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ESPN BET bows in US, initial advertising campaign to follow before Thanksgiving

ESPN BET officially launched Nov. 14, and the company plans to kick off an advertising push for the rebranded sports betting app in the coming days.

The app, rebranded from PENN Entertainment Inc.'s Barstool sportsbook as part of a 10-year partnership agreement with ESPN Inc., bowed as online/mobile sports service ESPN BET in 17 states, including New Jersey, Pennsylvania and Ohio. Under the terms of the partnership, PENN is slated to spend some $1.5 billion across the assets of Walt Disney Co.'s ESPN to support the new brand as it attempts to gain market share.

"Monday Night Football," Disney's largest sports property, did not include ads/promos for the app at launch, although pregame coverage featured ESPN BET odds integration. Coverage of Denver's upset of Buffalo on Nov. 13. across ESPN (US), ESPN2 (US), ESPN Deportes (US) and NFL+ drew a combined audience of 17.7 million, the best Week 10 mark since ESPN became the primary "Monday Night Football" rights holder in 2006.

A high-profile college basketball doubleheader presented by ESPN on Nov. 14 — in which No. 9-ranked Duke beat No. 18-ranked Michigan State and top-ranked Kansas edged out No. 17-ranked Kentucky — also ran without ESPN BET spots. The contests bookended the "College Football Playoff Top 25" countdown show on the ESPN network.

On ESPN BET's first night in play, there was not only a host of college basketball action, but a trio of Mid-American Conference college football games, nine NHL matchups and 10 NBA contests.

ESPN BET had been running a teaser spot featuring "SportsCenter" anchor and "Monday Night Football" host Scott Van Pelt in which Van Pelt receives notifications from both the ESPN and ESPN BET apps, underlining the connection between the two brands.

The full creative campaign, according to people familiar with the schedule, could begin Nov. 16 featuring two spots, one with Van Pelt and another with "SportsCenter" anchor Elle Duncan.

ESPN BET odds began appearing on ESPN's TV graphics and digital content on Nov. 1, displacing wagering information previously attributed to former marketing sponsors Caesars and DraftKings.

On Nov. 10, the sports programmer's gambling show, "Daily Wager," was rebranded to "ESPN BET Live."

Although the parties have kept media plan specifics close to the vest, PENN President and CEO Jay Snowden provided some launch plan signals during the company's earnings call earlier this month.

Snowden said the Nov. 14 launch will afford ESPN BET an introductory wagering period, ahead of what figures to be an attractive Thanksgiving week on the sports calendar. The schedule includes a Super Bowl LVII rematch between Kansas City and Philadelphia on "Monday Night Football" on Nov. 20; a trio of NFL games on the US holiday Nov. 23; the NFL's first Black Friday game on Amazon Prime Video; and college football rivalry week, led by a battle of College Football Playoff contenders Michigan and Ohio State on Nov. 25.

Behind the betting scenes

In connection with the app's debut, there were integrations across the ESPN ecosystem, including 200 million unique monthly users in the US, more than 12 million of whom are regular users of the ESPN fantasy sports app. PENN is also tapping 2 million digital registrants and 27 million customer loyalty members across its Barstool Sportsbook, Hollywood Casino, the ScoreBet and PENN Play apps.

At launch, extant Barstool Sportsbook customers were prompted to download the new app with all of their account information and wallet transferring to ESPN BET, which is powered by the technology platform PENN deploys in Ontario under theScore BET brand.

Given ESPN BET's presence in 17 states, most of the marketing efforts from paid and earned media perspectives will manifest on the national side, as PENN/Disney looks to stoke brand awareness, according to Snowden.

In addition to New Jersey, Pennsylvania and Ohio, ESPN BET is now available in Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Tennessee, Virginia and West Virginia.

Sizing up the market

The sports betting market has boomed since the Supreme Court repealed a law in May 2018 that had limited the practice to Nevada. The American Gaming Association estimated that revenue grew almost 73% year over year to $7.5 billion in 2022. Industry consultancy Eilers & Krejcik Gaming projects that annual gross gaming revenue could hit $18 billion in 2027 as more states adopt sports betting and the market matures.

Within PENN's interactive segment, the company estimates an EBITDA loss of about $100 million to $150 million for the fourth quarter with ESPN BET's launch.

PENN will provide 2024 guidance in February with its year-end earnings. CEO Snowden anticipates peak losses will come between the current reporting period and the first quarter of 2024, as ESPN BET ramps up. The executive noted there will be a lot of first-time deposits, matching promotional dollars and costs this year tied to running through the system as it looks to trade on NBA, NHL and NFL action. By the first quarter of 2024, "you're going to capture college basketball, you're going to have the college football championship and Super Bowl. So I think that's where you're going to see sort of peak."

Snowden projects that ESPN Bet will endure losses during its first two years before moving to breakeven and modest EBITDA growth in its third year.

In announcing the partnership in August, PENN estimated the ESPN Bet deal, in combination with its online casino unit, could deliver $500 million to $1 billion in annual long-term adjusted EBITDA by 2027. At the high end, that indicates PENN assumes a 20% market share within legal US sports betting states and Ontario, based on total addressable markets of $14 billion for iCasino and $15 billion for sports betting.

Barstool had an estimated 2% of the online sportsbook market.

The parties can exit the partnership after three years if certain market share thresholds are not met.