The upstart sports betting platform, ESPN BET, has got what it takes to challenge the industry-leading tandem of FanDuel and DraftKings according to a nationwide survey conducted by Truist Securities.
New Kid on the Block
A recent survey by Truist Securities brings good news for Penn Entertainment’s ESPN BET, revealing that 44% of sports fans who check scores turn to sports media giant, ESPN. Of those surveyed who regularly turn to ESPN and showed an interest in sports betting, 52% said ESPN BET would likely be their mobile sportsbook of choice while 45% said it was possible.
Truist managing director Barry Jonas commented on the results of the survey, saying, “I think their stated goal is to be a podium player, in the top three. Our sense is if they can execute and offer strong technology, we think ESPN as a lead generator will be very strong. The issue becomes when people migrate from checking scores on ESPN to bet mode, and if they can keep folks using it as their primary app.”
“The challenge of overtaking DraftKings and FanDuel is that you can’t assume those incumbents are staying still,” Jonas added.
Late to the Party
The primary obstacle facing ESPN BET in terms of muscling in on the industry’s two major players’ territory is that it was late to the party, making its appearance in November 2023. FanDuel and DraftKings formed their businesses years earlier through their daily fantasy sports (DFS) platforms and had already captured millions of sports betting enthusiasts.
Once sports betting became available in 2018 for those US states that wished to engage, both companies had already fertilized their newly-formed sports betting platforms with millions of DFS customers, all ideal candidates to pivot to betting on sports.
“ESPN Bet will be playing catch up to where they are today when DraftKings and FanDuel are evolving,” Jonas adds. “It’d be a challenge to tackle market leaders, but ESPN Bet can become top three and a podium player.”
One interesting note was that DraftKings, routinely trailing FanDuel in handle and revenue throughout most major markets, was reported to be the primary sports betting app by a 29% to 22% margin among those surveyed.
“Reasons for that preference were generally mixed, leading us to believe the consumer generally views the two as largely equal today,” the report says.
History of ESPN BET
ESPN BET may be new to the domestic sports betting market but its parent company, Penn Entertainment has been in the gambling business since 1982. The Pennsylvania-based gaming company operates 43 properties in 20 states, primarily hotels and casinos along with horse racing facilities.
When PASPA was overturned in 2018, paving the way for states to determine for themselves whether they would welcome retail and online sports betting in their jurisdictions, Penn began turning its attention to this new gambling frontier.
In January 2020, Penn bought a 36% share of Barstool Sports, a digital media company focusing on sports and pop culture while being described as the “Bible of Bro Culture”, and a year later launched Barstool Sportsbook. Fast forward to February 2023 and Penn purchased the remaining shares, paying Barstool founder, Dave Portnoy, roughly $550 million in total.
The Name Change
Shortly thereafter, word leaked that the sports media giant, ESPN, was willing to lease its name to the highest bidder. This news brought Penn’s management to the negotiating table and ultimately purchased a 10-year lease of the name, ESPN, and access to all its digital platforms for $1.5 billion plus $500 million in stock warrants.
But there was one caveat. ESPN did not want to be associated with the controversial Barstool brand, which meant Penn had to divest itself immediately if it wanted to go forward with the name lease purchase. This resulted in a deal that will be the subject of business school curriculum for decades.
After spending over half a billion dollars only six months earlier, Penn sold the asset back to Dave Portnoy for the princely sum of $1 with the stipulation that should Barstool Sports ever be sold, Penn would get 50% of the proceeds. Portnoy has vowed never to sell the Barstool brand.
