ESPN Bet, the newly rebranded sports betting platform from Penn Entertainment, is preparing to launch in New York after receiving regulatory approval from the New York State Gaming Commission (NYSGC). The approval follows Penn’s $25 million acquisition of Wynn Interactive Holding’s sports betting license, which Wynn had vacated after shutting down its WynnBet operations in the state. With this move, ESPN Bet is set to join the highly competitive New York sports betting market.
The approval allows Penn Entertainment to proceed with launching ESPN Bet in the Empire State. Chris Rogers, Penn’s Executive Vice President, Chief Strategy and Legal Officer, stated during the NYSGC hearing that while some technical preparations remain, the company plans to be ready within days for a soft launch. “We would be prepared to launch in a matter of several days. Perhaps even a soft launch in advance of the weekend with approval here today,” Rogers noted, according to iGaming Business.
ESPN Bet Targets Market Expansion in New York
As part of Penn’s strategy, the launch of ESPN Bet aims to attract a new audience in the New York betting landscape. Since its national debut in November 2023, ESPN Bet has been available in 17 states, including Arizona, Colorado, Michigan, and New Jersey. Rogers emphasized during the hearing that ESPN Bet is expected to bring new bettors into the market rather than cannibalizing existing players.
“We attract a different kind of bettor,” said Rogers. “We would expect to grow the market. I think we’ve seen handle on those markets [where we launch] go up, as people try a new platform.” The company hopes the New York launch will follow similar trends, where new bettors will trial the ESPN Bet platform, increasing the overall betting handle.
New York, one of the largest online sports betting markets in the United States, represents a significant opportunity for growth. Since the state opened its online sports betting market in January 2022, operators have taken in nearly $49 billion in bets and generated over $4.3 billion in gross gaming revenue. For Penn and ESPN Bet, breaking into this market is essential, especially as they aim to capitalize on the NFL season and other major sports events.
Concerns Raised Over College-Aged Marketing
During the NYSGC hearing, concerns were raised about ESPN Bet’s potential influence on college campuses, particularly in relation to the ESPN brand’s deep involvement with college sports. Rogers assured the commission that Penn takes its responsibility seriously when it comes to not marketing to underage individuals or students.
The company has committed to ensuring that its promotions do not target or influence individuals under the legal betting age, particularly during events like ESPN’s College GameDay, which is hosted on college campuses. Penn executives further clarified that general marketing efforts may still be visible to younger audiences, but they would focus on promoting the platform to those legally eligible to gamble.
Challenges and Financial Losses for Penn Entertainment
Despite the excitement surrounding the launch of ESPN Bet in New York, Penn Entertainment has faced financial hurdles. The company’s Interactive division, which includes ESPN Bet, reported a loss of $196 million in adjusted EBITDA during the first quarter of 2023. Despite generating $207.7 million in revenue, the division struggled to offset costs and improve its financial standing.
The high tax rate in New York, set at 51%, presents another challenge for Penn. CEO Jay Snowden acknowledged the difficulties of the economic model in the state during an earnings call, but remained optimistic, stating: “We look forward to bringing ESPN Bet to the largest regulated online sports wagering market in North America.”
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