ESPN Bet’s Gamble Isn’t Paying Off and Time Is Running Out
Penn Entertainment’s high-stakes bet on ESPN Bet isn’t looking like a winner. CEO Jay Snowden recently gave a blunt assessment of the platform’s underwhelming performance, admitting it’s falling far short of expectations. Meanwhile, restless investors, led by hedge fund HG Vora, are making moves to shake up Penn’s leadership, arguing that its sports betting strategy is bleeding money. With mounting losses, a proxy battle on the horizon, and a potential exit clause looming in 2026, ESPN Bet may be running out of time to prove itself.
A Struggling Venture with an Uncertain Future
During a recent earnings call, Snowden didn’t sugarcoat the situation. He admitted ESPN Bet is far from where it needs to be, lagging well behind industry giants like FanDuel and DraftKings. With an estimated market share of just 2.35%, ESPN Bet is nowhere near Penn’s 20% target for 2027. Worse, the company’s interactive division, which includes ESPN Bet, posted a brutal EBITDA loss of over $109 million in the last quarter.
Snowden made it clear Penn is keeping its options open. A clause in the company’s agreement with ESPN allows either party to walk away after three years. By 2026, Penn could cut its losses if ESPN Bet fails to gain meaningful ground. While Snowden emphasized major plans to turn things around in 2025 and 2026, he also stated Penn will do “whatever is in its best interest” if the numbers don’t improve.
Beyond financial setbacks, ESPN Bet has struggled with customer adoption. Despite ESPN’s massive brand presence, only a small percentage of ESPN app users have transitioned to ESPN Bet.
The company has also failed to fully capitalize on parlay betting, a key revenue driver for competitors. While Snowden remains optimistic, he admitted Penn cannot afford to keep ESPN Bet afloat with only a 4% or 5% market share.
Investor Pressure and the Proxy War
Adding to Penn’s headaches is growing investor pressure, led by hedge fund HG Vora Capital. The firm, which owns a significant stake in Penn, has been vocal in its criticism of the company’s direction, particularly its heavy spending on sports betting ventures like ESPN Bet. HG Vora is now pushing for three board seats, arguing Penn’s leadership has made costly strategic missteps that have eroded shareholder value.
HG Vora’s concerns echo those of other activist investors like Donerail Group, which believes Penn’s sports betting division is dragging down its core casino business. Over the past four years, Penn’s stock price has plummeted by 81%, fueling arguments that the current strategy isn’t working. Some investors are even calling for a breakup of Penn’s assets, suggesting separate buyers for its brick-and-mortar casino operations and online gaming segment.
The battle for control of Penn’s boardroom will play out at the company’s annual shareholder meeting in 2025. If HG Vora’s nominees win board positions, Penn’s sports betting ambitions, especially its partnership with ESPN, could face an uncertain future. The fund has made it clear it wants to rein in what it calls “reckless spending” and refocus on profitability.
Delaying the Inevitable?
Overall, the outlook for ESPN Bet isn’t looking great. The project faced challenges from the start, yet for a long time, the company maintained a steady flow of positive updates. Early claims that the operator just needed more time to take off don’t seem to be holding up.
Time is passing, and ESPN Bet has yet to make a real impact on the market. Meanwhile, Fanatics—which took a slightly different approach—has seen better momentum, despite operating in roughly the same market share range as ESPN Bet.
The hope that ESPN Bet could emerge as the industry’s third major player appears to be clashing with reality. While this isn’t an ideal outcome for PENN Entertainment, many analysts have pointed out that ESPN Bet was never a make-or-break venture for the company. These reports only reinforce the sense that we may just be delaying the inevitable.
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