Penn Earnings Preview: What ESPN Bet Info Will Investors Learn?

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Penn Entertainment is back at the forefront of sports betting industry chatter with the anticipated debut of ESPN Bet less than a month away.

There has been little info from the new partners save for a logo and a tentative mid-November start date. Investors will hope for more information when Penn announces its third quarter earnings Thursday.

Since announcing its sportsbook would be swapping the Barstool name for ESPN Bet ahead of Penn’s second quarter earnings, the company’s stock has fallen more than 20% to below $19.

How will ESPN promote ESPN Bet?

Look for Penn CEO Jay Snowden to field questions on ESPN as a promotional vehicle.

ESPN Bet will overtake Caesars as ESPN’s official odds provider once an existing partnership expires. ESPN’s flagship betting show, Daily Wager, is expected to promote the app. Both companies have deflected questions, however, about how much the rest of the network’s daily programming, game broadcasts and online publication will promote their sportsbook.

It is also unclear if Penn will have access to the ESPN+ subscriber base. The streaming service had over 25 million U.S. subscribers at the end of the third quarter, according to the Walt Disney Company.

How is Penn addressing tech issues?

Penn brass has been vocal about integration from theScore improving the user experience from Barstool Sportsbook to ESPN Bet.

It began moving off third-party provider Kambi’s technology in July and may provide further details about tech improvements on the call.

After three years, both parties can terminate ESPN Bet if online sports betting market share falls below a certain threshold. Snowden has previously suggested a bull-case figure of around 20% by 2027. Look for him to highlight more product investments on the call.

How will promos impact improved losses?

Revenue from the Penn segment that includes online sports betting, was up 66% year-over-year to $491 million through the first half of the fiscal year, as the segment’s EBITDAR losses improved nearly 40% to $18.5 million. That growth outpaced the rest of the company, which saw $3.34 billion in revenue, a 5% increase, as adjusted EBITDAR decreased by 4% to $955 million.

Penn is paying nearly $2 billion for the ESPN brand. It will have to keep spending as it issues promos during a mid-NFL season launch.

Historically intense levels of promotions have weighed down online sportsbooks’ profitability pursuits, especially those associated with new brands. During a recent investors conference Snowden touted what he saw as benefits from issuing promos mid-season.

Look for Snowden to highlight how the online betting segment’s recent growth will impact the promotions Penn offers and how the rebrand might impact that growth.