Penn Entertainment is looking for avenues to incorporate its newly launched ESPN Bet mobile sports betting app in New York’s regulated market. This was recently reported by Truist gaming analyst Barry Jonas after the recent 11th Annual Truist Securities GLLR Summit in Boston. This corresponds to previous comments from the company on joining the Empire State’s industry.
Launched in January 2022, New York’s mobile sports betting market is the largest legal sector across the US. However, its number of permitted operators is currently limited to just nine, which could be an issue for Penn. In addition to that, the state’s model imposes a hefty 51% tax rate on winnings, making it harder for online sportsbooks to make profits.
Is it Possible?
For Penn Entertainment to legally launch its ESPN Bet in the Empire State, local lawmakers would have to pass an expansion of the number of allowed sportsbooks in the state. Another option for the company would be to wait for a current sportsbook to exit the market or buy one of the currently active licenses from one of those companies.
Still, a purchase could turn out to be difficult but not impossible. However, the top five operators by handle and revenue in the state, FanDuel, DraftKings, Caesars Sportsbook, BetMGM, and BetRivers, will most likely refuse to sell. Fanatics which recently purchased PointsBet U.S. division, will also be a difficult seller as it aspires to succeed in the state.
This leaves WynnBET, Resort WorldBET, and Bally Bet, as potential targets for ESPN Bet. But parent companies of all three companies are after a downstate casino license in New York, and if they succeed in their quest, then it would be highly likely that they will give up on their sports betting licenses in the state. It could also pave the way for an iGaming license if legalized.
There is hope for Penn, as earlier this year, WynnBET reduced its operations, which could mean that Wynn Resort could be willing to sell its online sports betting permit if it does not land a commercial gaming license in the state. However, this is merely speculation, and the state is taking its time with the process of awarding the three licenses.
Additionally, Mr. Jonas explained that ESPN Bet could initially face projected losses of US$100 million to US$150 million and it could be 2025 before making profits. The expert also remarked that the casino operator is not yet repurchasing shares under a US$750 million buyback plan from a year ago, due to channelling its funds into the new sports betting platform.
Bally Bet Most Likely a No-Go
Bally Bet is most like out of the equation to sell its license. Despite its slow betting volume in the first half of 2023, the company went offline to revamp its sports wagering app adopting technology from Kambi Group. In the middle of November 2023, the sportsbook made its official return and the company is most likely eager to continue work in the state.
