Penn Entertainment’s ESPN BET has been rapidly expanding across the nation’s sports betting landscape but it has yet to gain a license in the most lucrative market of them all – New York. But that could be changing as there are reports of ESPN BET trying to purchase a license in the Empire State.
ESPN BET Wants Bite of the Big Apple
Reports began circulating about ESPN BET entering the highly competitive but densely populated New York sports betting market after the 11th Annual Truist Securities GLLR Summit in Boston, which welcomed 16 online gaming operators to have a seat at the table.
Although Penn Entertainment, owner of ESPN BET, has not commented, it would be the next logical step for the ever-expanding online sportsbook to take. ESPN BET launched after Penn Entertainment rebranded from its Barstool Sportsbook upon purchasing the licensing rights it obtained from sports media giant, ESPN, for $1.5 billion over 10 years.
The deal has already begun to pay dividends, as evidenced by ESPN BET averaging a 4.9 out of 5.0 rating from 90,000 reviews. Over two million downloads to date have transpired and it would only make sense that the owners would want to take advantage of the early momentum it has built since it launched in 17 states on November 14th.
It has also been reported that there will be a Bet Mode on the ESPN media app that will allow users to wager through the ESPN BET sportsbook. That exposure alone would allow ESPN BET to grow its customer base even larger but no date has been announced as to when that add-on will occur.
Change of Heart
It’s no secret that sports betting operators are not fond of New York’s onerous tax rate and hefty licensing fees. New York is tied with only New Hampshire and Rhode Island as having the highest tax rate in the nation at 51% of all adjusted gross revenue profits from the sportsbooks that operate within its borders.
The only reason why those two other much less densely populated states can demand the 51% from its operators is because New Hampshire has granted a monopoly to DraftKings, while Rhode Island’s lone sportsbook is run by the state lottery and powered by William Hill.
In November 2021, Jay Snowden, CEO of Penn National Gaming, was asked about the viability of entering the New York market in light of the onerous tax rate.
“So, I’ve always struggled with the ‘Would you rather be in or not?’ I think, objectively speaking, you’d probably rather be in than not be in, but it’s one of those states where if you’re not in you’re not crushed by that either. Maybe from a TAM perspective and a revenue perspective but I think it’s just going to be a margin killer. I think it’s going to be an EBITDA detractor,” remarked Snowden.
Regulatory Hurdles
Ultimately, Penn’s Barstool Sportsbook partnered with Fanatics in a bid to crack the New York market, but they were denied entry as one of the nine online betting sites to gain approval in the Empire State.
If no additional licenses are granted, then the only way ESPN BET can enter the New York market is if they purchase a license, which would likely be from one of the three lowest-producing sportsbooks in the state which include: WynnBet, Resorts World Bet, and Bally Bet.
Should that occur, ESPN BET would need to gain regulatory approval from the state before the license is transferred.
