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)
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