Penn Investor Meeting Puts Future of ESPN Bet in Doubt

Penn Entertainment presented a bleak update on the status of ESPN Bet to investors this week.

The operators told investors that the platform has failed to meet expectations over the last year and a half. Penn’s other gambling brands have seen more success, but ESPN Bet has served as an anchor and led to an EBITDA loss of over $109 million.

ESPN and Penn are halfway through a three-year agreement to operate the online sportsbook. That deal includes a clause allowing either side to back out after it is completed, but only if the goals set forward are not met. As of now, ESPN Bet is projected to miss on the majority of those goals.

“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 three year clause in the contract that both sides will have to do what’s in their best interest. Penn CEO Jay Snowden told investors. “That’s aways out there.”

After aiming to compete with FanDuel and DraftKings, the platform finished sixth in handle in the US during the football season. That put them behind Fanatics, which has found far more success in about the same time.

Penn Facing Second Significant Sports Betting Failure

When it partnered with the Barstool brand, Penn Entertainment had a solid plan to break into the US sports betting market. The sports media company had become one of the hottest in the country, which gave Penn a massive advantage in the then-new US market.

However, the platform was plagued by regulatory issues, mostly revolving around advertising. This led to a showdown with the Massachussetts Gaming Commission, which accused Penn of being uncooperative. As a result, Barstool ended its contract with Penn and pulled out of the industry. 

Penn quickly announced a new partnership with ESPN to replace the defunct Barstool Sportsbook. They were able to use many of the same operating licenses, allowing them to roll the new platform out quickly in many major US markets. The hope was that the biggest brand in US sports would attract bettors, but that has not been the case.

If ESPN Bet does fail, expect a shakeup in Penn's leadership.