Posted on: July 17, 2024, 08:56h.
Last updated on: July 17, 2024, 08:56h.
Penn Entertainment (NASDAQ: PENN) is planning layoffs at its Penn Interactive arm, which includes the ESPN Bet online sports wagering unit.
The number of jobs to be eliminated was not announced and the news was originally reported earlier today by Legal Sports Report. News of the headcount reductions at Penn Interactive arrived about nine months after the ESPN Bet mobile application went live.
This week, we are implementing changes at PENN Interactive to help streamline reporting lines, enhance operational efficiencies, and leverage shared resources across PENN,” wrote Penn CEO Jay Snowden in an email to staffers. “Unfortunately, these changes will result in a limited number of team member separations. While it is difficult to see colleagues impacted, we deeply appreciate their contributions and are committed to supporting them through the transition.”
Snowden’s message didn’t mention layoffs specific to ESPN Bet, but the chief executive officer noted the gaming company will continue building “upon the momentum of our partnership with ESPN with upcoming product enhancements and a deeper integration into the ESPN ecosystem.”
ESPN Bet Falling Flat
News of the Penn Interactive also arrived as data confirm ESPN Bet is struggling mightily to gain solid online sports betting market share.
The app got off to a decent start, sparking hope it would be more successful than its predecessor Barstool Sportsbook, but data indicate otherwise. In a new report, JMP Securities noted that as measured by handle, ESPN Bet’s second-quarter online sports wagering market share slide to 3.2% from 4.7% in the first three months of the year.
At 3.2%, ESPN Bet has less than half the share commanded by BetMGM, itself a laggard, and less than 10% of the share controlled by DraftKings and FanDuel — the two largest operators in the space.
ESPN Bet’s struggles provide more fodder for investors that have been critical of Penn’s online betting missteps and could call into question the reasoning behind the gaming company agreeing to pay Walt Disney (NYSE: DIS) $1.5 billion over 10 years to use the ESPN brand. That accord can be scrapped after a few years if certain financial metrics aren’t met.
“While we recognize that change is never easy, these evolutions will enable us to better capitalize upon our new phase of growth. Our Interactive business, which is a core pillar of PENN Entertainment, is well-positioned, and we continue to add capabilities and key talent to advance our digital growth strategy,” added Snowden in the email to staffers.
ESPN Bet Struggles Could Weigh on Acquisition Prospects
Soon after Penn investor Donerail Group authored a letter to the gaming company’s board of directors advocating for a sale, rumors surfaced that Boyd Gaming (NYSE: BYD) could make a run at its rival. However, there are doubts surrounding that thesis, many of which stem from the belief that Boyd wouldn’t want to pay as much as $500 million for Penn Interactive.
That implies a third party would need to get involved. Last week, the gaming industry rumor mill suggested that FanDuel parent Flutter Entertainment (NYSE: FLUT), which has a relationship with Boyd because the casino operator owns 5% of FanDuel, could get involved.
Flutter hasn’t confirmed an interest in Penn Interactive/ESPN Bet and the speculation is arguably a stretch because FanDuel doesn’t need to pay that much for just 3.2% in sports betting market share.
