At PENN Entertainment’s Q4 earnings call on Thursday, executives said that, while ESPN Bet’s start to life has been slower than hoped, they will continue to invest in app upgrades.
CEO Jay Snowden told investors that while the sportsbook is seeing “green shoots,” its progress in its first year has not lived up to aspirations.
“When we announced our partnership with ESPN in the summer of 2023, both sides made it very clear that we expected to compete for a seat at the podium,” Snowden reflected. “We’re not on pace right now to do that.
“We’ve got a cost structure that right now is built for us to be a scale player, because that’s what we and ESPN expect to be… It’s not as much progress as we planned to make as we move forward, but we have great product enhancements, a great team, great partners and we feel like we can continue to make really good progress…
“If, for whatever reason, we’re not hitting the levels that we need to, then obviously, as you’re approaching that third anniversary, you have a 3-year clause in the contract that both sides will have to do what’s in their best interest.”
When ESPN Bet launched in November 2023, its parents hoped that it could attain 20% U.S. market share by 2027, a target that raised some eyebrows. In Thursday’s update, execs suggested they anticipate ESPN Bet ticking over 5% in sports betting market share by the next Q4. The immediate goal for online casino is 3.5%.
ESPN Bet launched D.C. sports betting in late January and execs intend to enter Missouri when it opens up.
ESPN Bet adds live streaming
Despite the struggles, Snowden and Chief Technology Officer Aaron LaBerge hailed the account-linking integration with ESPN’s flagship app as a success, noting that a large percentage of monthly active users have their accounts linked.
Parlay mix as a percentage of handle has improved sequentially each month since October and exceeded 30% in both December and January. Across those two months, 70% of users placed a same-game parlay on the platform.
More innovations are coming to the app, including a Men’s NCAA Tournament Challenge integration for March Madness. ESPN Bet also launched livestreaming in some markets this week, something execs hope will provide a significant lift to its live betting traffic.
“ESPN produces or distributes 35,000 live events a year, which is pretty powerful in terms of our aspirations,” said LaBerge. “We just started launching and rolling out live video streaming with an ESPN Bet this week in PA and in Colorado, and we’ll be live through the rest of our jurisdictions through the week.”
“Live betting is certainly important, so having a partner that produces so many live events and being able to integrate with those is powerful. Of course, they have a new streaming service. We talked about March Madness only because it’s the most eminent but we have massive plans on the same scale for fantasy football… There’s a lot going on towards the end of the summer that we’re excited about.”
Hollywood Casino app provides tailwind
Snowden also shed some light on the early impact of the recent launches of the standalone Hollywood Casino app, which has translated the well-established retail brand to iGaming.
Hollywood iCasino launched in Pennsylvania in December and in Michigan in January and will go live in New Jersey soon.
“We picked up roughly 50 basis points of market share in Pennsylvania over the first two months and about 25 in Michigan in the first month,” said Snowden. “We feel like we’re making progress here and we should be exiting Q1 seeing real progress… We expect iGaming growth and market share to be at a faster clip than sports betting.”
Boosted by Hollywood Casino, which has translated the well-established retail brand to iGaming, total Interactive revenue hit $275 million in Q4 2024 revenue, bringing its adjusted EBITDA losses down from $334 million this time last year to $110 million now. PENN also vaunted a 61% year-over-year increase in online casino net gaming revenue across Hollywood Casino and theScore Bet in Ontario.
Monthly active users rose quarter-over-quarter to 542,000, although that is still short of the 771,000 peak in Q4 2023 after ESPN Bet’s launch.
