It was “The Move” that was supposed to bust booming U.S. online sports betting wide open, but PENN Entertainment’s one-dollar peppercorn divestiture of Barstool Sports and costly US$1.5 billion (£1.17bn) tie-in with Disney’s ESPN has proved nothing short of failing, if not fated to disaster.
During its fiscal Q2, ending June 30, for example, although its retail casino outlets remained solid, the ESPN BET operator saw its digital take dive 9.7 percent to US$232.6 million (£182.5m), year-on-year — and recorded an EBITDA loss of US$102.8 million (£80.66).
At US$1.66 billion (£1.3bn), retail revenue in the quarter was relatively steady in the quarter, falling by 0.7 percent, compared to Q2 2023.
But overall, PENN reported a US$27.1 million net loss for the period (£21.26m), against a profit of US$78.1 million (£61.27m) in the same quarter the previous year.
Putting a brave spin on the Q2 results, PENN Entertainment CEO Jay Snowden said: “Our retail properties delivered solid results this quarter as our best-in-class team of operators continues to execute across our diverse portfolio of market leading assets.
Contradiction
“In our Interactive segment, top-of-funnel growth, improved risk and trading execution, and refined promotional strategies contributed to better-than-expected revenue and Adjusted EBITDA results.”
Such positivity is proffered in direct contradiction of on-the-ground realities in the U.S. online gaming scene where ESPN BET is taking a veritable beating at the hands of FanDuel, DraftKings and BetMGM.
According to reputable gambling industry analysts JMP Securities, ESPN BET holds barely two percent of the U.S. iGaming and online sportsbook market — sharply down on the eight-plus percent cut the company claimed soon after launch in November last year.
Along with swingeing job shedding at its digital vertical, PENN is now planning to fix its ESPN BET fail.
“We recently began the rollout of our ESPN BET product enhancements and will launch the remaining key upgrades prior to the start of college football and our launch in New York,” said Snowden.
“In parallel, our partners at ESPN are expanding our unique ESPN BET media integrations, including those with ESPN’s leading fantasy football product which boasts over 12-million active users.”
Maybe.
But don’t ESPN BET on it.
