Penn Entertainment will not launch its sportsbook app in the Empire State until Week 4 at the earliest, despite indicating that New Yorkers would have ESPN Bet before the start of NFL betting.
The issue stems from transitioning the NY sports betting license Penn purchased from WynnBet in February. Penn’s application will likely be considered at a Sept. 23 meeting of the New York State Gaming Commission, according to a state spokesperson, weeks after Penn finished submitting required paperwork to the regulator in August.
That timeline would miss at least the first three weeks of NFL betting, at a critical time for Penn to show activist investors frustrated with the company’s lack of sports betting success over the last few years that ESPN Bet can compete with market leaders. Penn’s year-end guidance of $135 million to $115 million in EBITDA losses included a full season of NFL betting in New York.
“You should assume that we’re live in New York before college football week one, which is the end of this month,” Penn CEO Jay Snowden told investors in early August, several times adding “pending regulatory approval” as a caveat to the launch.
No deadline for August launch
The NYSGC began receiving necessary application materials from Penn in May and continued to do so through August, according to a commission spokesperson.
Neither side indicated if that timing impacted the review process.
“PENN Entertainment is continuing to work closely with the New York State Gaming Commission to facilitate our anticipated launch of ESPN BET in New York, subject to their final approvals,” a Penn spokesperson said in an emailed statement, responding to questions about the timing of its submissions.
NY the largest multi-operator state
New York is the largest multi-operator state and represents more than 13% of the total US online market by population. In 2023, it accounted for 17% of total US sports betting handle, more than double Ohio, ESPN Bet’s largest active state.
FanDuel has claimed 47% of dollars wagered in New York this year, followed by DraftKings at 35%, which aligns closely with national standings. ESPN Bet, meanwhile, holds 5% of the market across 13 of its 18 active states that break out operator data. That lags behind FanDuel, DraftKings, and BetMGM, which are each active in more states.
ESPN Bet’s delay follows mounting pressure tied to Penn’s capital investments, which have yet to yield substantial market share growth. Calling for a sale, the Donerail Group this summer criticized the Barstool acquisition, which resulted in nearly $1 billion in non-cash losses, as well as the $2.1 billion purchase of theScore and the $1.5 billion ESPN deal.
New York, ESPN Bet connection
Snowden told investors during Penn’s recent earnings call that New York will demonstrate how ESPN’s brand can drive customer acquisition without heavy promotional spending. He cited “the connection that ESPN has with millions and millions of New York-based sports fans.”
Promotions pushed ESPN Bet to the No. 3 spot in Ohio last December, with 41% of its handle coming from free bets. Penn is prioritizing reduced promotional spend, aiming for a 2-3% range of handle next year.
But as promotions have lowered, so has its market share. According to Citizens JMP Securities, ESPN Bet was sixth in second-quarter handle share at 3.2%, down from 4.7% in the first quarter.
Product updates in time for NFL betting
Penn planned to time the New York launch with several product updates and integrations into ESPN Bet, which Penn confirmed were all live ahead of the first week of NFL betting.
Those include:
- ESPN Fantasy App targeted offers on selected players on fantasy rosters
- ESPN Fantasy App FantasyCast integration
- ESPN App Score Page & Home Page integrations
- ESPN App Odds & Future tabs
- ESPN GameCast & Watch links
- Dedicated parlay longue
- Expanded Same Game Parlay offerings
- Improved profit boost offerings
- Early win payouts
- Revamped home page with featured markets and trending bets
Different approach to New York
Penn failed to meet New York’s criteria to be considered a qualified applicant in 2022 when it tried to launch as Barstool Sportsbook.
At the time, Snowden criticized New York’s nation-high 51% tax rate and said that no operator would make money there. Since shedding Barstool for ESPN, he has been more vocal about using branding power to keep costs down.
“We’re going to continue to take a different approach, in terms of launching in New York versus what we did when we launched across 17 states in the fourth quarter of last year, and really lean a lot more on the product improvements, the integrations, of course,” Snowden said.
