Penn Expands Into NY Sports Betting With Win Bet Buyout

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00:00 (upbeat music)

00:03 - Penn is now involved in New York through,

00:07 I believe it is Winbet that they've been able

00:09 to sort of take over or absorb.

00:11 Why did they choose, do you know, Sam,

00:12 why they chose Winbet?

00:14 Was it that they just wanted to get out

00:15 or what happened here?

00:17 - Yeah, really Penn had no other choice.

00:20 New York is unique where there's only nine licenses

00:23 up for grabs.

00:24 Other states like New Jersey, Arizona

00:26 have unlimited licenses.

00:27 You just have to pay the state for one.

00:29 But in New York, the way the law was written,

00:31 there can only be nine at one time.

00:33 You'd have to change the law to add more,

00:35 which had prevented, you know, sports books like Barstool,

00:39 sports books like Fanatics, Bet365,

00:41 that I'm sure would love to be in the largest market

00:43 in the country.

00:44 It's prevented them from joining.

00:46 So they bought Winbet's license.

00:48 Winbet had actually been looking to sell this license

00:50 for some time now.

00:53 Winbet, if you know anything about them,

00:55 they've been getting out of sports betting

00:57 as kind of as quickly as you can.

00:59 They closed up shop in eight states last year,

01:02 and now New York appears to be next on the horizon for them.

01:06 Once they leave New York,

01:07 it'll only be two states where they're alive.

01:10 So that's obviously not trending well

01:12 for their online sports betting operation.

01:13 You know, they've cited the crazy cost

01:16 associated with customer acquisition

01:18 in order to compete with the top dogs,

01:19 which obviously has been felt throughout the industry

01:21 when you have places like PointsBet closing up shop

01:24 and others as well.

01:26 So yeah, essentially there was no other licenses

01:29 up for grabs.

01:29 It's pretty funny actually,

01:31 about a year or two ago,

01:33 Jay Snowden, who is the CEO of Penn said,

01:37 "Oh, we don't wanna be in New York.

01:38 Nobody will make money there,"

01:39 alluding to the 51% tax rate in New York,

01:42 which is a nation high and really has been felt

01:45 on some of the operators.

01:47 But that kind of came right after his license was denied.

01:50 Some people have speculated that maybe it was

01:52 because of concerns with Barstool.

01:54 So it is funny now to see them about two years later

01:56 trying to get into the New York market.

01:59 But he's definitely right that it's been hard to make money.

02:01 The top three operators, DraftKings, BetMGM, and FanDuel

02:05 combined for about 80% of the market,

02:07 which leaves six others to have about 20%.

02:11 And really Caesars is the only one of those

02:13 that has significant gains.

02:15 The rest, including WinBet,

02:17 typically combined for 2% maybe on a good month.

02:20 So that really shows you the landscape

02:22 that Penn is getting into.

02:23 But for Penn and ESPNBet,

02:25 this is kind of a must have

02:27 now that they've invested so much money

02:29 into the ESPNBet operation.

02:31 They're spending a ton on national advertising.

02:35 They've been vocal.

02:36 They just had their earnings call today

02:37 about how launching in a state like New York

02:39 will help us kind of get more from the national ad spend.

02:43 It'll basically be realized in the states

02:44 we don't have a license in.

02:45 They're only in 17 states right now.

02:47 So this would be the biggest one.

02:49 Whether or not it'll actually help them

02:51 make money long-term, that's a different story.

02:54 They've held about 7% of the market since they launched,

02:57 which is decent.

02:58 But to do that in New York

03:00 is definitely gonna be challenging

03:01 when you think about all the costs associated with it

03:04 and everyone you're competing with.

03:05 And then just all the costs for Penn lately,

03:07 they're gonna have to spend to do well in New York.

03:10 They've committed to $2 billion for ESPN.

03:13 They, I think, spent a billion dollars

03:15 on the technology to run the app.

03:17 And then they also spent $550 million to buy Barstool,

03:21 which they only got a dollar back for.

03:23 So the costs are definitely adding up.

03:25 It's gonna be a costly year ahead.

03:27 New York still has to approve the license transfer.

03:31 So it's not a done deal yet,

03:32 but I would expect ESPN to launch in New York

03:35 probably leading up,

03:37 in the months leading up to football season.

03:39 (upbeat music)

03:42 [MUSIC]

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