Penn’s CEO reiterated during the company’s fourth-quarter earnings call that the future looks promising, focusing on upcoming opportunities rather than past events. Snowden noted that Penn is witnessing progress across its various departments and emphasized the ongoing efforts needed to fully leverage the partnership with ESPN.
The company reported $275 million in revenue from digital gaming for the fourth quarter. The adjusted EBITDA loss of $109.8 million was an improvement of $224 million compared to the same period in 2023, although it still affected the company’s overall performance and fell short of analyst expectations.
Overall, the company surpassed Truist’s adjusted EBITDA forecast with $320.7 million, although this was 1% below general market expectations. Penn’s stock price dropped from $20 at the start of trading to $19.28 right after the call, before settling at $20.39 at market close.
Penn’s adjusted EBITDAR of $461.2 million on the land-based side exceeded expectations, while digital losses of $110 million were in line with forecasts. Net revenue was largely consistent with Truist and general projections, varying by only 1% in either direction.
Snowden also announced plans for Penn to buy back “at least” $350 million in stock over the coming year as a demonstration of confidence.
## Growth Slow and Parlays Not Paying
Since ESPN Bet launched in November 2023, it has struggled to break into the top tier of sports betting platforms. FanDuel and DraftKings maintain dominant positions in the market, with BetMGM in a distant third. While the goal for ESPN Bet was to achieve a 20% market share by 2027 after replacing Penn’s Barstool Sportsbook, it currently holds less than 5%—a figure executives hope to improve by the end of the year.
One of ESPN Bet’s challenges is capitalizing on parlays. Multi-leg bets account for at least 50% of bets on DraftKings and FanDuel but only 30% on ESPN Bet. This is significant as parlays represent the most lucrative market for operators.
## Snowden: More Improvements Coming
Snowden promised further integrations and cross-sell opportunities for ESPN Bet. Last fall, the company introduced personalized experiences for bettors and new livestreaming features, aiming to attract more consumers and capitalize on Penn’s omnichannel strategy.
Penn reports a younger demographic trend and plans to open more retail locations. Hollywood Joliet in Illinois is set to open in the fourth quarter of 2025, with three more land-based locations planned for 2026. The company also launched online casino products in Michigan and Pennsylvania last year.
However, Snowden acknowledged that Penn is operating ESPN Bet as a “scale player.” If goals aren’t met by year-end, he mentioned potential for operational adjustments, particularly in marketing spending for its digital segment.
“We’ve structured costs to accommodate our expected scale due to ESPN’s expectations,” he said. “If we aren’t trending in that direction, adjustments are necessary to align cost structures with the scale of operation.”
## What Analysts Are Saying
Truist analyst Barry Jonas noted that if ESPN Bet doesn’t reach a critical point soon, Penn’s comments suggest a potential scaling down of marketing, cost structure adjustments, and other changes as they approach the agreement’s third anniversary in 2026, when opt-outs are possible.
Deutsche Bank’s Carlos Santerelli highlighted the continuing momentum in the online casino segment, noting a shift in executives’ tone toward online business. He observed that the digital business is regarded as a highly valuable asset.
“We interpret, perhaps over-interpret, the commentary as emphasizing the asset value of the technology and brand collections, potentially signaling a willingness to monetize should the OSB performance remain below expectations.”