Penn Leisure (NASDAQ: PENN) is actively evaluating avenues to deliver its newly launched ESPN Wager cellular sports activities wagering software to New York.
The ESPN and Penn Leisure logos. An analyst says the on line casino operator is trying to deliver ESPN Wager to New York. (Picture: Barrett Sports activities Media)
Following the current eleventh Annual Truist Securities GLLR Summit in Boston, Truist gaming analyst Barry Jonas famous that ESPN Wager stays one of many hottest matters within the trade, including that Penn is on the lookout for methods to enter New York.
That jibes with feedback from Penn CEO Jay Snowden. When the Penn/ESPN partnership was unveiled in August, Snowden famous the operator was contemplating getting into New York’s sports activities wagering market. That represented a reversal of his prior stance on the state.
So I’ve at all times struggled with the ‘Would you moderately be in or not?’ I believe, objectively talking, you’d in all probability moderately be in than not be in, but it surely’s a type of states the place for those who’re not in you’re not crushed by that both,” stated Snowden in 2021. “Perhaps from a complete addressable market perspective and a income perspective, however I believe it’s simply going to be a margin killer. I believe it’s going to be an earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) detractor.”
By deal with and income, New York is by far the biggest sports activities wagering jurisdiction within the U.S. However owing to an onerous 51% tax charge, it’s additionally tough for sportsbook operators to show earnings within the fourth-largest state.
How Penn Can Get ESPN Wager Into New York
When New York lawmakers accredited on-line sports activities betting in 2021, they granted 9 licenses to gaming corporations, all of that are at present spoken for.
For Penn to get ESPN Wager into the state, policymakers would want to legislate growth of the above coverage. Or Penn may look forward to a present operator to depart the state or purchase an current license from a type of corporations.
Acquisition could possibly be tough, although not not possible. However the high 5 operators by deal with and income in New York are unlikely sellers. These are FanDuel, DraftKings, Caesars Sportsbook, BetMGM, and BetRivers. Fanatics is sixth and an unlikely vendor as nicely, as a result of it’s new to the state by means of its acquisition of PointsBet U.S.
That leaves WynnBET, Resorts World Wager, and Bally Wager as potential targets for Penn and ESPN Wager. The curveball is that the guardian corporations of all three of these operators are vying for downstate on line casino permits, and in the event that they’re victorious in that quest, they’d be unlikely to relinquish their New York sports activities betting licenses.
Because of the vital paring of WynnBet operations earlier this yr, Wynn Resorts could possibly be a prepared vendor of its sports activities wagering entry if it isn’t awarded a New York on line casino license. However that’s simply hypothesis.
Different Penn, ESPN Wager Notes
Truist’s Jonas added that ESPN Wager may initially exceed Penn’s projected losses of $100 million to $150 million, which means it could possibly be 2025 earlier than the sportsbook turns worthwhile.
The analyst additionally famous that the regional on line casino operator just isn’t but repurchasing shares underneath a $750 million buyback plan introduced a yr in the past. That’s as a result of it’s directing extra money to ESPN Wager.
