333 Million-to-One May Just Go In Penn’s Hi-wire ESPN BET Q4 Rebrand
Three hundred and thirty-three million dollars into one may just go as US gaming Omnichannel Penn Entertainment unveiled heavy-duty Q4 losses.
That’s the EBITDA loss, US$333.8 million (£264.94m), that Penn has suffered because of the cost of rebranding and reconstituting its online sports book as ESPN BET; while the dollar represents the pepper-corn sale and divestiture of Barstool Sportsbook back to its founder, the controversial Dave Portnoy; a man who’s been dogged by allegations of sexual misconduct.
Penn are patently willing to take the hit–and the painful corresponding kick-in-the-groin delivered by Naddaq stock marketeers, following the release of their woeful Q4–on the proviso that the storied ESPN nomenclature and association gives them the thrust to compete with the likes of FanDuel and DraftKings at the sportsbook high table.
The value of Penn shares have dived by around 15 percent in recent trading after the company delivered a 12-percent, higher-than-expected, year-on-year decline in Q4 revenue — down to US$1.4 billion (£1.11bn) for the quarter; resulting in a US$358.8 million (£284.79m) Net Loss, compared to a profit of US$20.8 million (£16.5m) in Q4 2022.
Main driver of the catastrophic fall was the rebrand of Penn Interactive in November.
The cost of enticing over one million First Time Depositors (FTD) to the new Penn-ESPN BET brand was high.
But the number of FTDs is impressive. And now it’s up to the rebranded sportsbook to build — and surge.
In positive news, ESPN BET has just announced its intention to buy-out Wynn Interactive’s knuckle-grazing sports betting option in New York State, where Wynn has hitherto been way-back in ninth and last in the online stakes.
Upbeat
The new US$1.5 billion (£1.19bn) Penn-Disney sportsbook brand is also hoping to go live in North Carolina next month, March.
If both moves muster it will mean that ESPN BET will, in short order, be available to almost half of the addressable US betting population in 19 of the nation’s 50 states.
Penn Interactive clocked revenue of US$31.5 million (£25m) in Q4, with an Adjusted EBITDA loss of US$333.8 million (£264.94m).
Despite this Penn Entertainment President and CEO Jay Snowden (pictured, above) remained upbeat.
“[We] 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,” affirmed the gambling supremo.
“Our successful [ESPN Bet] launch led to substantial expansion in key performance indicators including monthly active users handle, and cash handle.
“Importantly, strong early retention and consistent user acquisition have led to steady month-over-month increases in cash handle as our promotional expense has started to normalise entering 2024.
“ESPN Bet has also attracted the mass market sports fan, highlighting the potential to expand the appeal of sports betting and grow the overall market.
“This foundation sets the stage for continued growth and market share gains as we introduce further product enhancements and deeper integrations into the ESPN media ecosystem,” asserted Snowden.
But talk, as Snowden would be the first to concede, is cheap.
While Penn’s 2023 Full Year Revenue, at US$6.36 billion (£5.05bn), is still just a relatively marginal US$3.9 million (£3.09m) less than 2022’s, much is riding on Snowden’s bold decision to heap his chips on ESPN BET.
Watch this space.
