PENN Entertainment CEO Jay Snowden suggested on Thursday that the company is still determining how best to proceed with the ESPN Bet platform — or even if to proceed at all beyond next year.
Snoweden stated in February that, amid slower progress than hoped for, there is a three-year clause in the 10-year, $1.5 billion contract between PENN and ESPN that could see the partners alter their path forward or even abandon the venture if it is “in their best interest.”
“Both sides have the option at the third anniversary, if we haven’t hit a threshold level of revenue market share, to decide if they want to rework the deal or exit,” Snowden said on the company’s latest earnings call on Thursday.
“[By 2026], I think it will probably be obvious not just to us, but obvious to others as well, to the path that makes the most sense … We’re confident it will deliver solid results through football season and going into 2026 we have the opportunity to really show why we did this deal in the first place.”
Estimates suggest ESPN Bet has around a 2.5 to 3% share of the U.S. sports betting market. Snowden said in the lead-up to its launch in November 2023 that PENN did not do the deal to see the brand capture only 5% of the market.
PENN Interactive posts best quarter of ESPN’s lifespan
Snowden was speaking after the PENN Interactive business reported its best quarterly revenue and EBITDA totals since ESPN Bet was born.
PENN Interactive encompasses ESPN Bet and PENN’s other digital ventures: theScore Bet sportsbook and theScore Casino in Ontario and Hollywood Casino both north and south of the border.
Total Interactive gaming revenue grew 40% year-over-year to $290.1 million, including a $128.2 million tax gross-up. Across all Interactive brands, adjusted revenue rose from $151 million to $162 million despite an estimated $15 million hit as a result of customer-friendly outcomes during March Madness. Monthly users rose quarter-by-quarter for the first time since late 2023.
PENN Interactive posted an adjusted EBITDA loss of $89 million for the quarter, an improvement of $106 million from one year ago.
More ESPN integrations coming
Having linked customer accounts between the ESPN flagship media app and the ESPN Bet app, as well as recently launching the Mint Club rewards program for users who link the two accounts, more integrations are coming.
Chief Technology Officer Aaron LaBerge teased a new “bespoke” and “first-in-market” integration that is on the agenda in the coming months, which was left mysterious without details.
One confirmed upcoming feature will allow ESPN Bet users to wager on props involving players from their ESPN fantasy lineups. ESPN is also about to announce details of its new direct-to-consumer streaming service, which will feature customized integrations with the sportsbook.
“Importantly, ESPN Bet and theScore Bet continue to provide a strong top-of-funnel for our online casino platforms, which achieved record gaming revenue in the quarter and are contributing meaningfully to our results,” said Snowden.
Hollywood omnichannel gains fueling growth
On the online casino front, users increased 20% year-over-year, something executives put down to a boosted omnichannel offering and cross-sell between sports betting and online casino.
Snowden said the online casino momentum was fueled by “compelling early results” of its standalone Hollywood Casino app in Pennsylvania and Michigan, which recently expanded into New Jersey and Ontario. Pre-existing customers using the app in Pennsylvania and Michigan are spending more across both retail and online channels with “minimal cannibalization,” he added.
PENN projects second-quarter Interactive revenue of $280 million to $320 million and expects the division to lose $50 million to $70 million in adjusted EBITDA this year, which would be a year-over-year improvement of around $43 million. It expects online sports betting and iGaming to be EBITDA-positive by the final quarter of 2025 and in 2026.
Overall, PENN Entertainment’s total revenue for the quarter was $1.4 billion, up 4%, while net income was at $111.5 million, down year-over-year from the $114.9 million posted in Q1 of 2024. Adjusted EBITA was $457 million, leading to a net loss of $0.25 per share.
No mention of proxy battle
One topic that was not broached on the call, either by executives or by investors and analysts, was the lawsuit filed by PENN shareholder HG Vora against the company.
HG Vora is accusing PENN of violating law by removing one of three board seats up for election without notifying shareholders in advance of the company’s annual meeting.
