Penn Cuts Expected Interactive Losses On ESPN Bet Improvements


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ESPN Bet

A larger-than-expected mix of parlays and lower promotional expenses for ESPN Bet means an improved interactive EBITDA outlook for Penn Entertainment‘s third quarter.

Penn shared the news as part of an investor presentation held Monday at the M Resort in Las Vegas. The company’s full Q3 results are due out the morning of Nov. 7.

The 95-slide presentation also looks at the potential online sports betting handle share and online casino revenue for 2026.

Penn’s stock was up about 3.5% early Tuesday.

Interactive guidance up $30 million

Penn expects to report an adjusted EBITDA loss of $95 million at the midpoint of its new guidance, a $30 million improvement from the prior midpoint.

Parlays as a percentage of handle was 27% in the second and third quarters, up from 22% for the same period last year. Part of that growth came from same game parlays, which had thrice as many markets in week 1 of NFL betting compared to last year.

That helped boost hold for the period to 9.0% this year compared to 6.7% last year.

Along with more parlays and lower promos, ESPN Bet is also “over-indexing with mass-market” bettors and seeing better unit economics than before.

ESPN Bet sees ‘strong’ NY bettors

ESPN Bet had four days of third quarter operations in the New York sports betting market. Penn reported “strong to-date NY cohort vs existing states” over that time.

Average daily handle per New York bettor was up 296% while they deposited double the average.

ESPN averages 10 million monthly visitors from New York.

What could interactive EBITDA be in ’26?

Penn expects its interactive segment to start to show profitability in 2026. Penn provided 15 possible outcomes that vary depending on its online betting hold, handle share and iGaming revenue share.

Structural online sports betting hold could range between 9% and 12%. At the lowest end, Penn forecasts an EBITDA loss of $42 million if the company holds 9%, has a 6% online sports betting share and a 4.8% online gaming revenue share.

The best-case scenario is if the company reaches a 12% hold with a 10% online betting share and 8% iGaming revenue share. That would lead to $580 million in segment EBITDA for 2026.

Account linking coming to ESPN Bet

Penn highlighted some of the new additions to ESPN Bet, including the Parlay Lounge with expanded markets and a referral program.

A key upcoming improvement is the linking of ESPN and ESPN Bet accounts, which will allow for “seamless” betting between the apps.

Linked accounts should be available by the time the NBA tips off on Oct. 22.

ESPN Bet helps build online database

Penn’s online database hit 3.9 million customers in the third quarter. That is up 85%, or 1.8 million customers, since ESPN Bet launched mid-November last year.

PENN Play‘s database sits at 31 million, up from 25 million in 2019 before Penn launched online sports betting.

The nearly 4 million in new digital customers helped bring the average age of its 12-month active database to 44 in August, down from 53 in August 2019.

Move online bettors to retail?

The push now is not just to get retail bettors gambling online but bring online bettors into its regional casinos as well.

A player’s value is four times higher if they play both verticals, Penn said.

About 1.1 million digital customers active in the last 12 months lives within 100 miles of a property, with 450,000 within 30 miles.

Penn will add about $50 million to annual revenue for every 5% of its database that converts to multi-channel, meaning someone betting both in-person and online.

Rebranding retail sportsbooks

Part of making the casino more appealing to online bettors is rebranding its retail sportsbooks under the ESPN Bet brand. Penn listed eight properties across five states that recently rebranded their sportsbooks as ESPN Bet.

Penn accounted for 26% of retail sports betting revenue in its active states through the first half of 2024. Excluding Nevada, it accounts for 17% of revenue at retail sportsbooks.

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