Penn Entertainment (NASDAQ: PENN) is actively exploring options to launch its ESPN Bet mobile sports wagering application in New York, following discussions at the 11th Annual Truist Securities GLLR Summit in Boston. Truist gaming analyst Barry Jonas noted that ESPN Bet is a hot topic in the industry, and Penn is seeking ways to enter the state’s sports wagering market.

This aligns with statements from Penn CEO Jay Snowden, who previously indicated the company’s interest in entering New York’s sports wagering market. While New York is the largest sports wagering jurisdiction in the US in terms of handle and revenue, the state’s onerous 51% tax rate makes profitability challenging for operators.

To get ESPN Bet into New York, Penn would need policymakers to legislate an expansion of the current licensing policy. Alternatively, the company could wait for a current operator to leave the state or attempt to acquire an existing license from another company. However, the top five operators by handle and revenue in New York are unlikely to sell, leaving WynnBET, Resorts World Bet, and Bally Bet as potential acquisition targets for Penn and ESPN Bet.

Truist’s Jonas also mentioned that ESPN Bet could initially exceed Penn’s projected losses of $100 million to $150 million, delaying potential profitability until 2025. Additionally, Penn has not yet initiated share repurchases under a $750 million buyback plan announced last year, as it is directing excess cash to ESPN Bet. The potential acquisition of ESPN Bet by Penn Entertainment presents an opportunity for the company to tap into the lucrative New York sports wagering market, but it also poses significant challenges given the current competitive landscape and regulatory environment.

By admin

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