Penn Entertainment is banking on fantasy football to help it capture some sports betting market share for ESPN Bet.
The company is launching new integration between a sports betting customer’s season-long fantasy team and ESPN Bet, Chief Technology Officer Aaron LaBerge said on Thursday‘s first-quarter earnings call.
“This year, if you’re a fantasy player, and ESPN has the biggest fantasy platform in the US, there is no better place to come play fantasy and bet your team than ESPN and ESPN Bet,” LaBerge said. “It will be, no question, and the product is going to be native, and it’s going to be integrated not only into the ESPN Bet experience, but there will be a derivative version of that within the ESPN experience, and you’ll seamlessly move across the two.”
It is the latest innovation Penn is trying to improve ESPN Bet’s standing. ESPN Bet has failed to hit the market share goals originally shared when Penn and Disney announced the partnership. Both companies have the right to end the relationship next August, the three-year anniversary of the multi-billion-dollar cash and stock deal.
‘Deep integrations’ finally happening
The fantasy product is one of the integrations that Penn has wanted to implement since the deal was signed, CEO Jay Snowden said.
“Look, we’re finally getting to the point, after being live with ESPN Bet for a year and a half, where the real deep integrations that we all were excited about when we did the deal and shook hands, those are all starting to happen now,” Snowden said.
“Having that linkage between ESPN and ESPN Bet, and now you go onto our betting app and your favorite teams are all right on the top of the home screen and so you can scroll through and see if you want to place bets with your favorite teams because we have that information.”
That link is already paying off, LaBerge said. Customers who have their accounts linked, which they call members of the Mint Club, “… love to bet parlays more in those favorites placements,” he said.
Snowden also said the new direct-to-consumer ESPN streaming product, which will be available by early fall, will be a big opportunity for Penn to “drive top-of-funnel as well as strong retention.”
Penn, Disney ‘focused’ on ESPN Bet ahead of opt-out
One analyst asked if Penn could do anything strategic with the digital segment before the opt-out window if the stock price is not reflecting the value of the business.
Snowden mentioned that while either side can end the relationship or renegotiate terms, Penn does not see it that way.
“We’re focused, our partners are focused, we’re excited about what’s ahead of us,” Snowden said. “Let’s see where we are as we trend through the next couple of quarters. I think it’ll probably be not just obvious to us but obvious to others as well what path is going to make sense.
“But we’re staying focused and our teams are staying focused on working together to deliver a really great and differentiated experience. We’re confident it’s going to deliver solid results through football season going into 2026.
“We’ve got an opportunity to really show why we did this deal in the first place and, for whatever reason, if those things aren’t working then you have optionality as you head into 2026. So, I would say nothing has really changed there but we’re excited by what’s in the queue.”
Q2 digital guidance shows improvement
Penn expects to cut its losses substantially in the second quarter compared to last year.
The adjusted EBITDA guidance for the second quarter is between a loss of $50 million and a loss of $70 million. At the midpoint, that suggests a $42.8 million improvement over last year.
That will come from revenue between $280 million and $320 million, $116 million of which is tax gross-ups, or reimbursement payments from skin partners. So, actual iGaming revenue from Penn is expected to be $184 million at the midpoint.
Penn reported $232.6 million in digital revenue for the second quarter last year. That included $82.1 million in tax gross-ups and $150.5 million in iGaming revenue.
The company reported an interactive adjusted EBITDA loss of $89 million for the first quarter, up from a loss of $196 million the prior year. That came on $290.1 million in revenue, up nearly 40% over 2024.
Standalone casino app success
The majority of revenue from the standalone Hollywood Casino in the US and theScore Casino in Ontario comes from players who did not play casino games through the sportsbook apps.
Penn noted that 70% of standalone casino app theoretical revenue is coming from new users, reactivated users, and customers who previously only gambled at Penn’s in-person casinos.
A graph showed steady improvements in average weekly gross gaming revenue and weekly users since the Hollywood Casino app launched in December.
Those standalone apps are also seeing a higher hold by 1.34 percentage points.
Still working on in-play betting at ESPN Bet
The main area ESPN Bet needs to improve compared to top sports betting operators is in live betting, Snowden said.
That looks like improving offerings for live same-game parlays as well as working on issues like latency.
Snowden said the casino side does not need a lot of work. The product has a good mix of games, including proprietary games that have done well, especially in blackjack.
Expect Penn in predictions if allowed
The subject of sports predictions is “definitely more of a niche market” and is far from Penn’s first priority, but the company is paying close attention to how the market unfolds.
“If this ends up being an opportunity for the industry, you should expect us to be participating,” Snowden said.
