PENN CEO: ESPN BET Not Yet on Pace For ‘Seat at the Podium’

• PENN CEO Jay Snowden today updated investors on the company’s performance during an earnings call
• Snowden acknowledged that ESPN BET’s performance has not yet lived up to expectations
• Original goal set for ESPN BET was a 20% market share by 2027

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PENN CEO Jay Snowden today acknowledged the company’s partnership with ESPN and the performance of ESPN BET, noting that it was not yet on pace for a “seat at the podium” in the national sports betting market.

Snowden made the announcement during PENN’s Q4 earnings call. When PENN and ESPN announced its partnership in 2023, both companies set a goal for a 20% market share by the end of 2027.

Right now, the market share goal is not yet within reach and both sides can opt-out of their partnership in 2026.

Not Yet Competitive With Market Leaders

When PENN Entertainment and ESPN announced its partnership in August 2023, Snowden noted that he hoped ESPN BET would be able to compete with market leaders FanDuel and DraftKings, at least “on the podium” in terms of market share in the states it operated in.

However, Snowden acknowledged during today’s call that ESPN BET is not yet on pace to do so. PENN estimates that ESPN BET will have a 4.7% total market share in its live jurisdictions, excluding New York, by the end of 2025. It’s

“When we announced our partnership with ESPN in the summer of 2023, both sides of this partnership made it very clear that we expected to compete for a seat at the podium. And we’re not on pace right now to do that. So, I would just say that our expectations as we’re moving through 2025 are that we’re continuing to show improvements in both the sports betting business, of course, on the online gaming business as well,” Snowden said during the call.

When PENN ceased its sports betting partnership with Barstool Sports in 2023, it was reported that the company also had less than a 5% market share in its jurisdictions.

ESPN BET has shown signs of improvement. Prior to ESPN BET’s launch, only 46% of PENN Entertainment sports betting users had bet a same game parlay. Since ESPN BET’s launch in Dec. 2023, the total has increased to 70% of users.

Same game parlay handle has increased to 32% of ESPN BET’s total handle, up from just 22% prior to ESPN BET’s launch.

Will Partnership Last Beyond 2026?

As part of the deal between PENN Entertainment and ESPN, both sides have the opportunity to opt out of the partnership after year-three of the deal, which will be in 2026.

Snowden noted the possibility in today’s call. He said both sides are expecting ESPN BET to have a successful 2025, but the option will remain in 2026.

“But, if for whatever reason we’re not hitting the levels that we need to, then obviously as you’re approaching that third anniversary, you have a three-year clause in the contract that both sides will have to do what’s in their best interest. And so that’s always out there. And so we do have conviction in terms of showing the improvements throughout the year,” he said.

ESPN BET and PENN Partnership Details

When the deal was announced in summer 2023, PENN Entertainment agreed to pay $1.5 billion to ESPN over the initial 10-year term and grant ESPN approximately $500 million of warrants to purchase 31.8 million PENN common shares. As part of the deal, PENN Entertainment included potential financial incentives for ESPN dependent on ESPN BET reaching performance thresholds for North American online sports betting market share.

PENN previously acquired a 36% stake of Barstool in February 2020 and completed the final acquisition of the remaining stake in February 2023 for $388 million. In total, PENN acquired all of Barstool Sports for $551 million. The 2020 agreement included a path for PENN to establish full control and ownership of the company.

However, the partnership did not work out as PENN envisioned and the company agreed to sell 100% of its Barstool Sports, Inc. common stock back to original founder David Portnoy in exchange for certain non-compete and other restrictive covenants. PENN also received the right to 50% of the gross proceeds received by Portnoy if he chooses to sell or agrees to another monetization event of Barstool.