Penn Entertainment is gearing up for a streamlined transition on December 1, when it will rebrand ESPN Bet to theScore Bet. Users won’t need to download a new app or re-register, avoiding disruptions experienced during the previous rebrand from Barstool.
“Apples and Oranges”
On Penn’s third-quarter earnings call, CEO Jay Snowden described the upcoming switch as different from the chaotic Barstool transition. “We put our customers through a lot with a new technology stack, were down for days, and required them to re-register and redeposit, which added noise,” he explained.
Snowden expects a seamless handover this time to retain customers as Penn aims for break-even in its interactive business by 2026. Payments to ESPN will cease by the end of the fourth quarter, following the early termination of their 10-year partnership announced in 2023.
Walking away from the ESPN deal, after spending $300 million over two years, is another challenge for Penn, which has struggled in the competitive US sports betting market despite significant acquisitions. The company bought Barstool for $550 million before selling it back to founder Dave Portnoy for $1, and paid $2 billion for theScore.
Mixed Reactions
Market reactions were mixed, with Penn’s share price briefly rising before closing about 3% lower. ESPN quickly announced DraftKings as its new official sportsbook partner, starting December 1.
Snowden explained the early exit was contractual, as Penn wasn’t on the desired market share trajectory. “So, why string this along? Let’s find the best path forward for both companies,” he said.
Penn plans to focus on profitable markets and leverage advanced marketing tools to boost retention. “We have marketing and CRM capabilities now that we lacked a year ago,” Snowden said. “We’re ready with a full marketing plan.”
The company reported $297.7 million in third-quarter interactive revenue with a $76.6 million adjusted EBITDA loss. CFO Felicia Hendricks said losses should narrow in Q4, with some costs rolling off before 2026.
Snowden warned that prediction markets could threaten the gambling industry and urged operators and regulators to address the issue before it grows beyond sports betting.
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- Source: SCCGManagement.com