In the company’s fourth-quarter earnings call on Thursday (27 February), Penn’s CEO emphasized future prospects over past performance. Snowden stated that Penn is observing “green shoots” in its departments and acknowledged the need to maximize the full potential of its partnership with ESPN.
For digital gaming, Penn reported fourth-quarter revenue of $275 million. Although the adjusted EBITDA loss of $109.8 million marked a $224 million improvement from the same quarter in 2023, it still dragged down overall performance and fell short of analyst expectations.
Penn exceeded Truist’s adjusted EBITDA forecast with $320.7 million, although this was 1% below general market expectations. The company’s stock price fell from $20 at the opening bell to $19.28 immediately after the call, ultimately closing at $20.39.
The land-based operations achieved $461.2 million in adjusted EBITDAR, outperforming expectations, whereas digital losses of $110 million met predictions. Net revenue was mixed but stayed within 1% of Truist and general projections.
Snowden also revealed Penn’s plan to repurchase “at least” $350 million in stock this year as a show 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 dominated by FanDuel and DraftKings, with BetMGM in third place. The platform, which replaced Penn’s Barstool Sportsbook, aims for a 20% market share by 2027 but currently holds less than 5%—a number executives hope to reach later this year.
One major challenge for ESPN Bet, aside from unfavorable football betting months, is the difficulty in capitalizing on parlays. These multi-leg bets form at least 50% of wagers on DraftKings and FanDuel but just 30% on ESPN Bet. Parlays are among the most profitable markets for operators.
### Snowden: More Improvements Coming
Snowden promised further integrations and cross-selling for ESPN Bet. Last fall, the company introduced personalized experiences and new livestreaming features to attract more consumers, banking on its omnichannel strategy.
Meanwhile, Penn is attracting a younger demographic and is expanding its retail presence. Hollywood Joliet (Illinois) will open in the fourth quarter of 2025, with three more land-based locations planned for 2026. The company has also launched online casino products in Michigan and Pennsylvania over the past year.
However, Snowden admitted that Penn operates ESPN Bet as a “scale player.” If goals aren’t met by year’s end, he said, “you’ve got levers operationally,” implying possible adjustments to marketing budgets and cost structures.
### What Analysts Are Saying
Truist analyst Barry Jonas noted that if the platform does not hit an “inflection point” soon, Penn’s remarks suggest a potential reduction in marketing spend and a leaner cost structure, possibly in anticipation of the agreement’s three-year anniversary in 2026, when both parties can opt out.
Deutsche Bank’s Carlos Santerelli mentioned positive momentum in the online casino sector. He highlighted a shift in tone regarding the digital segment, observing that executives view the digital business as a highly valuable asset. His interpretation is that there might be a willingness to monetize if performance falls short of expectations.