On December 1, Penn Entertainment is set to rebrand ESPN Bet to theScore Bet, aiming for a smooth and disruption-free transition for users. This time, the company assures that the process will be seamless, with no need for users to download a new app, re-register, or face any interruptions, unlike the challenges faced during its previous rebranding from Barstool.
During the recent third-quarter earnings call, Jay Snowden, Penn’s CEO, emphasized that this transition would be significantly different, describing it as “apples and oranges” compared to the earlier Barstool shift. Reflecting on the past, Snowden acknowledged, “We had put our customers through a lot of hoops to jump, and we had a new technology stack.” During that tumultuous period, the service was down for several days, requiring users to re-register and redeposit, creating unnecessary noise and confusion alongside the brand change.
This time around, Penn Entertainment is committed to ensuring a seamless handover that aims to retain the existing customer base and bolster its position as the company seeks to break even in its interactive business by 2026. Additionally, Penn will cease all payments to ESPN at the quarter’s end, following the early termination of their 10-year partnership, initially announced in 2023.
Penn’s decision to part ways with ESPN, after investing approximately $300 million over a two-year period, represents yet another significant moment for the company, which has faced challenges in establishing a strong foothold in the highly competitive US sports betting market, despite spending billions on acquisitions. Notably, the company acquired Barstool for $550 million before selling it back to its founder, Dave Portnoy, for a mere $1. It also spent $2 billion on acquiring theScore.
The market’s reaction to these developments was mixed. Initially, Penn’s share price experienced a brief uptick before closing the day about 3% lower. In a swift move, ESPN announced just an hour later that DraftKings would become its new official sportsbook partner, effective December 1.
Snowden elaborated that the early exit from the ESPN deal was a contractual option, acknowledging that Penn was not on the desired market share trajectory to justify continuing the partnership. “And so, you know where it’s headed, why string this along?” he remarked. “Let’s get together and figure out the best path forward for both companies.”
Looking ahead, Penn plans to concentrate on its most profitable markets while leveraging advanced marketing tools to enhance customer retention. Snowden highlighted, “We have the ability to target and personalise from a marketing and CRM perspective today that we just didn’t have even a year ago.” With a comprehensive marketing plan in place, the company is gearing up for the next phase of growth.
In the third quarter, Penn reported $297.7 million in interactive revenue, accompanied by a $76.6 million adjusted EBITDA loss. However, the company remains optimistic, with CFO Felicia Hendricks indicating that losses are expected to narrow in the fourth quarter, as some one-time expenses are phased out before 2026.
In conclusion, Snowden cautioned about the potential impact of prediction markets, suggesting they could pose an “existential” threat to the gambling industry. He urged both operators and regulators to proactively address this issue before it extends beyond the realm of sports betting.
While Penn Entertainment strategizes to streamline its operations and improve profitability through this rebranding, some industry experts remain skeptical about its ability to overcome the challenges in the crowded market. They argue that while advanced marketing tools and a focused strategy are beneficial, the competitive nature of the market, with strong players like DraftKings and FanDuel, continues to pose significant hurdles.
Others, however, see this transition as a necessary pivot for Penn, suggesting that focusing on core strengths and profitable segments could yield better returns in the long run. As Snowden and his team navigate these changes, the broader gambling industry watches closely, anticipating how these strategic moves will unfold in the coming months.
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