**During the company’s fourth-quarter earnings call on Thursday (27 February), Penn’s CEO emphasized a positive outlook for the future, focusing on upcoming opportunities rather than past results. Snowden mentioned that Penn is witnessing “green shoots” across its departments and acknowledged that more effort is needed to unlock the full potential of their partnership with ESPN.**
For digital gaming overall, the company reported revenue of $275 million (£218 million/€264.7 million) for the fourth quarter. The adjusted EBITDA loss of $109.8 million marked a $224 million improvement compared to the same quarter in 2023, though these numbers still impacted Penn’s overall performance and fell short of analyst estimates.
Overall, the company surpassed Truist’s adjusted EBITDA prediction with $320.7 million, although this was 1% below general expectations. Penn’s stock price declined from $20 at the opening to $19.28 immediately following the call, before closing at $20.39.
The $461.2 million of adjusted EBITDAR on the land-based side exceeded analyst expectations, while digital losses of $110 million were in line with predictions. Net revenue results were mixed, but within a 1% variance of both Truist and general projections.
Snowden also announced plans for Penn to repurchase “at least” $350 million in stock over the next year as a show of confidence.
## Growth Slow and Parlays Not Paying
Since ESPN Bet launched in November 2023, it has struggled to reach the top tier of sports betting platforms. FanDuel and DraftKings hold the dominant positions in market share, with BetMGM in third. The goal of reaching 20% market share by 2027 has been set, but ESPN Bet is still below 5%, aiming to hit this modest mark later this year.
A significant challenge for ESPN Bet has been its difficulty in capitalizing on parlays, beyond several football months that favored bettors across the industry. Multi-leg bets comprise at least 50% of bets placed on DraftKings and FanDuel, while only 30% on ESPN Bet. This is crucial as parlays are among the most profitable markets for operators.
## Snowden: More Improvements Coming
Snowden promised additional new integrations and cross-selling opportunities for ESPN Bet. Last fall, the company introduced a more personalized experience for individual bettors and new livestreaming features, with hopes that these will attract more consumers and leverage Penn’s omnichannel approach.
Meanwhile, Penn reports a younger demographic trend and continues to open more retail locations. Hollywood Joliet (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 over the past year.
Snowden acknowledged that Penn is managing ESPN Bet as a “scale player.” If goals are not met by the end of the year, he noted operational adjustments could be made, particularly concerning marketing expenditures in the digital business.
“We have a cost structure built for scale, which is where we expect to be. That’s where ESPN expects us to be. But if we’re not trending in that direction, we won’t maintain a cost structure at a scaled level,” he explained.
## What Analysts Are Saying
Truist analyst Barry Jonas suggested that if the platform does not reach an “inflection point” soon, Penn’s comments imply a potential reduction in marketing expenses and cost structure adjustments as they approach the agreement’s three-year anniversary in 2026, where both parties have opt-out options.
Deutsche Bank’s Carlos Santerelli noted that online casino “momentum continues to build.” He observed a shift in approach regarding the online segment, indicating executives view the digital business as an extremely valuable asset.
Santerelli interpreted the commentary as emphasizing the asset value of their technology and brand collection, potentially signaling a readiness to monetize should performance, specifically in the online sports betting division, remain below expected success levels.
Jay Snowden from Penn Entertainment highlighted “lower loss sequentially” projected for every quarter in 2025 and outlined better strategies to “optimize spending” with ESPN during the company’s quarterly earnings call. Nonetheless, Penn fell short of some expectations while exceeding others for the last quarter of 2024.