18 months, 24 months,” Snowden said. “So, we don’t anticipate that 7% is going to be as good as it gets by any means. We think that the market share is going to be growing steadily as we continue to make product improvements and add more deeper integrations with ESPN.”
Online North Carolina sports betting is scheduled to launch across the Tar Heel State on March 11, in time for the ACC men’s basketball tournament and NCAA men’s and women’s basketball tournaments. Pending licensure approval from the North Carolina State Lottery Commission, ESPN BET will operate in the state through a partnership with the Quail Hollow Club, the Charlotte golf course that hosts the PGA Tour’s Wells Fargo Championship.
What’s Coming Next For ESPN BET
Now that ESPN BET has gone through its national rollout, Snowden shared with analysts what’s coming next.
“With launches and migrations, our teams haven’t had the ability to really focus on features and functionality,” he said. “Now we can because we’ve got most of that behind us. We get North Carolina launch, but we’ve done so many state launches, that’s not going to be as time-consuming.”
What all that means is that PENN’s interactive division can now focus on making tweaks to the app. That will primarily focus on improving the same-game parlay offerings, which Snowden described as a priority. In addition, there will be more integrations with the ESPN media app and the media outlet’s fantasy sports database.
Those upgrades are also expected to help ESPN BET eat into the market shares held by FanDuel and DraftKings, the top two online sports betting operators in U.S. markets.
“We’re not really super focused on where we are today on market share,” Snowden said. “It’s where are we going to be in September and beyond.”
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