ESPN's chairman is confident in what PENN-owned ESPN BET has done since launching in November.
“To say we’re in the first inning of ESPN Bet would be a significant understatement,” Jimmy Pitaro recently told the Sports Business Journal. “We’ve done a good job together creating new users for the platform.”
However, despite a $1.5 billion investment from PENN to obtain ESPN's brand for its sports betting platform, ESPN BET has failed to make much of a dent in the market controlled primarily by FanDuel and DraftKings.
According to a report from Business Insider, ESPN BET has seized about 4% of the U.S. market share. The big-branded newcomer to sports betting is more comparable to and competitive with BetMGM, Fanatics, Caesars, and bet365 than the industry’s two top dogs.
“The industry has a tendency of looking at market share, and we have a significant path ahead of us in terms of FanDuel and DraftKings," Pitaro said. “They have a huge head start. They’re the leaders. Just like every day I used to wake up and try to beat my competitor, every day we wake up and we have a target, which is the next in line in terms of market share.”
Closing the gap
Pitaro hopes “significant product enhancements” expected this summer and into football season will increase online sports betting in 18 U.S. states.
Relying primarily on Disney-owned ESPN personalities to appeal to users and push the product, the sports betting side may have to find other approaches to increase market share as its marketing ploys show signs of losing effectiveness in some states.
With an app that ranked outside the top 10 of a product test from Eilers & Krejcik Gaming, ESPN BET plans to improve its home-screen navigation and parlay and player prop offerings in 2024.
The sports entertainment brand also plans to integrate media and sports betting.
Turnaround ahead?
Last year, PENN got out of its deal with Barstool and scooped up ESPN to battle FanDuel and DraftKings, which owned nearly 70% of the market share combined at the end of 2023, according to EKG.
However, an early major return on investment hasn’t occurred. While ESPN BET is doing better than Barstool, PENN has fallen short of expectations in each of the last two quarters and suffered a $114.7 million loss in the first three months of 2024.
The company’s struggles have Boyd Gaming eyeing an acquisition. Representatives have reached out to PENN, but one obstacle preventing a future sale is ESPN's 10-year agreement with Disney, which just started last year.
PENN has hopes for a turnaround. Earlier this year, the gaming company hired Aaron LaBerge away from Disney to be PENN’s new Chief Technology Officer. More recently, investment banking firm Truist Securities suggested ESPN BET is undervalued by the market.
ESPN BET also plans to enter the lucrative New York market sometime in 2024, though the sportsbook will have to contend with the state's 51% tax rate on sports betting operators’ revenue.
