Zona de Azar USA – ESPN Bet Takes Center Stage at Boston Gaming Conference
USA.- December 12th 2023 www.zonadeazar.com Even before the formal commencement of the 11th Annual Truist Securities GLLR Summit in Boston last week, all discussions revolved around the unveiling of ESPN Bet. It took center stage during the pre-conference investor dinner last Wednesday and occupied four paragraphs in the summary provided by Truist Securities analyst Barry Jonas, published today.
ESPN Bet is currently operational in 17 states and provinces, and Penn Entertainment, a partner in the joint venture with ESPN, expressed being “very pleased” with the app’s download metrics, surpassing two million. They also voiced satisfaction with the online reviews, maintaining an impressive 4.9 out of five-star ranking.
Despite early financial results not being disclosed, investors anticipate a five percent market share for ESPN Bet. Jonas noted, “Early data suggests PENN is growing the market, including an encouraging number of female players (speaking to the power of the ESPN brand).”
The retention of customers remains uncertain, but Penn executives are reportedly “encouraged” by the fact that bettors are spending more on wagers, even as promotional dollars run out.
While Penn acknowledges the challenging November in terms of hold, Jonas added, “adding another interesting ingredient to ESPN Bet’s mid-month launch.” Initial wagering volumes are reported to be robust, and Jonas believes promotional allocations have been similarly increasing.
Jonas indicated that Penn’s negative return on investment from sports betting would increase in the fourth quarter, from an initially guided $100 million to $150 million. However, he also believes that the timeline to profitability could be shorter, advancing from a previously stated fourth quarter of 2025.
The analyst’s own criticisms of ESPN Bet, regarding the speed of cash withdrawals and parlay treatment of pushed legs, are reportedly being addressed. Penn executives stated their expectation for the application to be an “industry standard” within the first quarter of next year.
ESPN plans to introduce its Bet Mode in the media app in time for the Super Bowl. In the long term, the application will include a tie-in to ESPN’s existing fantasy sports app.
Operating ESPN Bet in New York state, where the ill-fated Barstool Sportsbook had been barred, is deemed “imperative.” Penn believes ESPN Bet will be the sportsbook of the mass market, actively discussing the acquisition of an Empire State license from an existing operator, optimistic about approval and entry next year.
Despite ESPN Bet losing out on an online license in Connecticut to newcomer Fanatics, Jonas attributed this to unfortunate timing.
Shifting attention to the recent Las Vegas Grand Prix, Jonas was dismissive of some negative press but conceded that the event was “not A1.” Business was described as robust for major players in Vegas, driven by the high-end consumer. However, properties away from the track and less high-end did not fully benefit from the race.
Caesars Entertainment is reportedly walking back financial forecasts relative to Formula One, failing to achieve its projected five-percent cash-flow bump from the Formula One weekend. Nonetheless, Jonas predicts that future F1 races will “have wider appeal.”
Regarding the 2024 Super Bowl, Jonas anticipates that it will offset the absence of the Con/Agg expo, a first-quarter tentpole. He foresees little cannibalization from the new Fontainebleau, opening Wednesday, but some from Station Casinos’s Durango Resort, which debuted on December 5.
“Overall, gaming continues to hold up,” Jonas said of regional operations, even though “management teams have been scouring company data for trends of a softer consumer.” Reflecting Wall Street narratives since the post-COVID reopening, “The lower end and unrated player have softened, while the higher end remains strong.”
Several regional markets face headwinds during the present quarter, including Detroit, where revenue has already been decimated by a 47-day casino strike; Council Bluff, Iowa, where Nebraska racinos are making inroads; and Chicago, where the launch of Bally’s Casino and others has intensified competition.
One anticipated tailwind is for Churchill Downs in Virginia, where gray-market slot machines, a bane of the company’s existence, are slated to be removed by year’s end.
As for game makers, their prospects were described as flattish, with operator spending remaining stable in 2023. Jonas chronicled, “Slot suppliers are looking to expand into new/slot-adjacent markets to find incremental install-base growth.”
While there was talk of consolidation in the manufacturing sector, AGS was described as “clearly gaining traction,” and Everi Holdings could see a comeback thanks to new products. However, six months into International Game Technology’s “strategic review,” Jonas had no new news to offer.
Other companies attending the summit included Accel Entertainment, Bally’s Corp., Century Casinos, Caesars Entertainment, Churchill Downs, DraftKings, Golden Entertainment, Light & Wonder, MGM Resorts International, Vici Properties, and Wynn Resorts.
Edited by: @MaiaDigital www.zonadeazar.com
