FanDuel and DraftKings collectively dominate the US online sports betting industry, holding 35% and 32% shares in the market, respectively. However, ESPN BET has ambitions of catching these market leaders in the future.
This goal is lofty, considering that ESPN trails DraftKings and FanDuel significantly. It currently has just 4% of the market several months after launching.
Why does ESPN still think it can become a leading US online sportsbook? Find out as I cover what led to ESPN BET forming, its potential advantages over the market, and if this bookmaker has any chance at pulling off its goal.
Key Highlights
- PENN Entertainment paid $1.5 billion and $500 million in shares for the ESPN brand.
- ESPN’s reputation was a big factor in PENN switching from Barstool.
- Despite being available in 18 states, ESPN BET hasn’t performed well so far.
- DraftKings and FanDuel have built-in advantages that are tough to overcome.
Events That Led to the Creation of ESPN BET
PENN Entertainment entered a sports betting partnership with ESPN in the summer of 2023. It paid $1.5 billion to use the ESPN brand for 10 years. It also granted the world’s leading sports network $500 million worth of PENN common shares.
The company was previously in a partnership with Barstool Sports after paying $551 million for rights to its brand. It had hoped to leverage Barstool’s significant fanbase into a sports betting giant. These plans ultimately failed, with PENN selling the Barstool Sportsbook back to founder Dave Portnoy for $1 in August 2023.
It claimed an $850 million write-off when accounting for overall losses on the deal. On the bright side, PENN would receive 50% of the revenue if Portnoy sells the Barstool betting site.
Why This Sportsbook Could Theoretically Be a Hit
After a nine-figure strikeout with Barstool, PENN is again taking an incredible risk. It couldn’t turn the Barstool crowd into a winning gambling venture. However, there’s reason to believe that things could be different with ESPN.
It was because of me. The regulated industry is probably not the best place for Barstool Sports and the content we make.
Dave Portnoy, founder of Barstool Sportsbook
Barstool Sports and ESPN have massive followings through their websites and social media channels. However, the latter gives PENN an advantage through its reputation.
The Barstool Sportsbook was denied licensing in multiple states, including New York and Massachusetts. “[It was] because of me,” Portnoy admitted to Variety. “The regulated industry [is] probably not the best place for Barstool Sports and the content we make.”
While ESPN has controversial media figures like Pat McAfee, it’s still less edgy than Barstool. Therefore, the ESPN BET brand has a better chance of gaining licensing in more states.
ESPN is also a go-to source for sports info. 44% of sports fans turn to this network for scores and statistics. It’s not hard to see some of these same fans giving ESPN Bet serious consideration when looking to place wagers.
ESPN BET “Still in the First Inning”
PENN started at the bottom with ESPN BET, having to regain markets that it was previously in with Barstool. The ESPN sportsbook is now available in 18 states, like Illinois, Indiana, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, and Tennessee. This number isn’t far off DraftKings and FanDuel, which are available in 24 and 22 states, respectively.
However, ESPN Bet’s presence in 18 states hasn’t produced much better progress than Barstool. It only has a 4% market share, roughly 9x and 8x smaller than FanDuel and DraftKings.
To say we’re in the first inning of ESPN BET would be a significant understatement. We’ve done a good job together creating new users for the platform.
Jimmy Pitaro, ESPN Chairman
Nevertheless, ESPN Chairman Jimmy Pitaro remains confident that the sportsbook can improve.
“To say we’re in the first inning of ESPN BET would be a significant understatement,” Pitaro said. “We’ve done a good job together creating new users for the platform.”
Why DraftKings & FanDuel Are Likely to Remain on Top
The combination of ESPN’s brand and sports betting seems like a winning formula. However, the regulated American betting market is littered with would-be hopefuls who fell by the wayside.
The graveyard of failed US online sportsbooks include Betway, Fox Bet, Golden Nugget, PointsBet, SI, Unibet, William Hill, and WynnBet. We’re not saying ESPN BET will necessarily join these obsolete US ventures, but it’ll have trouble crashing DraftKings and FanDuel’s party.
These bookmakers acquired millions of customers through daily fantasy sports long before PASPA fell and regulated online betting became a reality. These customers naturally kept with FanDuel and DraftKings once sports betting became legal in 2018.
The best goal for ESPN BET would be to slowly accumulate a larger market share, aiming for 8-10%. Catching DraftKings and FanDuel seems like a monumental task that would take years.
Sources
https://www.egr.global/northamerica/news/eilers-krejcik-gaming-fanduel-retakes-market-share-lead-from-draftkings-in-q4
https://investors.pennentertainment.com/news-releases/news-release-details/penn-entertainment-and-espn-enter-long-term-exclusive-strategic
https://www.sportico.com/business/media/2023/portnoy-pays-a-dollar-1234733833
https://www.sportsbusinessjournal.com/SB-Blogs/Newsletter-Media/2024/07/01.aspx
https://variety.com/2023/digital/news/barstool-portnoy-gambling-licenses-denied-penn-1235691265/
https://www.businessinsider.com/what-espn-bet-struggles-say-about-future-sports-betting-penn-2024-6
