Penn, ESPN Bet Secure New York Licenses in $25 Million Deal
ESPN Bet is coming to New York, following a $25 million deal between Penn Entertainment and Wynn Interactive.
Penn, which operates ESPN Bet, has reached an agreement to buy Wynn’s New York licenses, the company said Tuesday in a press release. Pending approval, the transfer should pave the way for ESPN Bet to start taking bets in the industry’s largest legal U.S. market later this year.
It’s the latest new state license for ESPN Bet, which launched late last year following a 10-year, $2 billion agreement between Penn and Disney, ESPN’s parent. Penn (Nasdaq: PENN) sold Barstool and shuttered the Barstool Sportsbook to facilitate that deal, with hopes that the ESPN brand and media empire would create a steady flow of marketing and new customer leads.
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The results so far have been mixed. Across Maryland, Indiana and Iowa, three states that have already released January numbers, ESPN Bet had about 7% market share, down from 9% in December, according to a note from JMP Securities analyst Jordan Bender. In New York, the trio of DraftKings, FanDuel and BetMGM have captured more than 80% of the market every month since the state’s 2022 launch, the note said.
“This is an important development,” Penn CEO and president Jay Snowden said in a statement. “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.”
Not everyone has felt that way. New York legalized sports betting with a 51% tax on gaming revenue, the highest in the country. It drew outcry from a number of betting executives who publicly questioned whether the tax would prevent operators from taking bets in New York. Snowden was among them.
“I don’t think a single operator will make money in New York,” he told analysts in 2021. “So I’ve always struggled with the—would you rather be in or not? I think objectively speaking, you’d probably rather be in than not be in. But it’s one of those states where if you’re not in, you’re not crushed by that either, maybe from a [total addressable market] perspective and from a revenue perspective. But I think it’s just going to be a margin killer.”
New York was the largest market for sports betting in the United States in 2023, generating $1.7 billion gross gaming revenues, according to Bender. With 19.5 million people, it is also the most populous U.S. state with full-scale legal sports betting.
For Wynn (Nasdaq: WYNN), the deal continues a gradual downshift from nationwide sports betting and iGaming. The company said in August that it was ceasing operations in eight states, and has continued to deprioritize the business in the face of minimal market share and high acquisition costs.
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