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ESPN and PENN Entertainment announced an ESPN BET launch date of Nov. 14 on Thursday, and PENN Entertainment CEO Jay Snowden reiterated his enthusiasm for arguably the most anticipated entry of any sports betting newcomer since the historic 2018 PASPA decision.
The partnership between PENN and ESPN was announced in early August, but the launch of ESPN BET won’t come until three months later.
Snowden suggested the partners “could have rushed” to have the betting app ready for the start of football season, but they wanted to ensure the product was “first class” before going live.
“You get one chance to make a first impression,” Snowden said Thursday on PENN’s third-quarter earnings call.
PENN Entertainment’s stock climbed sharply after the launch announcement, underscoring bullishness among some investors on ESPN BET’s future. One prominent venture capitalist believes the sportsbook will eventually become the top sportsbook in the U.S.
Immediate next steps
Pending regulatory approvals in each jurisdiction, the sportsbook will go live in 17 states as soon as Nov. 14. The app’s first impression will come during the heart of the NFL regular season. The mobile sports betting platform will be live about a week before a highly anticipated Monday Night Football game on ESPN between the Philadelphia Eagles and Kansas City Chiefs on Nov. 20.
Launching on a Tuesday gives the company time to work out any possible kinks prior to a weekend of football games. The initial weekend also includes college football’s rivalry weekend and some conference championships, along with games early in the college basketball, NBA, and NHL seasons.
“We have had plenty of time to order additional servers and hardware to prepare for what we anticipate with volumes being the highest we’ve ever seen,” Snowden said.
As for current Barstool Sportsbook users, the operator says their information will be seamlessly transitioned over to ESPN BET when the app goes live in mid-November.
“If you’ve used HBO Max, and then when it just went to Max, when you opened the app it prompted you to download the new app, and then you could use all your prior credentials,” explained Felicia Hendrix, PENN Entertainment’s executive vice president and chief financial officer. “The whole thing took like two seconds. That’s the experience that we’ll have with ESPN BET.”
ESPN BET integrations
ESPN BET’s integration into ESPN platforms has already begun, with the app and website now showing odds via the ESPN BET app. The website previously pulled odds from Caesars Sportsbook. ESPN’s Daily Wager show will be rebranded to ESPN BET Live beginning on Nov. 10.
Once live, the betting platform will feature same-game parlay creation, live betting options, featured bets, and the ability to share a bet slip on social media. Standalone six-pack odds (spread, total, and moneyline) will be integrated into ESPN.com in the coming weeks.
Other potential media integrations are abundant but have yet to be announced. ESPN has yet to reveal any potential integrations between its streaming service, ESPN+, and ESPN BET.
Additionally, Disney announced Wednesday it plans to purchase Comcast’s stake in Hulu, giving Disney full ownership of the streaming service. There’s a possibility of integrations between Hulu and ESPN BET, perhaps with a similar look or feel to FanDuel TV.
PENN Entertainment hopes to leverage the power of ESPN’s media brand in a way it wasn’t able to with Barstool Sports. The goal is an improved conversion rate of engaged ESPN users into ESPN BET customers.
Long-term focus
While gamblers may look forward to the upcoming launch of ESPN BET, the focus for Snowden and PENN lies on a long-term outlook.
Snowden anticipates a $100-150 million EBITDA (earnings before interest, taxes, depreciation, and amortization) loss in Q4 for Penn Interactive as the company works to get ESPN BET up and running. PENN Interactive reported revenues of $196.3 million in Q3, with an adjusted EBITDA loss of $50.2 million.
PENN Entertainment believes the company’s long-term partnership with ESPN should prove financially lucrative. Previous earnings call guidance shared that PENN hopes to achieve 20% market share for ESPN BET by 2027, an optimistic goal as the sports betting app looks to compete with industry giants like DraftKings and FanDuel. The mobile sportsbook will also have to compete with BetMGM, Caesars Sportsbook, and Fanatics Sportsbook, among others.
ESPN BET is coming soon!
Excited to share our new teaser spot with ESPN’s Scott Van Pelt. https://t.co/K038YKAdDF
— PENNEntertainment (@PENNEntertain) November 1, 2023
Snowden pointed to Ontario, where theScore Bet is owned by PENN, as an example of what he hopes ESPN BET can achieve in the U.S.
In Ontario, 73% of theScore Bet’s handle comes from users in theScore’s media ecosystem. PENN also reported that 50% of those sports betting users also played iCasino games in the third quarter of 2023, giving the company a valuable chance to cross-sell products. The company says it’s converting online sports betting customers to its iCasino product 44% more effectively than 2022.
“We think Ontario with theScore Bet provides one of the best blueprints for success in the U.S. with ESPN BET,” Snowden said.
Under PENN’s exclusive deal with ESPN, the gaming operator will pay the network $1.5 billion in cash payments over an initial 10-year period. In the event that PENN does not attain certain market-share targets, the deal can be terminated after three years. Although the ESPN deal could result in massive value creation for PENN’s shares, anything short will leave the company with capital outlays for an extended period, JMP Securities analyst Jordan Bender wrote in an August research note.
During PENN’s third quarter of 2023, the company reported a net loss of $724.8 million, translating to a loss of $4.80 per share. PENN also reported adjusted earnings for non-recurring costs at $1.21 per share, topping analysts’ consensus estimates of $0.33 per share. On the revenue side, PENN generated quarterly revenue of $1.62 billion, narrowly beating analysts’ estimates of $1.61 billion.
PENN shares jumped nearly 15% early in Thursday’s session, hitting a session high of $22.78 per share. PENN initially surged to $29 a share upon news of the transformative deal in August. The company is still down about 22% since the announcement.
Matt Rybaltowksi contributed to this report.
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