ESPN Bet launched in November, marking the Worldwide Leader in Sports’ first direct foray into sports betting.
But less than a year later, ESPN Bet’s future could be in flux as Penn Entertainment, the platform’s operator, could be purchased by another operator.
According to a report by Reuters, Boyd Gaming, a Las Vegas-based casino operator with 28 gaming entertainment properties across 10 states, has approached Penn to gauge the interest that the company is willing to sell off to its competitor.
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The report did not confirm whether Penn will even consider talks with Boyd, a smaller company with a market value including debt of $7.8 billion compared to Penn’s $9 billion.
Following the news, Boyd’s stock fell around 3% to below $52 per share, but it has recovered and is now above $55 per share, its highest share price since late April. Penn’s stock jumped about 8% to about $20 per share on Thursday after the news dropped and has hovered around the same marker since.
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ESPN is locked in with Penn
The Reuters report indicated that if Boyd is to acquire Penn, it would need to “win over” Disney (DIS) due to the two’s partnership.
Disney and Penn entered a 10-year partnership in August following the separation of Penn and Barstool Sports. The deal is worth $2 billion in cash and share options.
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While the deal between the two sides has yet to hit its anniversary — ESPN Bet launched in November — the early returns haven’t been impressive. Penn’s revenue for its online segment, which included ESPN Bet, missed analyst targets in Q1 2024.
Penn still has a long way to go before it can eat into the market share of FanDuel and DraftKings, the two giants in the sports betting industry. During an earnings call in August, Penn CEO Jay Snowden said that the company is aiming for ESPN Bet to have about 20% of the market share by 2027.
Barstool Sportsbook had around 2% to 3% of the sports betting market share, and ESPN Bet hasn’t performed particularly better over its first two quarters.
Considering the investment placed by ESPN on Penn, the success of this partnership will be essential for the future of both entities in the sports betting space. Boyd would need to come prepared to create a plan with Disney should it be serious about its acquisition desires.
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