ESPN's official sportsbook is officially stuck waiting for the green light from regulators to launch in the Empire State.
PENN Entertainment Inc. suggested last month that its launch of ESPN BET in New York was possible by late August. Even so, a press release warned the debut was "subject to regulatory approvals."
As it turns out, PENN has yet to obtain all of those regulatory approvals, so ESPN BET has not gone live in New York, the biggest competitive market for legal sports betting in the United States.
Waiting is the hardest part
The hold-up is tied to Wyomissing, PA-based PENN’s entry point into the Empire State - specifically, the acquisition of a Wynn Resorts Ltd.-related entity that holds an online sports betting license for New York.
A New York State Gaming Commission (NYSGC) spokesperson told Covers on Monday that PENN’s application to acquire the Wynn entity has not yet been considered by the regulator’s board.
“We believe the Item will be on the agenda for the next Commission meeting, which is scheduled for September 23, 2024,” said Brad Maione, director of communications for the NYSGC, in an email.
Maione also confirmed that the commission's board needs to approve PENN's acquisition before ESPN BET can launch New York sports betting. That could keep the bookmaker on the sidelines until later this month, or perhaps even later if there are additional delays.
"PENN Entertainment is continuing to work closely with the New York State Gaming Commission to facilitate our anticipated launch of ESPN BET in New York, subject to their final approvals,” a spokesperson for the company told Covers on Monday.
PENN announced in February it had struck a deal with Wynn Interactive Holdings that included the acquisition of an entity holding an online sports betting license issued by the NYSGC in 2021. WynnBET was the previous beneficiary of that license before the operator shuttered its operations in New York and several other markets.
Start spreading the news
The Wynn deal was crucial for PENN, as it agreed last year to pay $1.5 billion in cash to ESPN over 10 years for the exclusive right to the ESPN BET brand. PENN was also on the hook for that money even as it was boxed out of the massive New York market.
“This is an important development that will bring ESPN BET to the largest regulated online sports wagering market in North America,” said Jay Snowden, PENN’s CEO and president, in a press release earlier this year.
PENN said in February that it would launch ESPN BET in New York in 2024, subject to approvals from regulators. Snowden then updated shareholders in August, saying in an earnings press release that the company "will maintain our disciplined approach to customer engagement when we launch ESPN BET in New York in late August."
Soooo did ESPN BET really NOT launch in New York in time for the start of NFL?
— Geoff Zochodne (@GeoffZochodne) September 9, 2024
The “late August” timing was notable, as it suggested a launch in time for the start of the NFL regular season was possible. That window has come and gone, though, and ESPN BET is still awaiting the final sign-off from state regulators.
Unlike Wynn Interactive, PENN was not one of the winners of the competitive bidding process for online sports betting licenses in New York. And while ESPN BET is available in 18 other states, it's fighting to increase its toehold in the online sports betting market into a foothold and beyond. A New York launch could aid those efforts.
Top of the heap
The operator, which first launched in Nov. 2023, was responsible for 1.7% of gross gaming revenue generated in 11 states in July, New York included, according to a note from Citizens JMP Securities. But ESPN BET's market share paled in comparison to DraftKings and FanDuel, which led the way with 37.8% and 40.1% of GGR, respectively.
“ESPN Bet’s aggressive entry into the US market in the past several months has not prevented share gains or expanding EBITDA margins at Flutter’s FanDuel brand,” said Dan Wasiolek, senior equity analyst at Morningstar, in a note earlier this month.
However, when New York was removed from the equation, ESPN BET's market share grew to 2.8% for July, according to JMP’s math. That suggests there is upside for the operator, if and when it can start taking action in the Empire State.
PENN noted in its second-quarter presentation to investors that launching in New York would mean ESPN BET is available in markets equal to 46% of the U.S. population, up from 40% currently.
“Our upcoming launch in New York, subject to regulatory approvals, will meaningfully expand our digital footprint and further leverage ESPN’s unparalleled sports media reach,” the presentation added.
