ESPN Bet causes quarterly revenue decline for PENN Entertainment

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PENN Entertainment reported a fourth-quarter decline in profits amid the launch of ESPN Bet.

The gaming and entertainment company generated $1.3 billion in revenue in Q4 2023, down from $1.5 billion for the same period the year prior. PENN posted a net loss of $358.8 million in Q4 2023 compared to a net income of $20.8 million in Q4 2022.

Its adjusted EBITDA in Q4 reached $39.6 million, down from $438.3 million in Q4 2022.

PENN’s results in Q4 2023 were spearheaded by the company’s property segment, which saw revenue close at $1.3 billion for the quarter compared to $1.4 billion in Q4 2022.

“PENN delivered another quarter of solid property level performance while continuing to invest in our high growth digital business, which we believe will create significant long-term shareholder value,” said PENN CEO and President Jay Snowden in a statement.

PENN’s digital business expanded in Q4 with the launch of ESPN Bet in November 2023.

The company’s interactive segment, which includes ESPN Bet, posted $31.5 million in revenue in Q4 2023 with an adjusted EBITDA loss of $333.8 million. In Q4 2022, PENN’s interactive segment, which included the now-defunct Barstool Sportsbook, generated $208 million in revenue with an adjusted EBITDA of $5.2 million.

PENN shuttered operations of Barstool Sportsbook after the company sold media brand Barstool Sports back to founder Dave Portnoy in February 2023 for $1. PENN originally purchased a 36% stake in Barstool in 2020 for $163 million before acquiring the remaining 64% three years later in a deal valued at $388 million. PENN rebranded Barstool Sportsbook as ESPN Bet, which launched initially in 17 jurisdictions across the country.

ESPN Bet will be expanding its reach with new wagering licenses in North Carolina and New York, pending regulatory approval. Earlier this week, PENN agreed to acquire WynnBet’s online wagering license in New York for $25 million. WynnBet, owned by Wynn Resorts, launched in the Empire State in 2022 with plans to now leave the robust market.

ESPN Bet is gearing up for a debut in North Carolina next month.

Last December, ESPN agreed to a deal with Quail Hollow Club to launch operations in the Tar Heel State when wagering goes live on March 11. ESPN Bet will join at least four other operators in the state, which include DraftKings, FanDuel, and bet365.

PENN’s new market access in New York and North Carolina is projected to improve the company’s addressable online sports betting U.S. population from 37% to roughly 46%.