ESPN Bet Seen Bringing More Women to Sports Wagering

Posted on: December 20, 2023, 11:53h. 

Last updated on: December 21, 2023, 11:02h.

Penn Entertainment’s (NASDAQ: PENN) recently launched ESPN Bet mobile sports wagering application may be luring more casual bettors and women to the world of sports betting, thus growing the market.

An image from an ESPN Bet tutorial. An analyst says the app is attracting more female bettors. (Image: YouTube)

That’s the take of Bank of America analyst Shaun Kelley, who in a recent report to clients, joined a growing chorus of analysts praising ESPN Bet’s strong start. The app debuted in 17 states on November 14, topping one million downloads in its first week. It appears the venerable ESPN brand is paying off for Penn in terms of bringing new bettors to the table.

It’s our sense ESPN Bet could be growing the market through more casual and female bettors compared to other sportsbooks,” Kelley noted.

That’s potentially good news for the industry at large, because in the U.S., sportsbook operators are struggling to attract female bettors, according to some studies. The opposite is true in Europe and other regions where data indicate women eagerly wager on sports and frequently do so on women’s competitions.

ESPN May Have Pilfered Share from Rivals

In several of the states in which ESPN Bet is operational that have already delivered November data, the app exceeded market share expectations.

Kelley pointed out that in November, ESPN Bet’s gained market share came at the expense of BetMGM, Caesars Sportsbook, and DraftKings (NASDAQ: DKNG) while FanDuel, the largest online sportsbook operator, added 1% of market share, “which we think is driven by NBA seasonality and increased marketing.”

While ESPN Bet and Fanatics have the luxuries of financial resources and strong brand recognition, some analysts say the increased competition isn’t yet weighing on DraftKings. It’s estimated that in November and through the first half of this month, DraftKings’ customer churn and client spending habits were normal in the states in which the company competes with ESPN Bet.

Bank of America’s Kelley added that the research firm has “high conviction in DraftKings’s growth story, despite increased competition.”

Scrutiny on ESPN Bet Promotional Spending

With lessons learned from the go-go days of 2020 and 2021, analysts and investors are paying more attention to how much sportsbook operators allocate to promotional spending as an avenue for customer acquisition. ESPN Bet naysayers believe generous promos are the reason the app is off to a fast start. But Kelley sees things differently.

Bears are concerned ESPN Bet achieved their market share through promotions. But in Maryland and Kansas, ESPN Bet’s promo is 35% of handle, in line with offers for the launch in Kentucky. That said, given the strong initial uptake, absolute promotional dollars will be high and we’re increasing our loss estimate for the fourth quarter from $130 million to $185 million,” concluded the analyst.

That loss estimate exceeds the $100 million to $150 million forecast by Penn. Using that as a gauge, it could be 2025 before ESPN Bet becomes profitable.