ESPN BET is off and running
Source: Mike Windle / Getty Images for ESPN
The biggest name in sports aims to become the biggest name in gambling as ESPN BET launched in 17 states and reports filtering out from the weekend indicate it was a massive success on positive and dominating download data for the sports-gambling service app.
ESPN teams up with Penn Entertainment
Under a recently signed deal, the legacy sports broadcasting giant and casino owner Penn Entertainment (NASDAQ: PENN) agreed to launch a sports betting business under ESPN BET.
Penn Entertainment paid a considerable price to partner with ESPN.
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Under the terms of the deal, Penn will pay ESPN $1.5 billion in cash and offer about $500 million worth of warrants to purchase its shares over an initial 10-year term in exchange for the brand, promotional services, and other rights. While expensive, the sheer magnitude of ESPN’s reach is a potential game changer for the sports gaming business.
Penn Entertainment stock is on fire.
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The shares traded double the average volume to start the week and closed Monday 7% higher. The massive download reports help to light the fire on the shares that have tumbled from $133 in March of 2021 to Monday’s close of $26.26.
BofA Securities upgraded the stock.
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Analyst Shawn Kelley upgraded the shares to Buy from Neutral with a timid $30 target. The analyst noted this in the research report:
ESPN BET dominates initial download activity and charts, proving it is cutting through to customers. ESPN Bet has been #1 or #2 of all free apps on the iOS store since last Tuesday, with 865,000 cumulative downloads and a 4.8 app store rating, even without data from NFL Sunday.
Some think PENN Entertainment could become a target.
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There was some chatter on news platforms that PENN Entertainment could now become a target for a larger gaming enterprise. The fact that the shares have plummeted over the last almost three years could make it a very appealing asset to MGM Resorts International (NYSE: MGM) or Caesars Entertainment, Inc. (NYSE: CZR)
Fighting ESPN BET will be very expensive for DraftKings.
Source: Scott Eisen / Getty Images for DraftKings
While DraftKings, Inc. (NASDAQ: DKNG) has aggressively fought the competition, they have yet to face a challenger with the reach, strength, and deep pockets of ESPN and PENN Entertainment. While DraftKings currently holds an estimated 33% share of sports betting and iGaming, ESPN Bet could severely challenge that.
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