Penn Lays Off ESPN Bet Employees, Could Be Sold Before Making NY Debut

Written By Corey Sharp on July 24, 2024
Logo for ESPN Bet sportsbook for a story on Penn Entertainment laying off employees as it eyes a New York launch.

Penn Entertainment and ESPN Bet have had their sights set on the New York sports betting market since February. However, the future of the company is in jeopardy with rumors swirling about a potential sale.

In the midst of those rumors, Penn Entertainment recently laid off approximately 100 employees, as ESPN Bet staff were affected.

ESPN Bet is live in 19 jurisdictions– but in important states such as Pennsylvania, Michigan, and New Jersey, the brand is not performing well.

It’s possible that Penn gets sold before ESPN Bet makes its NY sports betting debut.

What ESPN Bet layoffs mean for Penn, NY entrance

It’s been more than five months since Penn Entertainment acquired Wynn Interactive Holdings’ sports betting license for $25 million. A lot has changed since, including the trajectory of Penn Entertainment.

New York had been a target of Penn for a while, according to CEO Jay Snowden.

“This is an important development that will bring ESPN Bet to the largest regulated online sports wagering market in North America,” he said in a statement last February.

“Together with ESPN, we’re building a brand that is synonymous with sports betting, and operating in the New York market is key as we grow ESPN Bet across the US.”

Snowden had told investors that ESPN Bet NY would be up and running in the Empire State “before the football season.” However, pressure is mounting on PENN to sell the company, which means it might not be able to see the launch through.

Layoffs could show Penn prepping for NY sports betting launch

The layoff of employees indicates, perhaps, that Penn is committed to entering the New York market. Because of the state’s 51% tax rate, the highest of any jurisdiction, it might have triggered the shakeup at the company.

According to an email obtained by Legal Sports Report, Snowden referred to the layoffs as a “limited” number. Part of the email read:

“While we recognize that change is never easy, these evolutions will enable us to better capitalize upon our new phase of growth. Our Interactive business, which is a core pillar of PENN Entertainment, is well-positioned, and we continue to add capabilities and key talent to advance our digital growth strategy.”

The new phase of growth could be referring to New York.

The pressure on Penn Entertainment to sell

Some of Penn’s top investors have called the company out for poor performance, especially its interactive arm, and have called for a sale of the company.

The Donerail Group published a letter back in May that expressed frustration with the direction company, including the online business as well as Snowden’s salary.

That has led to numerous reports and rumors of different scenarios in which Penn could be sold, including a potential joint acquisition involving Boyd Gaming and Flutter.

Penn’s stock is down 22.5% over the last six months. However, the price is up 26.6% since the Donerail Group went public with its comments on May 31.

It seems as if many investors believe that the sale of Penn is what’s best for them.

ESPN Bet’s performance in other key states

The size of New York, obviously, makes it one of the most important gambling states. Pennsylvania, New Jersey and Michigan are also top markets.

ESPN Bet has not fared well in each of those states, especially in Pennsylvania, where the operator has lost market share in every month so far in 2024, a trend also seen in Michigan.

MonthPennsylvaniaMichigan
January8.9%10.2%
February7.9%8.6%
March6.8%8.1%
April6.4%7.9%
May5.5%7.1%
June5.2%7.1%

New Jersey does not report handle by operator, which makes it difficult to tell how much market share ESPN acquires. In terms of revenue, though, ESPN Bet has reported $6.8 million, accounting for a slim 0.8% of the $876.8 million generated by online sportsbooks in the Garden State.

ESPN Bet has declined sharply in two other key states. Investors’ patients appear to be growing thin, especially after Penn’s failed investment in Barstool.

The outlook looks bleak with ESPN Bet. As the operator keeps losing market share, it’s possible that enough pressure is applied to Penn for the product to be launched under the purview of another gambling company.

However, the layoffs suggest that Penn is gearing up for a launch in the Empire State, likely its last attempt to impress shareholders.

Photo by ESPN Bet
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