Penn Entertainment stock plummets after revealing ESPN Bet is underperforming

ESPN is known as the worldwide leader in sports, but its new sportsbook isn't catching on.

According to Eben Novy-Williams of Sportico, Penn Entertainment's stock dropped as much as 15% on Thursday morning after revealing its first-quarter earnings, which included numbers from ESPN Bet.

During the first quarter of 2024, Penn reported overall revenue of $1.63B, meeting expectations. However,  revenue for its online segment —which includes ESPN Bet — was $208M, lower than estimates of $237M.

Penn CEO and president Jay Snowden insists the sportsbook is still in a good position despite the disappointing numbers. 

"While we are pleased with the early ESPN Bet adoption and engagement results, our focus heading into this football season will be on enhancing our product offerings, including a refreshed home screen and expanded parlay offerings," Snowden said, via a press release. "Simultaneously, with our partners at ESPN, we will reveal additional ESPN Bet media integrations within their digital media app and industry leading fantasy product."

This shouldn't come as a surprise. Penn and ESPN agreed to a 10-year, $1.5B deal in August 2023, ending its relationship with Barstool Sports. Despite ESPN's brand recognition, the new sportsbook may face an uphill battle. 

"The fear when ESPN Bet started was that they were already so far behind established market leaders such as DraftKings and FanDuel that it would be incredibly hard to make a dent in the marketplace," wrote Awful Annoucning's Sean Keeley. "These numbers appear to bear out the reality of that concern, though it remains very early in ESPN Bet's lifecycle."

ESPN Bet launched in November 2023, so it could turn things around. Still, the turnaround must happen quickly, or it will continue to struggle against stiff competition.