PENN Entertainment has undergone serious turmoil as of late, as pressure has mounted on the company to sell its assets, including ESPN Bet.
There are reports of a joint acquisition that includes Flutter buying out ESPN Bet and Boyd Gaming overtaking PENN Entertainment’s retail casinos.
The retail portion of the deal does not apply to New Jersey, since PENN does not have a physical presence in the Garden State. However, Flutter operating both FanDuel and ESPN Bet would cause a huge shakeup among New Jersey online sportsbooks as well as NJ online casinos.
Flutter could help turn around ESPN Bet
As it has been well-documented, FanDuel Sportsbook NJ is easily the market leader in the Garden State. The New Jersey Division of Gaming Enforcement (DGE) does not report specific operator handle.
However, it does calculate the revenue for each platform. FanDuel has come out on top in every month in 2024, generating some $211.4 million in betting revenue, good for over 25% of the market:
- January: $80.7 million (DraftKings was second with $40.3 million)
- February: $26.6 million (DraftKings with $24.2 million)
- March: $29.5 million (PointsBet, a Fanatics Experience with $20.1 million)
- April: $37.9 million (PointsBet, a Fanatics Experience with $32.9 million)
- May: $36.7 million (DraftKings with $22.1 million)
FanDuel does much of its damage on the parlay side. It has the best same game parlay product on the market. By providing a better parlay mix and adding more VIPs, The EKG Line newsletter believes ESPN Bet would be a good fit for Flutter:
“In our view, Flutter could reasonably expect to fix these issues — especially SGP, a category FanDuel dominates — and improve ESPN Bet’s U.S. OSB GGR market share from its current ~3% level (our estimate).”
In addition, Flutter would be swallowing up the competition, making it even more difficult for other operators to compete. Because, let’s face it, there’s FanDuel, DraftKings, and everyone else when it comes to sports betting.
A potential tech stack migration, according to The EKG Line, would be a potential challenge for Flutter. However, should Flutter be able to improve the ESPN Bet product, it would likely be a good investment.
Not to be overlooked, FanDuel’s NJ online casino performance
Then consider the online casino side of things.
Since regulators began detailing operator-specific revenue in January, only DraftKings has performed better than FanDuel’s $199.96 million in NJ online gambling revenue, reflecting a 21.2% market share.
The next closest is BetMGM with $110.26 million, and no other online casino has generated more than $88 million.
Documenting ESPN Bet’s struggles in New Jersey
The much-anticipated launch of ESPN Bet has not gone according to plan, especially in the New Jersey. A large reason for the pressure mounting on PENN to sell the company is because of poor online performance, first with a failed experiment with Barstool, and now with ESPN Bet.
ESPN Bet has lost market share, in terms of handle, in states such as Pennsylvania and Michigan in every month this year so far. Since the New Jersey DGE reports handle by licensee, it’s difficult to see ESPN Bet’s performance in that regard.
In terms of revenue, it’s been less than a stellar year for PENN and ESPN. In January and February, the operator lost a total of $3.9 million. (The ESPN Bet online casino side of things have fared better; of 32 operators with revenue reports in 2024, ESPN Bet ranks 10th with over $16 million.) ESPN finally went positive in the months since, recording the following totals:
- March: $4.3 million
- April: $2.1 million
- May: $2.6 million
Its performance over the last three months certainly hasn’t made up for the slow start, which has made some key investors impatient over the last month.
The rumblings of a potential sale of PENN has picked up in recent weeks, with the Boyd/Flutter acquisition being the latest. Without giving ESPN BET an entire football season, it makes it unlikely that a deal happens before September.
However, at this point, a huge shakeup of this magnitude wouldn’t be a total surprise.
