Penn Entertainment’s stock price tumbled Thursday morning after reporting their first quarterly earnings with ESPN Bet revenue numbers.
During the first quarter of 2024, Penn reported overall revenue of $1.61 billion, which was in line with expectations. However, revenue from their interactive business, which now includes ESPN Bet, came in at $208 million, much lower than expected estimates, which were closer to $237 million.
“ESPN Bet continued to attract new users this quarter while maintaining a disciplined approach to promotions and marketing expenses; however, our financial results were impacted by lower-than-expected hold and spend per user,” said Jay Snowden, Chief Executive Officer and President, in Penn’s press release. “While we are pleased with the early ESPN Bet adoption and engagement results, our focus heading into this football season will be on enhancing our product offerings, including a refreshed home screen and expanded parlay offerings. Simultaneously, with our partners at ESPN, we will reveal additional ESPN Bet media integrations within their digital media app and industry-leading fantasy product. We believe our enhanced product offering and media integrations will result in superior experiences for our customers, leading to higher retention, share of wallet, and spend per user.”
This was Penn’s first full quarter to include data from ESPN Bet, which launched in collaboration with ESPN in November. Penn and ESPN agreed to a 1o-year, $2 billion deal after Penn ended its relationship with Barstool Sports, selling the media company back to founder Dave Portnoy for just $1 and closing Barstool Sportsbook.
The fear when ESPN Bet started was that they were already so far behind established market leaders such as DraftKings and FanDuel that it would be incredibly hard to make a dent in the marketplace. These numbers appear to bear out the reality of that concern, though it remains very early in ESPN Bet’s lifecycle.
The financials shouldn’t be too much of a shock to anyone paying attention. Bloomberg reported that Penn’s interactive gambling unit lost $333.8 million in the fourth quarter of 2023 due to costs associated with ESPN Bet’s launch. That news had sent Penn’s stock tumbling at the time as well.
Last quarter, Penn said initial ESPN Bet downloads exceeded the company’s projections and they expect ESPN Bet to break even by 2025 before producing “meaningful” cash flow in 2026. They’ve also continued to tout the arrival of chief technology officer (CTO) Aaron LaBerge, who recently arrived from Disney where he had the same role.
“Mr. LaBerge brings more than 20 years of experience at The Walt Disney Company, most recently serving as the CTO for both Disney Entertainment and ESPN,” said Snowden. “We are incredibly excited about the arrival of Mr. LaBerge, who is uniquely qualified to help us create a best-in-class digital experience for our customers, while further deepening our connections and integrations with ESPN.”
Penn also recently debuted the first ESPN Bet sportsbook at the Hollywood Casino at Greektown in downtown Detroit.
About Sean Keeley
Along with writing for Awful Announcing and The Comeback, Sean is the Managing Editor for Comeback Media. Previously, he created the Syracuse blog Troy Nunes Is An Absolute Magician and wrote 'How To Grow An Orange: The Right Way to Brainwash Your Child Into Rooting for Syracuse.' He has also written non-Syracuse-related things for SB Nation, Curbed, and other outlets. He currently lives in Seattle where he is complaining about bagels. Send tips/comments/complaints to sean@thecomeback.com.