PENN Entertainment released its fourth-quarter results Thursday and shared an optimistic look at its ESPN BET app.
The launch of ESPN BET drove more than one million downloads, expanding PENN’s digital database by more than 50%.
“ESPN BET attracted significantly more first-time depositors than we anticipated, which drove higher than expected promotional expense,” said CEO and president Jay Snowden.
However, ESPN BET is the scapegoat for the company’s 12% year-over-year decline in quarterly revenue from $1.6 billion in Q4 2022 to $1.4 billion, missing its target by 10%. PENN also fell short on annual revenue YoY, coming in at $6.36 billion in 2023, lagging behind the $6.4 billion generated in 2022.
Overall, PENN reported a Q4 net loss of $358.8 million with the Interactive segment accounting for an adjusted EBITDA loss of $333.8 million, which triggered the stock price to dive 10% when the markets opened Thursday.
Diluted earnings per share dropped from $0.13 to an eyebrow-raising loss of $2.37 for the quarter as well. The company lost nearly $500 million across its entire business in 2023, which is a stark contrast to the net income of almost $222 million it reported in 2022.
An optimistic outlook
Despite an over $900 million write-off on the Barstool deal, the company is confident that the launch of ESPN BET in partnership with perhaps the strongest brand in sports media sets the stage for continued growth and market share gains.
“ESPN BET has also attracted the mass market sports fan, highlighting the potential to expand the appeal of sports betting and grow the overall market,” said Snowden.
PENN achieved a record online sports betting handle in the U.S. in ESPN BET’s first two full months of operation in December and January.
On Tuesday, news broke of PENN striking a deal with Wynn to bring ESPN BET to the New York sports betting market.
Combined with PENN’s online sportsbook going live with North Carolina sports betting in March, ESPN BET will increase the operator’s total addressable online sports betting U.S. population from 37% to 46% across 19 jurisdictions.
The first ESPN-branded retail sportsbook is set to open in Detroit at Hollywood Casino, coinciding with the NFL Draft there in April.
A third of the one million new customers who downloaded the online sportsbook are also located within 50 miles of one or more of PENN’s 43 retail properties.
