PENN Entertainment Misses Q1 Predictions

ESPN Bet Falls Short of Revenue Resulting in Stock Drop

PENN Entertainment knew things were going to be rough at the start. It may have underestimated just how tough it would be. The company announced its first quarter earnings report Thursday and while not bad, it wasn’t quite what PENN was hoping for.

It was PENN Entertainment’s first full quarter report that featured ESPN Bet for the entire three months. Many analysts weren’t surprised to hear that PENN Entertainment missed Q1 projections for revenue. Projected revenue from online offerings, including ESPN Bet, was predicted to be $237 million and PENN Entertainment announced it was $208 million. Overall, the company reported revenue of $1.61 billion, so it’s not hurting.

The company’s stock dropped heavily when the earnings were announced, falling as much as 15%. For the day, shares were down 8.76% but had rebounded slightly Friday morning. That was to be expected since earning projections fell short. All of the news isn’t bad, however. Even though PENN Entertainment missed Q1 revenue projections, it does have the ESPN name behind its sportsbook. That can’t hurt in the long run and it’s a given sportsbooks will lose money at the start. There are costs associated with trying to attract customers who already have accounts at sports betting sites. That usually means free bet offerings and higher advertising costs.

Sportsbooks, like to draw in brand new customers who haven’t bet on sports before, such as those who need betting odds, explained. They are likely to remain customers for a long time. With FanDuel and DraftKings as household names, it can be tough to break into a state with legalized sports betting.

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PENN Entertainment Keeping the Faith

Even though PENN Entertainment misses Q1 forecasts, the company remains optimistic about the future.

“ESPN BET continues to drive strong top-of-funnel demand due to the reach and affinity for the ESPN brand, which led to record online sports betting handle and iCasino gross gaming revenue in the quarter,” said Chief Executive Officer and President Jay Snowden. “However, Interactive segment results were negatively impacted primarily by an unfavorable hold from major sporting events. We look forward to unveiling additional product enhancements and unique media integrations with ESPN ahead of the 2024 football season. Our improved online product offering will help engage, reactivate, and retain our expanding database, while also advancing our strategy to create a highly differentiated experience for sports fans and sports bettors.”

Snowden touted the recent announcement of Aaron LaBerge as the company’s Chief Technology Officer. Snowden has said increasing parlay offerings is one of the big goals ahead of football season. He believes LaBerge is the person to help with its digital offerings.

Snowden also amplified the potential for crossover promotions with ESPN. That’s something the other online gambling sites are unable to do.

“On March 11, we launched ESPN BET in North Carolina with a VIP event featuring ESPN’s Stephen A. Smith, highlighting our opportunity to leverage key talent at ESPN,” he said. “Our Hollywood Greektown property in Detroit was also the home of several ESPN broadcasts during the NFL draft held last week. We believe our enhanced product offering and media integrations will result in superior experiences for our customers, leading to higher retention, share of wallet, and spend per user.”

For Gambling news, odds analysis, and more, visit Point Spreads Sports Magazine.


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