Penn Entertainment and ESPN rocked the sports betting world last week and set lofty goals for their new partnership. North Carolina will be critical in determining whether those goals are reached.
Penn and ESPN are collaborating to launch the online sportsbook ESPN Bet. In the process, Penn has dumped its previous sportsbook partner – Barstool Sports.
Barstool is the latest media-branded sportsbook that failed to gain traction and succeed in the competitive US sports betting market. It joins Fox Bet, Fubo Sportsbook and MaximBet in the media-branded sportsbook graveyard.
Is it a matter of time before ESPN Bet joins the departed? Or will the power of the “worldwide leader” and the ESPN brand catapult the venture to success?
Time will tell. One thing is certain, however. The launch of North Carolina sports betting next year will be important for ESPN Bet to succeed.
Defining success for ESPN Bet
Penn Entertainment CEO Jay Snowden made it clear Wednesday during Penn’s Q2 earnings call that ESPN Bet’s ambition is not to be a middling online sportsbook.
“We’re not doing this deal to be 4% or 5% market share players,” Snowden said. “That’s not going to be acceptable for us. It’s not going to be acceptable for ESPN.”
There’s a clause in the $1.5 billion deal that terminates the agreement after the third year if certain market share thresholds aren’t met. Snowden wouldn’t disclose those thresholds but hinted they hovered around 20% market share.
That kind of success would put ESPN Bet NC directly behind sports betting heavyweights FanDuel and DraftKings. Depending on the month, FanDuel’s market share in the US is about 45%. DraftKings sits around 30%. BetMGM is a distant third at 9%.
Barstool Sportsbook never sniffed that level of success. Nationally, its market share is about 5%.
“I think this narrative or this notion that the market share that’s established is sort of permanent here in the US, that’s – to me, that’s crazy talk,” Snowden said. “I’m not saying that it’s going to be wildly different from what it is today. But it’s going to ebb and flow. It’s going to move around. It’s going to be fluid. And [ESPN Bet] is something new and different to think about that probably wasn’t in the consideration set up for anybody a day ago. And so it’s going to have an impact on what that overall market share looks like. And we think we’re going to be a major player.”
If ESPN Bet is just another Barstool Sportsbook, it will be a failure. If it can stake its claim at No. 3 in the operator pecking order, it will be a huge success.
ESPN Bet’s exposure, promotional spending and technology will be important. Operating in legal markets will be paramount in earning market share. That’s where North Carolina enters the chat.
Putting NC sports betting into perspective
Twelve online sports betting licenses will be up for grabs as NC establishes its sports betting industry. The North Carolina Lottery Commission’s window to launch the sector runs from Jan. 8 to June 14, 2024. Whenever NC sports betting goes live, ESPN Bet North Carolina sportsbook would be well served to accept bets in the state on Day One.
North Carolina is the ninth-ranked state in the US for population. Excluding Florida, where Hard Rock Bet will have a monopoly on sports betting once the legal system runs its course, NC will be the fifth-largest state by population with legal sports betting. New York, Pennsylvania, Illinois and Ohio are the only legal jurisdictions larger than the Tar Heel State.
Because of Penn’s licenses to operate the Barstool Sportsbook, ESPN Bet will be live in three of the four states ahead of North Carolina when the app launches this fall – Pennsylvania, Illinois and Ohio. No specific launch date has been determined.
That leaves New York, where Penn was denied a license once, and North Carolina as the top sports betting states not in Penn’s portfolio. New York, however, doesn’t sound like a priority for Penn. No licenses are available, and Snowden has lamented in the past about the difficulties of making money in NY because of its 51% tax rate on operators.
Suddenly, North Carolina is the biggest fish in the pond where Penn can cast its line.
If that transpires, North Carolina could be one of the largest markets in the country. NCSharp projects that North Carolina could generate between $6 and $7 billion in total bet spending in its first year of operation.
Discover the most up-to-date North Carolina bonus offerings in our comprehensive guide to NC Sports Betting Promotions.
Penn’s plans in North Carolina
Operators and industry stakeholders await more information from the NC Lottery Commission (NCLC) regarding licensing and regulations.
The commission hired a deputy executive director of gaming compliance and sports betting late last month. It recently added a registration button on its sports betting webpage for potential operator license applicants to receive email updates and information.
One would presume a lot of work is happening behind the scenes, but little has been revealed publicly on the progress the NCLC is making. The commission has not met since June 21, a week after Gov. Roy Cooper signed the expansion of sports betting into law. The NCLC does have a meeting scheduled for Tuesday evening, but sports betting will not be discussed, a lottery spokesperson said.
As for ESPN Bet, Snowden would not offer any details Wednesday on the sportsbook’s plans for 2024.
“I don’t want to get into too much detail on ’24 yet,” Snowden said. “We will hold an Investor Day before the end of the year and give you a lot more detail on that.”
To look more like DraftKings and less like Barstool, North Carolina should be atop ESPN Bet’s 2024 plans. If not, Penn and ESPN will have difficulty reaching their ambitious goals.
Image: Phelan M. Ebenhack / AP photo
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