- ESPN BET launched in 17 states, but does it have its eyes on New York?
- CEO Jay Snowden previously said PENN has interest in the state, but “nobody is making money in New York”
- PENN Entertainment had initial intrigue in New York when it first opened up license applications in 2021
ESPN BET launched yesterday across 17 states, but it’s never too early to wonder where the newest sports betting operator will expand to next.
So where could the operator have interest in? Will it have any interest in the biggest sports betting market in the country? If PENN and ESPN want to be one of the top players in the sports betting industry, it should only stand to reason that it wants to be in the biggest sports betting market in the country.
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PENN Had Previous Interest in New York
PENN Entertainment has long had interest in working in New York. When New York opened its application process in 2021 for its nine initial online sports betting licenses, PENN and its Barstool Sportsbook brand partnered with Fanatics Betting and Gaming and Kambi for a joint application. The three companies projected its bid could result in $1 billion in incremental tax revenue for the Empire State over a decade.
Ultimately, the New York State Gaming Commission did not accept the group’s bid. Despite the rejection, PENN Entertainment CEO Jay Snowden has mentioned the state as a possible expansion target, most recently after the ESPN and PENN partnership was announced over the summer.
Snowden spoke about the possibility during PENN Entertainment’s Q2 2023 earnings call in August. Snowden pointed out New York as a target for expansion, with opportunities in the short- or medium-term to gain licensure. While Snowden did say that “nobody is making money in New York,” he did say it’s important for a scale player to have access to the states that matter.
And New York certainly matters. New York online sports betting surpassed $2 billion in handle for a single month this past October, the first state in the history of legalized sports betting to surpass the $2 billion a month handle target.
New York is the epicenter of sports betting in the country, maybe even the world, and if PENN and ESPN are hoping to be on the same pedestal as a DraftKings or FanDuel, it will have to be operational in the states that matter.
Several Points of Potential Entry
So how exactly could ESPN BET find its way into New York? The easiest way may be to simply wait and see if New York legislators expand the number of available online sports betting licenses. Expansion is going to be a target for several sports betting proponents in the New York legislature, and more licenses could be on their way in late 2024.
Sen. Joseph P. Addabbo Jr. (D-15) told Sports Betting Dime in October that in addition to introducing an iGaming bill for the state, he also plans to explore the expansion of online sports betting in the Empire State.
Addabbo Jr. noted that New York should absolutely be considered as a “growth market” for gaming. If a credible argument can be made that an increase to the number of online sports betting operators will lead to additional online sports betting revenue, while maintaining the New York sports betting status as a top market, the state will have to be open, he said.
“We’ll have to be open to the idea. We can never, as a state or a legislature, sit back and say we’ve done mobile sports betting, it’s very successful, we’re done. It’s always evolving. To keep up with other states and give New Yorkers the best product they deserve, I think we should always be open to additional operators. That’s something myself and (Assemblyman) Gary Pretlow always envisioned, having additional operators,” Addabbo Jr. said.
If the state does open itself up to additional licenses, it would likely go through a similar process as it did in 2021. The state would publish an RFP for bids and would grade each bid on potential revenue, tax rate, and partnerships with state tribes, and award new licenses based on a points rubric.
Mergers and Acquisitions?
A more immediate, but potentially more costly, point of entry into New York? An acquisition or merger with one of the nine company’s that currently have online sports betting licenses.
Wynn Resorts and Rush Street Interactive are two companies that immediately come to mind as targets for PENN to enter into the Empire State.
Wynn Resorts announced over the summer that it would cease its sports betting operations in Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia, and West Virginia. While it did not cease operations in New York, Wynn Resorts said it would “review” its Empire State activity.
Does this mean a potential sale of its online sports betting license could be a possibility? There are no published rules for an operator potentially selling a license, and the New York State Gaming Commission has said before it will not deal in hypotheticals, but it stands to reason that a sale could be possible if the two parties came to an agreement.
After all, Fanatics acquired PointsBet’s North American assets for $150 million, which included a New York license. The gaming commission approved the deal and Fanatics received the license.
So would Wynn Resorts be up for a sale? Or would Rush Street Interactive potentially be a target for PENN Entertainment? Rush Street Interactive’s BetRivers sportsbook is not a top-three performer in the state and is likely not lucrative for the company.
Rush Street Interactive CEO Richard Schwartz said over the summer at the SBC Summit North America that the company is “always open to evaluating opportunities” when considering a potential takeover.
ESPN was actually rumored to be in takeover talks with Rush Street Interactive all the way back in 2021, so the potential for a sale could still be there.
ESPN BET Launch a Success
ESPN BET launched on Tuesday, Nov. 14, at 3:30 p.m. and Snowden described the launch as a success. PENN Entertainment and ESPN agreed to the 10-year sports betting partnership this past August, as the company has completely rebranded its Barstool Sportsbook to ESPN BET.
“We’re extremely proud to introduce ESPN BET and look forward to delivering an exceptional customer experience to fans across the U.S.,” said Jay Snowden, CEO & President, PENN Entertainment, in a released statement. “Our successful launch is the culmination of months of hard work across both teams and we could not be more excited to roll out ESPN BET in partnership with ESPN. PENN’s operational excellence paired with ESPN’s unmatched brand and reach is a powerful combination that will drive this compelling new sportsbook.”
PENN secured the exclusive rights in August to the ESPN BET trademark for online sports betting in the U.S. for an initial 10-year term which may be extended for an additional 10 years upon mutual agreement. PENN Entertainment agreed to pay $1.5 billion to ESPN over the initial 10-year term and grant ESPN approximately $500 million of warrants to purchase 31.8 million PENN common shares.
ESPN BET is now live in the following states:
- Arizona
- Colorado
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maryland
- Massachusetts
- Michigan
- New Jersey
- Ohio
- Pennsylvania
- Tennessee
- Virginia
- West Virginia
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