Penn Entertainment presented a positive outlook for the Penn Interactive digital business at its Investor Day on 7 October. Highlights included green shoots already showing in New York, merely a week after ESPN Bet’s launch, and continued efforts to integrate the app with ESPN to up-sell users and cut down on time spent away from the ESPN Bet product.
Despite criticism from analysts and investors earlier in the year and claims that a Boyd takeover was on the horizon, CEO Jay Snowden is sure ESPN Bet can turn its luck around.
“Net-net, we remain positive on the ESPN Bet opportunity,” Truist analyst Barry Jonas said of the presentation.
Early signs of success in New York
New York is already showing signs of success for ESPN Bet in its first week. The presentation showed daily handle per ESPN Bet user in New York is already 296% higher than any other state it operates in.
In the first three days, ESPN Bet took $3m in bets, according to the New York State Gaming Commission. For comparison, for the week ending 29 September, market leaders DraftKings and FanDuel each cleared $196m in handle. But Bally Bet, Resorts World and Rush Street Interactive all recorded handle of $8.8m or less for the week.
Since its hotly awaited entry into the Empire State on 27 September, the average deposit amount on the app is 100% higher than in other states. Penn’s hold rate has increased from 6.7% to 9% since ESPN Bet launched in November 2023.
Total sportsbook net gaming revenue (NGR) grew 403% in September, compared to the previous year. Monthly unique users grew 161%, Penn said.
ESPN and sportsbook becoming deeply linked
On product, Jason Birney, Penn’s head of interactive operations, and Penn CTO Aaron LaBerge listed all new and novel features across ESPN Bet, including ESPN Gamecast direct links within the sportsbook’s My Bets and Event pages. Users can now add to their bet slip directly from the ESPN and theScore apps.
Ahead of its launch, analysts touted integration between ESPN and ESPN Bet would be crucial to the product’s success, providing users with a seamless journey between watching sports, betting and tracking player and game statistics.
Ahead of the October NBA season, the ESPN and sportsbook app will be synced by shared player data. This will eventually unlock new personalisation opportunities and specific benefits for loyal customers. The operator said syncing the two apps will provide a “seamless contextual user experience”.
A glimpse at Q3 results, adjusted EBITDA raised
Preliminary Q3 results show Penn has raised its expected adjusted EBITDA loss for the interactive business to $100m to $90m. It had previously forecasted a loss of up to $135m.
The upside is because of “better than expected hold, driven by a higher parlay mix from its sportsbook, as well as lower promotional expenses”.
Elsewhere, its Hollywood Casino interactive brand has seen monthly active users soar 233% during Q3. That drove Hollywood Casino gross gaming revenue (GGR) up 53% and net gaming revenue up 63%.
Growth across theScore’s casino offering was comparatively slower. Monthly active users (MAU) were up 27%, GGR up 16% and NGR up 15%. Full-year revenue for the interactive arm is expected at $700m, while overall group revenue is expected to hit $6.4bn.
Its omnichannel customer database almost doubled between Q3 2023 and Q3 this year to 3.9 million. ESPN Bet has accumulated 1.8 million users since its inception, contributing an 85% uptick in the operator’s total customer base. Penn said its digital business has accounted for 67% of the database’s overall growth since 2019.
The average age of players active for a total of 12 months dropped from 53 in August 2019 to 44 in August 2024, no doubt driven by the launch of ESPN Bet and continued growth among theScore users.
Taking a broader look at the Penn Interactive business, online betting and igaming make up the lion’s share (75%) of the group’s digital revenues, while the remaining 25% is split between retail betting, its media business and games studios and market access deals with DraftKings, BetMGM, Fanatics and Bet Rivers.
Growth in Ontario, no timeline for Alberta launch
Shifting to Ontario and theScore Bet, the sportsbook’s net revenue has grown 29% year-on-year-to-date in the nine months to September. Casino net revenue jumped 32% in the same period, thanks in part to a 60% cross-sell rate from betting to casino. TheScore Bet seized double-digit market share in Ontario during the first half of the year.
Birney did not provide a timeline for Penn’s move into Alberta as it is not yet known when the region will launch its regulated gambling market.
Dale Nally, Alberta’s minister of service and red-tape reduction, first mentioned the region’s intention to open up in June. Nally hopes to put legislation forward in 2025, although he this week admitted that furthers conversations with the industry are necessary to formulate regulations.
Together Alberta and Ontario are estimated to make up over half of Canada’s population (51%) Penn estimates, with Alberta alone accounting for 12%.
