PENN Entertainment Reports $115M Q1 Loss After Lower-Than-Expected ESPN Bet Numbers

Steven Melendez

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PENN Entertainment reported a $115 million dollar loss and a slight year-over-year revenue drop for the first quarter Thursday, citing poor weather and “lower than expected hold and spend” in online sports betting.

PENN officially relaunched its online sports betting operation as ESPN Bet in November in a deal with the Disney-owned sports channel, ditching the previous Barstool Sportsbook name. The deal is intended to take advantage of “the powerful and inevitable convergence of sports and sports betting in a way that no one else can replicate,” PENN CEO Jay Snowden said in an earnings call.

Overall, quarterly revenue dipped slightly to about $1.61 billion, down from about $1.67 billion the same time last year. Revenue was down in each of PENN’s four regional casino divisions, as well as in the interactive segment, which includes online sports betting. Casino visits recovered later in the quarter as the weather improved, Snowden said, echoing the experience of other casino operators.

The company did see significant year-over-year growth in online gambling monthly active users, up 152% to 685,000 from the first quarter of 2023. But so far, ESPN Bet spend per user has been less than expected, the company acknowledged, which Snowden attributed to new bettors and limitations of features, such as same-game parlays, that are “currently trailing the market” but are scheduled to be enhanced later this year.

Separate online casino app coming

The ESPN Bet app currently also contains PENN’s iGaming offerings in the states where they’re available, but the company plans to launch a standalone Hollywood Casino iGaming app by early next year, which Snowden said should help market the games to fans of its casinos.

“We’re probably the only major player that doesn’t have a standalone iCasino app at this point,” Snowden said.

The company opened its first ESPN Bet-branded retail sportsbook operation at its Hollywood Casino in Detroit’s Greektown on April 25, and shortly before that hired Aaron LaBerge — former chief technology officer for Disney Entertainment and ESPN — as its CTO as it continues to try to leverage the ESPN connection and compete with industry leaders DraftKings and FanDuel.

“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,” Snowden said in a statement.

Upward trajectory for ESPN Bet?

During March alone, ESPN Bet saw 300,000 unique visitors from links from ESPN’s digital offerings, according to the company. PENN expects to build further connections between the ESPN media and ESPN Bet brands — including linked user accounts, more prominent promotion of betting odds in the ESPN app, and integration into the popular ESPN Fantasy sports app — by the early days of the fall football season.

“We continue to attract new, first-time deposits at a healthy pace, showcasing the effectiveness of ESPN as an ongoing acquisition channel,” Snowden said.

Closer ties between ESPN Bet and ESPN media apps will let PENN bring ESPN fans targeted offers based on the sports and players they’re following through ESPN and their fantasy sports play, something competitors can’t easily match. ESPN Bet is also slated to make its debut this year in New York, the biggest regulated online sports betting state.

Other anticipated app improvements this year include extended parlay options, which is expected to lead to more spending.

“Please keep in mind that Disney and ESPN did not agree to this alliance with PENN to be number four or number five in the market,” Snowden said.