Despite Early Losses, ESPN Bet Still Banking On New York Launch By NFL Season

Written By Grant Lucas on May 7, 2024
Image of a microphone with the ESPN logo for a story on executives targeting a New York launch of ESPN Bet sportsbook by the 2024 NFL season.

It’s been said before and it was reiterated again last week: ESPN Bet is coming to New York by football season.

Speaking during an earnings call recently, Jay Snowden – CEO of PENN Entertainment, which partnered with ESPN to create the sportsbook – told investors that ESPN Bet will join the NY sports betting landscape “before the start of this upcoming NFL season.”

Snowden then emphasized that PENN has built a customer database of “over 3.5 million” unique bettors over the past three-and-a-half years, “a number that we thought would take much longer to deliver.”

Just how well ESPN Bet will perform in the Empire State remains to be seen, of course. What is known, however, is the roller coaster the platform has ridden over its first few months of operations.

ESPN Bet started strong, including in New Jersey

As Snowden highlighted during the call, ESPN Bet now operates in 19 jurisdictions across the country, including in nearby New Jersey. Thanks to a deal that saw PENN acquire the sports betting license of Wynn Interactive Holdings earlier this year, New York will soon join that growing list.

Last last year, soon after ESPN Bet went live in the Garden State, a team of analysts with Wells Fargo shared their surprise with the “sustained level of app engagement, based on usage/time spent on [the] app.”

According to the analysts, over the first few weeks after launching, ESPN Bet’s usage time by customers averaged around 2.4 minutes, which was just on the heels (by 8%) of DraftKings though far behind (40%) FanDuel. On top of that, users combined to average around 72,500 per day, again just behind DraftKings (76,500) and FanDuel (114,500).

Those same analysts added, though, that “being in New York is critical.” Even with Snowden going on record with his disdain for the state’s 51% tax rate.

This predated the first quarter of 2024, during which time PENN missed its earnings estimate because of ESPN Bet.

Costs of ESPN Bet lead to losses for PENN

According to Sports Business Journal, PENN lost some $333.8 million over the last quarter of 2023 as a result of “costs associated with the Nov. 14 launch of its new ESPN Bet sports-wagering product, sending the shares lower.”

The platform enjoyed more than 1 million new sign-ups within the first two months, driven mostly by “generous promotional offers that PENN cut in half just before the Super Bowl” in February.

In New Jersey, where regulators began breaking down monthly revenue reports by individual skin this year, ESPN Bet has reported just over $423,000 over the first three months of 2024. In March, however, the platform clocked in at $4.3 million, certainly bolstered by March Madness.

“While we are pleased with the early ESPN Bet adoption and engagement results,” Snowden said, “our focus heading into this football season will be on enhancing our product offerings.”

Can ESPN Bet thrive once live in New York?

During last week’s earnings call, Snowden was asked about specific investments to help ESPN Bet NY get started on strong footing in a state “that’s obviously a big market and not super favorable on the tax side.”

Snowden then detailed how promo spending expects to decrease over the next few months, assuming PENN doesn’t expect to launch in a new state during that time. In New York, he added, “you’ll probably see it tick up a little bit there.”

“We’re definitely thinking about our launch in New York very differently than all of the state launches to date with ESPN Bet,” Snowden said, “simply because of the tax rate makes it very, very challenging to do anything real aggressive there.”

Todd George, head of operations for PENN, then chimed in, emphasizing the already-sizable database of ESPN customers living in New York.

“So with ESPN, we have access to this, and this will be a big driver and really what we’ll be leading with in New York, getting away from some of the other launch strategies that all of this have used in new markets in. That would include the way we look at the affiliates, the way we look at promo bet. So it will be a very different approach, but really leveraging the ESPN brand there.”

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Grant Lucas

Grant Lucas is the managing editor for PlayNY. A longtime, award-winning sports writer, Grant has covered gambling and legal sports betting since 2018, when he got his start reporting on the New Jersey and Pennsylvania industries. He now oversees PlayNY as New York expands legalized gambling to sports betting and online casino gaming.

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