New York state of mind
Penn Entertainment is acquiring the New York sports wagering license of Wynn Interactive Holdings. Specifically, Penn is buying WSI US, LLC, the entity that technically owns the license, for $25 million. Penn will use the license to launch ESPN BET in the state.
“This is an important development that will bring ESPN BET to the largest regulated online sports wagering market in North America,” said Penn Entertainment President and CEO Jay Snowden in Tuesday’s announcement. “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.”
Wynn Resorts announced last summer that it was going to withdraw its WynnBET online sportsbook from eight states: Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia, and West Virginia. That left Nevada and Massachusetts, where Wynn has retail casino resorts, and New York and Michigan, large markets that it was still evaluating.
About two weeks ago, Wynn announced that while its brick-and-mortar operations won’t be affected, it had decided, in fact, to close WynnBET in Massachusetts, where it had less than 4% market share. In the eight other states, it was at less than 1%. Customer acquisition costs were just too much for the operator as it fought a difficult uphill battle against FanDuel and DraftKings, who hold about three-quarters of the US market combined.
Penn getting aggressive
In the meantime, Penn Entertainment is forging ahead undaunted. That’s not to say that it hasn’t been a bumpy ride for the company when it comes to US sports betting. It had partnered with Barstool Sports on Barstool sportsbook, buying 36% of the company for $163 million in 2020. It acquired the rest of Barstool in 2022.
But then, in August 2023, Penn Entertainment announced a partnership with ESPN in which it would pay the worldwide leader in sports $1.5 billion plus another $500 million in warrants to use its branding to create a new sportsbook, ESPN BET. Penn believes that the ESPN brand will allow it to make inroads in the US sports betting industry that it was unable to do with Barstool.
Now partnered with ESPN, Penn Entertainment sold Barstool Sports – which it spend around half a billion dollars acquiring – back to founder Dave Portnoy for just one dollar.
Penn had to buy a New York sports betting license for ESPN Bet because all licenses in the state were taken. It is not a surprise that it was WynnBET the company got license from, as there were rumblings late last year that WynnBET was the most likely seller.
