Goliath gets a feel for what it’s like to be David in the latest US sportsbook launching this week.
ESPN Bet is currently broadcast in 17 states, but its market share among U.S. sports gamblers starts at about 2%.
That market share comes from the remains of PENN Entertainment’s Barstool Sportsbook product, which formed a $2 billion partnership to license the ESPN brand. PENN will pay Disney $150 million annually for the next 10 years and grant Disney approximately $500 million in stock options to purchase PENN stock.
According to a recent report from research firm Eilers & Krejcik Gaming, the biggest hurdle facing ESPN Bet is the U.S. sports betting duopoly of FanDuel and DraftKings, which accounts for about 73% of the U.S. sports betting market share. The top five rankings are as follows:
- FanDuel: 39.28%
- DraftKings: 34.11%
- BetMGM/Borgata: 9.41%
- Caesars/William Hill: 6.57%
- Bet Rivers/Sugar House: 2.68%
In addition to a tightening of top pairs and operators like Caesars and BetMGM maintaining a strong foothold, Fanatics is becoming more aggressive in sports betting after acquiring PointsBet’s US operations .
Despite existing competition, ESPN Bet’s backers predict it can achieve 20% market share by 2027. However, many people find it difficult to reach that goal.
grand vision
Aggressive. Exalted. Huge.
These are the words industry insiders have used to describe ESPN Bet’s 20% market share goal.
The consensus seems to be that achieving even 10% over the next few years would be a success. “Double-digit market share in the U.S. market is an amazing number at this stage of gaming,” Chris Grove, co-founding partner at gaming-focused venture capital fund Ashes Investments, told FOS.
However, market share numbers are not completely black and white.
“Now we’re going to start to see how many new casual fans are coming into the sports betting ecosystem,” said Roberts, a longtime sports media executive and investor who owns micro-betting technology company SimpleBet. said Chris Bevilacqua, co-founder and CEO.
Perhaps the idea is that if ESPN Bet has mainstream appeal, it could open the door to a new class of sports bettors who aren’t so intimidated by a familiar brand. Still, it could ultimately just be an opportunity for the likes of DraftKings and FanDuel to gain more customers after ESPN Bet’s initial promotion ends.
ESPN Bet certainly represents an interesting evolution in the short lifespan of America’s legal sports gambling industry. But should rivals be worried?
temperature check
At least initially, neither half of the American sports betting monopoly appears overly concerned about ESPN Bet’s entry.
“You want a great product experience, right?” FanDuel CEO Amy Howe said at the CNBC Global Evolve virtual summit earlier this month. “At the end of the day, it doesn’t matter how good the brand is if the product doesn’t work. It needs to be a truly phenomenal experience.”
DraftKings co-founder and CEO Jason Robbins said on a Nov. 3 investor conference call that he expects people to take advantage of promotions offered by ESPN Bets. But he added that his company “always” expects other companies to try to poach customers.
DraftKings, along with Caesars, had a co-exclusive deal with ESPN to promote a better product that is now being phased out. However, gambling companies can still advertise on ESPN if they wish.
“I don’t think anyone is looking to dramatically change their strategy yet,” Barry Jonas, a gaming analyst at Trust Securities, told FOS.
However, there is no complete consensus on how the rest of the market should react.
Max Bixel, vice president of sports betting media company Gambling.com Group, believes competitors large and small should be concerned. “People who were betting on DraftKings yesterday or last week are going to be betting on ESPN this week,” he said.
Grove, who is also a partner emeritus at EKG, agreed, saying, “I don’t think any of our competitors who say they’re worried about ESPN Bet are telling the whole story.”
But whether ESPN Bet becomes a mainstay in sports gambling or languishes like many others, the impact for the two companies behind it will not be equal.
winners and losers
The fate of the ESPN bet may not hinge on Disney or Penn, but either has far less to lose.
“As we understand the terms of the contract, no matter how well PENN does, ESPN is going to do pretty well,” Bixel said, adding that the $150 million annual payment from PENN will make it difficult to see what happens. also pointed out that Disney would be given a relatively high floor. But even if it completely fails, PENN will still have a “very strong” land-based casino business.
Jonas hypothesized that ESPN may want to leverage sports betting’s cultural relevance to ultimately charge higher ad rates, but it complicates the definition of success. I admit that. “PENN shareholders are looking for profitability, and accepting a huge market share will not minimize profitability,” Jonas added.
And then there’s the question of how on-air talent will be involved in ESPN Bet’s promotions. So far, Scott Van Pelt and Elle Duncan have participated in the ad campaign. Mike Greenberg mentioned ESPN’s betting odds on this week’s “Get Up.” Pat McAfee also praised the new app on his show.
ESPN Bet is still in its early stages, but the proverbial clock may already be ticking for a verdict.
fast start
ESPN Bet shot to the top of the iOS app charts shortly after its launch, but hard data on what impact it’s having remains to be seen once an earnings report is published and the platform’s performance compared to existing players. We won’t get it until the end of December when we can compare and measure it.
An interesting test will take place in January, when mobile sports betting is scheduled to begin in North Carolina. ESPN Bet will be able to attract more than 10 million new customers on a competitive basis with the likes of DraftKings and FanDuel.
Dave Wakeman, a sports business analyst and founder of the consulting firm WCG, says 80% of a successful product launch happens before, during and after go-live. “If you don’t have a hit after the first release, you’re unlikely to have a hit,” he told FOS.
Other brand concepts have not been big hits for Disney. Mobile ESPN mobile phone products failed to gain enough users, and the ESPN Zone restaurant chain eventually closed all of its locations.
And the network’s mainstream spotlight could accelerate judgment on whether ESPN Bet passes the test. “Unfortunately, this partnership will not be given the space it should be reasonably developed and evaluated,” Grove said.
Other important dates to measure competition against are the NFL Playoffs, Super Bowl, and March Madness. He will have nearly a year to establish himself by ESPN Bet’s first full season of football next fall.
With aggressive market share goals in a crowded environment and $2 billion in trade at stake, ESPN Bet has a tough challenge ahead of it. But for now, discussion is possible on the floor.
Please place your bet.