Why PENN Needs ESPN Bet To Be In New York

Why PENN Needs ESPN Bet To Be In New York
Fact Checked by Thomas Leary

As more details emerge about the $2 billion deal between PENN Entertainment and ESPN to rebrand the gaming company’s Barstool Sportsbook under the Worldwide Leader in Sports' name, there’s one thing that becomes clear: The agreement is all about increasing PENN’s market share in the very competitive online sports betting segment. It is trying to grow nationally but at the moment is blocked from entering the New York sports betting market because of operator limits.

The PENN-ESPN deal runs for 10 years and can be extended for another 10. However, language included in the pact could end the whole thing after three years if certain market share goals aren’t met.

On a call Wednesday with analysts to discuss the megadeal, PENN Entertainment CEO Jay Snowden wouldn’t reveal what those levels are, but he did give some hints.

“We’re not doing this deal to be 4% or 5% market share players,” he said. “That’s not going to be acceptable for us. It’s not going to be acceptable for ESPN.”

PENN’s Barstool Sportsbook currently lingers around that mark. Snowden Wednesday kept referencing to ESPN Bet getting on the podium, a likely reference to becoming a top three operator.

Besides needing a significant boost to get from 4% to the 20% threshold where stock bonus triggers would begin, there’s another big hurdle for PENN to overcome.

Barstool Sportsbook is currently available in 16 states. None is named New York, the biggest state in U.S. sports betting. Can PENN make its way into the NY sports gambling hierarchy? 

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Access Very Limited In New York

To put it lightly, getting into New York sports betting will be a challenge.  The state approved nine operators through a competitive bid process two years ago. Barstool partnered on a bid with Fanatics and didn’t even make the final cut.

Fanatics is on the verge of entering New York thanks to its pending acquisition of the U.S. assets of PointsBet, one of the nine current NY betting apps.

Over the last couple of years, there has been talk about expanding the number of operators in New York, but that has failed to gain much traction in Albany. So, that means PENN would need to buy its way in like Fanatics, and there’s not much available right now.

FanDuel NY, DraftKings, Caesars Sportsbook and BetMGM are also in New York, so there’s zero chance PENN can get one of those. Bally BET and WynnBET are in the middle of technical upgrades, so it seems unlikely either would be available anytime soon.

Then there’s BetRivers, operated by Rush Street Interactive. It’s not a major player in New York sports betting, but Rush Street has its eyes on a potential iGaming license in the state, so it’s also unlikely to sell.

That leaves Resorts World Bet, which is only in New York. Its platform provider is PointsBet. 

It would seem to be the most logical opportunity for PENN, but Resorts World is also trying to secure a downstate casino license in the state and may not want to sell something that could be used to promote a full-fledged casino in Queens.

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Snowden Says New York Matters

PENN understands that to achieve its goals with ESPN, it must be in New York, even with the state’s massive 51% tax on operator revenues.

Snowden told analysts Wednesday the company is working “behind the scenes” to gain entry in New York and that there could be creative ways ESPN Bet could get market access sooner rather than later.

“It’s really important to be a scale player to have access to the states that matter,” Snowden said. 

“I don’t think anybody’s really making money in New York today, but from a database cultivation (viewpoint) and hopefully down the road, there’s opportunities to work with the state on a win-win scenario between the state and the operators to have a more favorable operating environment there.”

Stay tuned to EmpireStakes.com for the latest on ESPN Bet.

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Author

Steve is an accomplished, award-winning reporter with more than 20 years of experience covering gaming, sports, politics and business. He has written for the Associated Press, Reuters, The Louisville Courier Journal, The Center Square and numerous other publications. Based in Louisville, Ky., Steve has covered the expansion of sports betting in the U.S. and other gaming matters.

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