It has been seven months in the making, but ESPN BET is making the New York mobile sports betting picture whole once more.
The state's gaming commission approved the transfer of the needed licenses from Wynn Interactive on Monday to conduct wagering. ESPN BET's impending arrival will again give the Empire State — the largest marketplace in the United States — nine mobile operators for the first time since WynnBET shuttered operations at the end of July. ESPN BET parent PENN National purchased the licenses from Wynn for $25 million, a small premium considering the 10-year license still has seven years of run time remaining.
This marks the second changeover among mobile operators in New York since the first online wagers were taken in January 2022. Fanatics Sportsbook began taking bets at the end of February after integrating PointsBet's platform following the $225 million purchase of the Australia-based sportsbook's North American operations in June 2023.
ESPN BET's performance in New York could be a make-or-break proposition for both ESPN's parent company Disney and PENN Entertainment when it comes to sports betting given the challenges it faces to cut into the market share of digital titans FanDuel and DraftKings.
The Big Target: 7% Mobile Market Share
Earlier this year, PENN National CEO Jay Snowden targeted a 7% mobile market share for ESPN BET by the end of 2024, a goal that looks elusive for 2024 calendar-year handle in most states where operator figures are available.
Nearing its first anniversary following its national mid-November rollout, ESPN BET does not have a 7% market share in any of those 12 states when reviewing handle figures solely in 2024. It is right on that edge in Kansas, where it has the benefit of a dominant retail tether in Hollywood Kansas at the Kansas Speedway.
ESPN BET has a mobile market share above 6% in Michigan and Pennsylvania, two states similar to Kansas where there is no cap on deducting promotional spend against gross revenue. Michigan is also similar to the Sunflower State in that ESPN BET is connected to a dominant retail sportsbook with Hollywood Greektown in Detroit.
ESPN BET's market share in the other nine states ranges from 4.2% in Arizona to 5.5% in Ohio, while Illinois is its best-performing state in terms of dollars with $381.6 million worth of wagers through the first seven months of the year.
When projecting New York's mobile handle for the final three months of the year, which includes maintaining the current year-to-date total handle increase of 22.2%, ESPN BET would need to average $175.6 million handle from October through December to attain a 7% market share from an expected $7.53 billion in digital betting. Mobile handle topped $2 billion last October, November and December, reaching a U.S. record $2.11 billion in November.
As a point of comparison, WynnBET totaled $32.8 million in accepted wagers the final quarter of 2023, with no monthly market share topping 0.7%. But Wynn Interactive had essentially given up by that point — it had announced in August it was exiting eight states and limped along all of 2024 before its July shutdown.
By contrast, PENN has the option to again utilize a heavy promotional spend with ESPN BET's New York rollout, similar to the national launch last November. This was something Caesars did to great effect with its initial offers of $300 in free bets and matching deposits up to $3,000.
Repercussions have been lasting, as Caesars remains the No. 3 mobile sportsbook in the Empire State in terms of weekly handle. But Caesars has lost some steam in recent months, with its year-to-date mobile market share below 9% after finishing at 11.2% for 2023.
Fanatics Sportsbook has grown to more than 4% after PointsBet finished at 1.6% last year, while BetMGM has inched higher from 6.5% to 6.9%. DraftKings has also gained some ground to 36.1%, while FanDuel has backslid from 40.8% to 39.9%.
Those year-to-date percentages, though, hide the surge Fanatics is currently enjoying. It eclipsed a 6% share in both July and August, and its $93.1 million handle last month was nearly four times the $23.8 million in wagers PointsBet accepted for the same month in 2023.
Fanatics' surge also contributed to FanDuel's August 2024 market share dipping to a year-low 35.6% — one full percentage point lower than August 2023 and its lowest overall since Caesars' opening salvo helped limit it to 31% in January 2022.
ESPN BET's other choice is to stay the course and keep its offers proportional compared to other states. In the four states where operator promotional spend is known — Arizona, Kansas, Ohio and Pennsylvania — ESPN BET has totaled $29.6 million in credits and bonuses.
That was roughly 3.6% of its $814.3 million handle in that quartet of states. A similar spend in terms of percentage to arrive at $526.8 million handle for the final quarter in New York would be close to $19 million, nearly double the $10.4 million outlay that has helped ESPN BET attain a 5.5% market share in Ohio, a state with 15 mobile operators currently.
These ESPN BET projection numbers also exist in a vacuum to some extent. As the marketplace leaders in New York, FanDuel and DraftKings can choose to match any promotional spend dollar-for-dollar based on their overwhelming market share and performance against the betting public.
FanDuel, in particular, has been more than willing to spend as a means of keeping its status as the No. 1 or close No. 2 in handle wherever it operates. To wit, it has lavished $58.5 million in bonuses and credits on bettors in Ohio this year, with its $5.1 million outlay in July a low point for the year.
How Will ESPN BET Perform?
It is all well and good to carve out a spot in the country's biggest sports betting market, but it will not mean much if ESPN BET fails to generate a competitive hold, especially with New York's 51% tax on mobile revenue. This means ESPN BET will likely have to aggressively market its parlay offerings, both in terms of promotional spend and awareness on the app or home page, given the higher hold generated from such wagers versus single-event betting.
Illinois is the lone state that publishes category-specific figures by operator, and ESPN BET has shown itself capable of being competitive for parlays. It has a 17.2% hold there through the first seven months of 2024, ranking fourth among the seven mobile sportsbooks that have offered multi-leg wagers for the entire year.
Over 41% of the nearly 7.8 million tickets written were parlays, with the $89.2 million handle accounting for 23.3% of ESPN BET's $382.6 million overall action. But the $15.3 million in revenue accounts for 54.7% of its total winnings, helping absorb a relatively low 4.3% hold on single-event wagers. That win rate ranks ahead of only Caesars (3.9%) for single-event betting in the state and is more than three percentage points lower than leader Fanatics at 7.6%.
If one goes back to the projected $526.8 million handle for New York for the final three months of the year, a little bit of shaving provides a tidy average of $175 million in wagering. Using the year-long handle and hold percentages from Illinois, that projects to ESPN BET generating $12.8 million in monthly sports betting revenue and a 7.3% win rate.
Given that the overall mobile win rate for New York operators in the 2024 calendar year is 9.4% through August, splitting the difference at 8.35% bumps the monthly haul to $14.6 million. Both revenue figures project ESPN BET challenging Caesars for No. 3 among mobile operators for monthly revenue, but it would also still pale in comparison to FanDuel.
The digital juggernaut is coming off a record week in which it accrued $35.1 million in winnings. FanDuel also averaged $82 million monthly in the final quarter of 2023 while posting a 9.3% win rate against $2.65 billion handle from October through December. That hold is nearly 1.8 percentage points below its current 11.1% mark for 2024.
