Betting News 
Penn Entertainment is set to deliver one of the most anticipated earnings reports this quarter as it navigates investor pressure while ramping up ESPN Bet ahead of its first full NFL betting season.
Penn will announce its second-quarter results at 7 a.m. ET on August 8, followed by an earnings call at 9 a.m. ET.
Investors have been eagerly awaiting a business turnaround since Penn swapped out Barstool for ESPN Bet last summer. The impatience is evident, as the stock saw nearly a 20% jump following a critical letter from a key shareholder questioning company strategy and leadership. However, some believe the upcoming football season could help the app achieve key milestones.
Online gaming revenue was significantly down in Q1, missing both Wall Street estimates and Penn’s prior guidance. The app’s lackluster financials have overshadowed Penn’s retail business, though CEO Jay Snowden has urged investors to have faith in his long-term plan.
Upcoming product changes for ESPN Bet ahead of football season include integration with ESPN’s extensive media assets, a standalone iGaming app, and expanded same-game parlay offerings. These enhancements were a major reason for committing up to $2 billion to ESPN over the next decade, a plan announced during the last earnings call.
Since then, Penn has laid off as many as 100 employees, including some involved in those product changes. Despite this, Snowden maintains that ESPN Bet is “well-positioned.”
Aaron LaBerge, former ESPN Chief Technology Officer, took over the interactive division in July, shortly before the layoffs. In a recent LinkedIn post, he highlighted improvements made to theScore. He or Snowden is expected to provide further insights into ongoing product refinements.
ESPN Bet has also faced challenges due to a significant drop in promotions since its launch in 18 states, resulting in an 11% decrease in users last quarter. However, with the football season approaching and plans to launch in New York, promotions are likely to increase.
According to Snowden, ESPN Bet would have performed better last quarter if bettors had not been as successful. The particularly unfavorable quarter of sports outcomes impacted the entire industry, with Penn’s 4.4% hold among the worst. Despite this, handle was nearly double compared to Q1 2023.
As of April, ESPN Bet was holding at 8.5%, a level Penn guided investors to expect for the rest of Q2. The ability to sustain increased betting activity in typically slow Q2 could be crucial for Penn’s online gaming revenue story, along with the hold rate.
Early handle reports, however, have been less encouraging. According to Citizens JMP Securities, ESPN Bet ranked sixth in second-quarter handle share at 3.2%, down from 4.7% in the first quarter, though this did not include key states like Arizona, Illinois, and Ohio reporting June figures.
Management will likely face questions about the letter from Donerail Group, prompted by poor sports betting results.
Boyd’s appointment of a director with a history of financing and advisory roles has fueled speculation about Penn’s rival as a potential buyer. A report from TheDeal.com suggests that FanDuel parent Flutter could potentially acquire Penn’s betting app assets if a sale occurs.
Snowden has remained silent on the letter, and Disney has provided little insight into its partnership with Penn. Investors are keen to know what would happen to ESPN Bet if Penn sells, as it could have significant ramifications across the industry.
