ESPN Bet isn’t even six months old yet, but with the biggest sports gambling events of the first half of the year having yet to produce a major boost for the platform, a crucial summer lies ahead for the product and brand born out of a $2 billion partnership between Disney and Penn Entertainment.
Last week, Penn’s stock tumbled more than 10% and, at one point reached a 52-week low, after the company missed analyst estimates in its most recent quarter, due in part to struggles by ESPN Bet, which saw lower-than-expected hold and spend per user.
“Admittedly, we have not been as tight and accurate with our financial forecasting in the early days of ESPN Bet,” Penn CEO Jay Snowden said during the company’s earnings call. With earnings from Penn’s online gaming segment coming in roughly $30 million lower than predicted, even ESPN personality Pat McAfee chimed in on the poor performance: “Things going great here. … Not at all.”
The majority of the NBA and NHL playoffs still lie ahead, but the real indicator of success for ESPN Bet will come during its first full professional and college football seasons this fall. Can it use the next four months to get in prime position for a strong run around the NFL and the first season of an expanded 12-team College Football Playoff?
“ESPN Bet still has a tremendous amount of work to do, as do many sportsbook operators,” Chris Grove, a partner at research firm Eilers & Krejcik Gaming, tells Front Office Sports. “The difference is that Penn appears to be the greatest distance from portability of all major operators, and it’s not clear that their shareholders have any more appetite for sustained losses. We’re certainly not seeing evidence of powerful momentum in the market share or revenue numbers.”
DraftKings and FanDuel Dominate
DraftKings and FanDuel remain the top dogs among U.S. sports betting operators, as they have since it became legal in 2018. Recent data pegged FanDuel’s share of the American sports betting market at roughly 41% and DraftKings at 32%. ESPN Bet, which was estimated under 5%, needs to get 20% market share to satisfy expectations initially laid out by Disney and Penn.
On Tuesday morning, Disney will report its next quarterly earnings, and company CEO Bob Iger could shed more light on ESPN Bet’s performance and any change in outlook for this year.
