Penn Entertainment Admits ESPN Bet is Disappointing

Posted on: April 30, 2025, 02:38h. 

Last updated on: April 30, 2025, 03:06h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • CEO Jay Snowden admits to sports betting disappointment in letter to investors
  • Company looking for ways to “unlock full value” of ESPN relationship

Penn Entertainment’s (NASDAQ: PENN) ESPN Bet sports betting brand isn’t where the operator envisioned it would be when it announced a partnership with the sports broadcaster nearly three years ago, and the regional casino operator isn’t running away from that disappointment.

Penn Entertainment
Penn Entertainment CEO Jay Snowden. In a letter to investors, he acknowledged ESPN Bet isn’t meeting expectations. (Image: Bloomberg)

In a new letter to shareholders, CEO Jay Snowden and Chairman David Handler acknowledged ESPN Bet “remains a key area of focus”, but that to date, the business hasn’t performed as expected. In August 2023, the gaming company and ESPN parent Walt Disney (NYSE: DIS) struck a 10-year, $2 billion deal, including $1.5 billion to be paid to ESPN by Penn over that time along with $500 million in warrants that allow the network to buy approximately 31.8 million shares in the casino company, vesting ratably over 10 years.

That said, our market share and financial performance in sports betting to date has not met our expectations. Our Board and management team are moving swiftly and decisively to recalibrate execution and unlock the full value of this partnership,” wrote Handler and Snowden in the letter.

Penn described ESPN as a “committed partner” while pledging to build market share “in a financially responsible way.” That may be easier said than done because Flutter Entertainment’s (NYSE: FLUT) FanDuel and DraftKings (NASDAQ: DKNG) have a stranglehold on the top two spots in the US sports wagering market – a grip experts believe is unlikely to loosen anytime soon.

Pressure Mounting on Penn to Generate ESPN Bet Results

The letter is part of a package of regulatory documents published by Penn in advance of its annual meeting on June 17, which include voting instructions on the company’s board of directors elections.

That’s recently become a hot-button issue because hedge fund HG Vora, which is one of Penn’s largest shareholders, is waging a proxy fight against the casino operator. On Monday, the money manager issued a press release in which it expressed dismay that Penn nominated just two of its three candidates for board seats.

Last week, Penn said it will nominate Vora candidates Johnny Hartnett, and Carlos Ruisanchez to the board, but William Clifford, who previously held high-ranking roles at a company that was acquired by Penn seven years ago, was excluded. Vora is pushing for all three to be nominated to the board and is taking that fight directly to Penn shareholders.

The Handler/Snowden letter was released nearly two months after Penn’s fourth-quarter earnings conference call on which the chief executive officer noted that August 2026 marks the third anniversary of the ESPN deal, and that either the gaming company or the sports media giant can pull the plug on ESPN Bet after three years.

Penn Yet to Find Sports Betting Success

Penn’s previous foray into online sports betting was paying more than $500 million to acquire Barstool Sports and applying that brand to its internet and retail sportsbook. That deal didn’t deliver and the buyer took a massive loss on it, selling Barstool back to founder David Portnoy for $1 so it could move forward with ESPN.

There’s added pressure on Penn to make ESPN Bet work because its Hollywood iCasino app ranks highly in various surveys and has made strides in iGaming, but sports betting is often the funnel operators rely on to bring customers over to internet casinos. Penn is casting a somewhat optimistic tone about ESPN Bet’s future.

“While our initial integrations have expanded reach and driven customer acquisition, we recognize there’s more work to do to deliver on the full potential,” added Handler and Snowden. “As mentioned on our Q4 earnings call, we are optimistic that our joint efforts with ESPN will deliver improved results over the coming quarters, but we maintain optionality and control of our future in this vertical if this does not prove to be the case.”