The highly anticipated launch of ESPN BET as the newest entry in New York’s mobile sportsbook industry has been delayed due to a lack of regulatory approvals.
Red Tape Snafu
In February of this year, Penn Entertainment reached an agreement with Wynn Interactive Holdings to acquire its New York mobile sports wagering licenses to allow access into the highest-grossing sports betting market in the country. The goal was to launch before the highly coveted NFL and college football seasons, but that has hit a regulatory snag.
Jay Snowden, PENN Entertainment CEO and President, said at the time, “This is an important development that will bring ESPN BET to the largest regulated online sports wagering market in North America. Together with ESPN, we’re building a brand that is synonymous with sports betting, and operating in the New York market is key as we grow ESPN BET across the U.S.”
The hurdle facing ESPN BET’s launch is that the license transfer application has yet to be considered or approved by the New York State Gaming Commission (NYSGC). “We believe the item will be on the agenda for the next Commission meeting, which is scheduled for September 23, 2024,” Brad Maione, director of communications for the NYSGC, wrote in an email.
A Penn spokesperson stated, “PENN Entertainment is continuing to work closely with the New York State Gaming Commission to facilitate our anticipated launch of ESPN BET in New York, subject to their final approvals.”
New York Critical to ESPN BET
The Empire State is the largest sports betting market in the nation, but its 51% tax rate on adjusted gross revenues takes a big bite out of profits. Nevertheless, the collective monthly handle makes the juice worth the squeeze.
For example, in August 2024, the combined sports betting handle from all mobile operators was north of $1.4 billion, but when football is in full swing, that number will increase. A mobile sportsbook that can gain traction in a market dominated by FanDuel and DraftKings stands to make millions every month, which is why New York is essential for ESPN BET’s U.S. rollout that commenced in November of last year.
During a second-quarter presentation to investors, the company stated, “Our upcoming launch in New York, subject to regulatory approvals, will meaningfully expand our digital footprint and further leverage ESPN’s unparalleled sports media reach.”
Penn’s High-Stakes Bet
Penn Entertainment has much riding on its success in New York, as it paid $1.5 billion over 10 years to use the ESPN brand name and gain access to its digital content. This was after it paid $550 million to do the same with Barstool Sports.
However, only six months after completing the deal with Barstool, the opportunity to use the ESPN brand name arose, but it was contingent on Penn divesting itself from the controversial bro-culture Barstool name.
It was an expensive contingency requested by ESPN, but Penn complied and sold the Barstool media brand back to its founder, Dave Portnoy, for $1 with the promise that if he ever sold it, Penn would receive 50% of the profits. The Barstool sportsbook was phased out after the deal with ESPN was struck.
