ESPN Bet is the newly renamed sports betting platform by Penn Entertainment, preparing to launch in New York after receiving regulatory approval from the New York State Gaming Commission (NYSGC). Previously, Penn acquired the sports betting license from Wynn Interactive Holding for $25 million, after Wynn relinquished the license following the shutdown of its WynnBet operations in the state. This move positions ESPN Bet to join the competitive sports betting market in New York.
This approval allows Penn Entertainment to proceed with the launch of ESPN Bet in the Empire State. Chris Rogers, Penn's Executive Vice President, Chief Strategy and Legal Officer, stated at the NYSGC hearing that although some technical preparations are still needed, the company plans to be ready for a trial run within days. According to iGaming Business, Rogers noted, "We will be ready to launch within a few days. If approved today, we might even start the trial run before the weekend."
ESPN Bet Targets Expansion in the New York Market
As part of Penn's strategic plan, the launch of ESPN Bet aims to attract a new audience in the New York betting community. Since its national debut in November 2023, ESPN Bet has launched in 17 states including Arizona, Colorado, Michigan, and New Jersey. Rogers emphasized at the hearing that ESPN Bet is expected to bring new bettors to the market, rather than cannibalizing existing players.
"We have attracted a different type of bettor," said Rogers. "We hope to expand the market. I believe, as people try new platforms, we have seen the betting volumes in those markets we launched increase." The company hopes that the launch in New York will follow a similar trend, with new bettors trying out the ESPN Bet platform, thereby increasing the overall betting volume.
New York is one of the largest online sports betting markets in the US, representing a significant growth opportunity. Since the state opened its online sports betting market in January 2022, operators have garnered nearly $49 billion in bets and generated over $4.3 billion in total gaming revenue. For Penn and ESPN Bet, entering this market is crucial, especially as they look to capitalize on the NFL season and other major sports events.
Concerns Over Marketing to College Students
At the NYSGC hearing, concerns were raised about the potential impact of ESPN Bet on college campuses, particularly given the deep association of the ESPN brand with college sports. Rogers assured the commission that the University of Pennsylvania would take its responsibilities seriously in not marketing to minors or students.
The company pledged to ensure that its promotional activities would not target or affect individuals who are not of legal betting age, especially during events like ESPN's College GameDay held on college campuses. University of Pennsylvania executives further clarified that general marketing might still be visible to a younger audience, but they would focus on promoting the platform to those who are legally eligible to gamble.
Challenges and Financial Losses Faced by Penn Entertainment
Despite the excitement surrounding the launch of ESPN Bet in New York, Penn Entertainment still faces financial hurdles. The company's interactive division, including ESPN Bet, reported an adjusted EBITDA loss of $196 million for the first quarter of 2023. Despite generating $207.7 million in revenue, the division struggles to offset costs and improve its financial situation.
The high tax rate of up to 51% in New York presents another challenge for the University of Pennsylvania. CEO Jay Snowden acknowledged the difficulties of the state's economic model during an earnings call but remained optimistic, stating, "We look forward to bringing ESPN Bet to North America's largest regulated online sports betting market."
