Posted on: November 2, 2023, 06:15h.
Last updated on: November 2, 2023, 06:15h.
Penn Entertainment (NASDAQ: PENN) has released its third-quarter results, but the focus is on the upcoming launch of ESPN Bet. Analysts and investors are eagerly awaiting the debut of this new online sportsbook brand.
The Pennsylvania-based casino operator announced that ESPN Bet will launch on November 14 in 17 states. This timing is significant as it precedes Thanksgiving football games, which aligns with the start of “Rivalry Week” in college football and includes a highly anticipated Monday Night Football matchup between the Kansas City Chiefs and the Philadelphia Eagles.
This news has caused Penn shares to soar 14% today on above-average trading volume.
“In connection with the launch, ESPN will be implementing an initial wave of exclusive integrations targeting their 200 million loyal fans across their linear and digital platforms, including an advertising campaign headlined by SportsCenter anchors Scott Van Pelt and Elle Duncan,” said Penn CEO Jay Snowden in a statement.
Snowden also mentioned that there will be further integrations with ESPN in the coming months.
ESPN Bet Brings New Hope for Penn
After facing challenges with the Barstool Sportsbook brand, Penn decided to partner with ESPN in August for a new direction in the sports betting industry. The upcoming launch of ESPN Bet is seen as a potential game-changer.
Under the terms of the deal, Penn will pay ESPN $1.5 billion over 10 years to use the brand. Additionally, ESPN has the option to buy approximately 31.8 million shares in Penn. The partnership between these two giants has already resulted in exclusive odds furnished by Penn being used on ESPN broadcasts.
Despite some initial reservations from analysts about ESPN Bet’s ability to challenge the FanDuel/DraftKings duopoly, there is growing optimism.
“For now, we continue to prefer to treat ESPN Bet as an option. Could the strategy work? Certainly. However, as time goes on, it becomes increasingly clear first mover advantage is real in OSB/iCasino. ESPN’s brand equity within sports is unparalleled. But will consumers change their behavior this late in the game? Have they become accustomed to navigating certain apps?”
ESPN Bet Boosts Penn Interactive Profitability
ESPN Bet has the potential to drive profitability in Penn’s interactive unit, which is a top priority for investors in the iGaming and online sportsbook space. While the mobile sportsbook may face losses in the current quarter, next year is expected to bring better results.
“I think at a high level, you should expect the Interactive losses to sort of be at their peak between Q4 and then Q1,” said Snowden in response to a question from Deutsche Bank analyst Carlo Santarelli.
Snowden added that Penn’s online unit is likely to experience losses throughout 2024.