No legal sports betting industry can compare with that of New York.
Number one in lifetime revenue ($2.86 billion), number one in lifetime tax revenue ($1.46 billion), number two in lifetime handle ($33.25 billion). All in a matter of less than two years.
And while many did not like – and still aren’t fond of, surely – the sky-high 51% tax rate, outsiders still want in on the NY sports betting industry.
That includes ESPN Bet, as PENN Entertainment continues to search for ways to gain Empire State access for the newly launched sportsbook. Just how that could happen remains unclear. But that doesn’t mean there isn’t at least one way for New Yorkers to potentially have access to the platform down the road.
Opportunities exist for NY sports betting to welcome ESPN Bet
In recapping the Truist Securities GLLR Summit in Boston recently, analyst Barry Jonas noted that ESPN Bet remains the “topic du jour” for PENN.
Perhaps an implication that PENN will look for any avenue to get its sportsbook in front of as many customers as possible. Why not New York?
In August, Jay Snowden, CEO of PENN, apparently heel-turned on previous thoughts regarding online sports betting in NY. During an earnings call, Snowden conceded: “No one loves the tax rate in New York.”
However, he added:
“But there could be opportunities in the short-term, medium-term to gain access to New York creatively, and those are the things we’re working on behind the scenes.”
Then again, that was when PENN operated Barstool Sportsbook. Now the company boasts arguably the most-talked-about sports betting product in the country, thanks to a 10-year partnership with ESPN. Certainly that kind of brand recognition and strength will change anyone’s outlook.
ESPN Bet has shined over first few weeks
What’s more, ESPN Bet has performed relatively well.
A team of analysts with Wells Fargo shared their surprise by the “sustained level of app engagement, based on usage/time spent on [the] app.”
According to the team, the first few weeks of ESPN Bet saw the sportsbook’s usage time average 2.4 minutes. For perspective, that stands just 8% behind DraftKings’ usage rate of 2.62 minutes, while FanDuel remained 40% ahead. In addition, average daily hours spent on ESPN Bet hovered around 72,500: DraftKings stood at 76,500; FanDuel at 114,500.
But to truly compete, analysts have said, “being in New York is critical.” According to the team, up to three licenses “could be up for grabs,” which could clear the way for ESPN Bet NY.
New York now the apple of PENN’s eye
Recall that PENN once had a shot at getting in on the NY sports betting ground floor. State regulators, however, went a different direction and excluded the company’s Barstool Sportsbook.
Around that time, Snowden remarked: “I don’t think a single operator will make money in New York.”
Since then, NY sportsbooks have combined for nearly $3 billion in gross gaming revenue. Of course, getting clearance to even offer legal betting in New York cost operators $25 million. As we near the two-year anniversary, five of the nine sportsbooks in the state have crossed that total in net revenue (after taxes).
Regardless, there still remains the question of how ESPN Bet makes its way to New York.
Buying into the industry was how Fanatics Sportsbook NY did it, taking over for PointsBet. That would likely be the path PENN and ESPN takes.
How ESPN Bet could get into NY sports betting landscape
And the name thrown around most: WynnBet, which has shed most of its online gambling operations in the country – except, among others, for New York.
In January 2022, shortly after online sports betting went live in New York, reports surfaced that Wynn had begun looking into selling its NY sports betting license. While that has yet to come to fruition, WynnBet Sportsbook NY has not performed well, ranking seventh of nine in both handle and NY sports betting revenue.
And Wynn has not been alone in potential sales. In May 2023, Richard Schwartz, CEO of Rush Street Interactive, which operates BetRivers Sportsbook NY, shared that his company will “have to be open-minded” when it comes to its brand.
It remains to be seen exactly how PENN sees a path to the NY sports betting world for ESPN Bet, whether it be overtaking an existing licenseholder or potentially earning an incremental license from the state. Either way, analysts agree, hurdles will be in place.
Taking over an existing operator would expand the investment and establish a “higher return hurdle,” a team of analysts said, “while a direct license would reduce the tax rate by rule and would likely take longer.”
