PENN Entertainment reported its first quarter results on Thursday, the first full quarter with ESPN BET as part of its content portfolio. The company inked a 10-year, $1.5 billion deal with The Walt Disney Company to rebrand its betting vertical from Barstool Sports to ESPN, and is eventually looking to yield as much as 20% share of the total addressable domestic online sports betting market in the next four years.
As it pertains to ESPN BET specifically, the interactive segment had revenues of $207.7 million and an adjusted EBITDA loss of $196 million. Upon reporting the quarterly earnings, PENN Entertainment stock fell by as much as 15% and closed the day down 8.76% overall at $15 per share. The earnings report comes a week after the company announced the addition of Aaron LaBerge as its chief technology officer after spending more than two decades with The Walt Disney Company.
“Our property level performance showed resilience this quarter, with stable trends continuing into April following portfolio-wide severe weather through mid-February,” Jay Snowden, chief executive officer and president of PENN Entertainment, said in a statement. “Meanwhile, ESPN BET continues to drive strong top of funnel demand due to the reach and affinity for the ESPN brand, which led to record online sports betting handle and iCasino gross gaming revenue in the quarter. However, Interactive segment results were negatively impacted primarily by unfavorable hold from major sporting events.
“We look forward to unveiling additional product enhancements and unique media integrations with ESPN ahead of the 2024 football season. Our improved online product offering will help engage, reactivate, and retain our expanding database, while also advancing our strategy to create a highly differentiated experience for sports fans and sports bettors.”
Pat McAfee, who licenses his eponymous afternoon show to ESPN to distribute on linear and digital platforms, was in the midst of another discussion when an ESPN BET advertisement came onto the screen. This led McAfee to state that things are “going great here,” proceeding one of the other show contributors to reply by saying “Not.” McAfee then acknowledged that ESPN BET had been “knocked down” and was encouraging the property to come back, preceded by a remark that the “truth [had] come out.”
“Legit, good luck, pulling for it, because we are on ESPN and obviously we’re a part of ESPN so we would like ESPN stuff to succeed,” McAfee said. “Now granted, ESPN BET, I don’t think ESPN people are running the book. I think it’s somebody with a whole thing. With that being said, let’s go. You got ESPN on – come on.”
McAfee said that it was the fault of show videographer Evan Fox for putting the ESPN BET graphic on the screen since it was something he did not expect. Even though McAfee explained that they never met anyone from the company, presumably referring to PENN Entertainment, he believed that the platform would be fine and concluded the discussion with a round of applause that they would be able to figure it out.
