ESPN BET now has an avenue into New York sports betting.
On Tuesday morning, PENN Entertainment, which operates the online brand, announced it would acquire Wynn Interactive’s sports betting license in the Empire State for $25 million.
Pending approval by the New York State Gaming Commission (NYSGC), PENN plans to launch ESPN BET in the largest U.S. sports betting market later this year.
ESPN BET will join the competitive market, which to date has been driven by FanDuel NY and DraftKings NY.
“Together with ESPN, we’re building a brand that is synonymous with sports betting, and operating in the New York market is key as we grow ESPN BET across the U.S.,” PENN Entertainment CEO and President Jay Snowden said in a statement.
New York Change of Mind
WynnBET was one of nine operators approved by the NYSGC more than two years ago as part of a unique competitive bidding process. The state awarded licenses to members of two groups that agreed to pay a 51% tax on revenues to take sports betting wagers online. Each platform provider, including Wynn, agreed to pay $25 million to the commission for a 10-year license. They also must pay $2.5 million annually, which goes to the four upstate commercial casinos for hosting New York online sports betting servers.
PENN, which launched its Barstool Sportsbook in May 2021, did not make the cut in New York. Speaking to investment analysts in November 2021, Snowden did not seem to mind losing out in New York.
“I don’t think anybody is going to make money, operator-wise,” he said at the time. “The state’s going to make money. I don’t think a single operator will make money in New York. So, I’ve always struggled with the – would you rather be in or not? I think, objectively speaking, you’d probably rather be in than not be in.”
PENN purchased Barstool Sports in hopes of leveraging the media site’s audience to gain market share in states where it had sports betting licenses. However, Barstool Sportsbook failed to gain much traction nationwide as FanDuel and DraftKings became the dominant two in the online gaming industry.
That includes New York, where sports bettors have wagered more than $16 billion, and operators have generated more than $1.48 billion in revenue through the first 10 months of the 2023-24 fiscal year. FanDuel has taken $6.6 billion in wagers and reported $709.3 million in winnings in that span. DraftKings has accounted for $5.8 billion in handle and $517.5 million in revenue.
Last August, though, PENN said it would sell Barstool back to its original owner, Dave Portnoy, for $1 and rebrand its sports betting operation under the name of the top U.S. sports media entity as part of a $1.5 billion, 10-year deal that also gave ESPN the rights to buy nearly $500 million in company stock.
ESPN BET launched in mid-November and is now available in 17 states. In states where operator performance is broken down, ESPN BET has improved on Barstool’s performance, but it has also relied on significant promotional spending to accomplish that.
In Ohio for December, ESPN BET ranked third in handle with $72.9 million (DraftKings was second with $261.3 million). The Ohio Casino Control Commission reported ESPN BET produced revenues of $8.2 million for the month but spent $11.3 million on promotional offers, more than either DraftKings ($9.2 million) or FanDuel ($7.1 million on a handle of $289 million).
Another Departure for Wynn
Wynn’s sale of its New York license comes a day after the company formally announced its departure as an online sports betting operator in Massachusetts. Last summer, Wynn had online access in a dozen states, but the company revealed in August that it would pull out of eight states in August – just days after PENN made its ESPN BET announcement. At the time, company officials said WynnBET NY would continue to operate in Nevada, Massachusetts, Michigan and New York.
Wynn struggled for market share in its online gaming states. WynnBET accounted for just $92.3 million (.58% market share) of that handle and won slightly more than $3 million (.21% share).
“In light of the continued requirement for outsized marketing spend through user acquisition and promotions in online sports betting, we believe there are higher and better uses of capital deployment for Wynn Resorts shareholders,” Wynn Resorts CFO Julie Cameron-Doe said in the Aug. 11, 2023, release.
If the NYSGC approves the license transfer, Wynn will be down to an online presence in just Nevada and Michigan. It has a sports betting and online casino license in the latter state.
There are no online New York casinos, although there is a bill sponsored by State Sen. Joseph Addabbo.
In a statement Tuesday afternoon, Wynn Chief Communications and Brand Officer Michael Weaver told EmpireStakes.com that the sale serves as "an important milestone" to the review of remaining WynnBET markets the company announced six months ago.
"We are pleased with this transaction, which effects our exit from the New York digital gaming market and generates $25 million in proceeds," he said.
Wynn's exit from New York could be short-lived. The company has been working with Related Companies on a proposal for one of the three downstate casino licenses the NYSGC plans to award, perhaps sometime this year. That proposal calls for a casino resort to be part of a $10 billion development at Hudson Yards in Manhattan. NYSGC staff members are currently answering questions from teams interested in bidding for the licenses, which will command at least $500 million each. Proposals will be due to the state within 30 days of the answers being published.
"This has no effect on our bid for one of the downstate licenses," Weaver said. "We look forward to submitting our bid and actively participating in that process."
