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Penn Entertainment launches ESPN BET on Tuesday with the intention of being No. 3 in the country in sports gambling by 2027.
It’s a 10-year, $1.5-billion deal, but we’ll know if it’s going to work by this time next year.
Why?
Because by November 2024, we’ll figure out if ESPN BET is taking share or creating new gamblers. If they aren't, there’s not much that can be done.
Penn has roughly 2% of the U.S. sports gambling market, so the deal counts on a 10-fold increase over five years.
FanDuel's and DraftKings' lists of daily fantasy gamers gave them a huge lead when sports gambling was legalized. They've both spent a boatload of money to try to beat each other, but they’ve maintained a huge lead over the casino sportsbooks — BetMGM and Caesars.
Those huge leads, while not insurmountable, aren't easy to break through.
Gamblers expect huge promos. Deposit matches of $500 or more.
But even then, there are no guarantees. Caesars came out with huge $1,000-plus matches in New York, but when those stopped and everything settled down, they didn’t gain significant market share.
Penn will be required to spend on marketing as part of the ESPN deal, but the whole strategy is to spend less acquiring customers by being present on shows and games on ESPN.
Penn CEO Jay Snowden’s premise has always been in believing that his book could win by being tied to an editorial product. This means that they won’t have the best promos because it’s not their way. Their way is in buying the licensing rights to the ESPN name.
So, how much value is in the ESPN brand and name? If ESPN had the approval rating they had in 1993 or even 2003, scoring ESPN would be a bigger deal. But their brand value has disintegrated of late, which means fewer people will make a blind switch.
The second challenge might just be that it’s simply too late. In the most valuable states — New York, New Jersey, Pennsylvania, Nevada and Illinois — gamblers are engrained with their brands. And although life long gamblers can’t understand it, the average gambler in America today doesn't line shop, doesn't check the speed of one book to another when live betting and doesn't have more than two sportsbook apps on their phone.
If ESPN BET isn’t significantly growing at this time next year, it’s not happening. No interface will help. No promo can be done.
Penn stockholders won’t accept the biggest deal in gambling to be followed by the highest consumer acquisition. No glitz and glamor or shoving in the face of the fan will help.
So yeah, it’s a 10-year deal, but we’ll know in a year if it’s on a path to working.
Soon, you’ll be able to use Action’s ESPN BET promo code as the new ESPN Sportsbook comes online. The planned launch is Tuesday, November 14.
