ESPN Bet can challenge market leaders, Truist report shows

Data collected by Truist Securities analysts in their 2024 Interactive Gaming Survey shows that Penn Entertainment’s ESPN Bet gaming brand has the potential to take on the big two.

According to Truist, it is ESPN’s position as the primary app for bettors to check scores that could help its branded sports betting platform rival DraftKings and FanDuel.

Some 44% of sports fans surveyed said they checked scores on ESPN and 64% of those said they would have interest in betting integration beyond listed lines.

Of the respondents who both frequent ESPN and showed an interest in betting integration, a majority (52%) stated it was likely that ESPN Bet will become their primary wagering platform. Nearly all others (45%) stated it was possible.

Penn’s prospects of overhauling DraftKings and FanDuel

Reflecting on the results, Truist managing director Barry Jonas tells iGamingBusiness that the onus is on Penn to create a compelling technology solution for the ESPN Bet brand, which launched in Q4 2023.

“I think their stated goal is to be a podium player, in the top three. Our sense is if they can execute and offer strong technology, we think ESPN as a lead generator will be very strong,” Jonas says. “The issue becomes when people migrate from checking scores on ESPN to bet mode, and if they can keep folks using it as their primary app.

“The challenge of overtaking DraftKings and FanDuel is that you can’t assume those incumbents are staying still.”

While Penn has been in the online sports betting business for several years prior to the ESPN Bet launch with its Barstool Sportsbook, the company pivoted in November and may be a little behind the pack.

“ESPN Bet will be playing catch up to where they are today, when DraftKings and FanDuel are evolving,” Jonas adds. “It’d be a challenge to tackle market leaders, but ESPN Bet can become top three and a podium player.”

BetMGM’s omnichannel potential over ESPN Bet

While Truist has a positive outlook regarding ESPN Bet, it currently believes that DraftKings and FanDuel will continue to coexist at the top.

The survey puts DraftKings ahead of FanDuel as players’ primary sports betting app by 29% to 22%.

For users who frequent both platforms, 61% stated they favour DraftKings when asked directly. This, Truist notes, goes against state-reported data. Looking at the New Jersey Division of Gaming Enforcement’s figures for February, for example, FanDuel’s partner Meadowlands makes up $35.1m of GGR, compared to $24.2m for DraftKings partner Resorts Digital.

Similarly in Michigan, FanDuel’s mobile handle came to $152.4m in February, compared to $109.9m for DraftKings.

“Reasons for that preference were generally mixed, leading us to believe the consumer generally views the two as largely equal today,” the report says.

Can BetMGM stay in the race?

BetMGM is favoured by 12% of users, but Jonas remains unconvinced as to whether it can catch up the two leaders, or indeed outpace ESPN Bet.

“BetMGM still has strong omnichannel potential and igaming advantages that others don’t have,” Jonas says. “The question is, can they take the investment year and use it on technology and improve their offering?

“It boils down to execution. It’s hard to say yes or no. It has a very strong brand and the ownership structure is complex, which has likely at times been both beneficial and detrimental. That’s something to look at to see if it starts to lean towards more beneficial.”

BetMGM, as a joint venture between Entain and MGM Resorts, is reliant on funding and resources from each partner. While this provides access to specialist trading solutions from Entain’s Angstrom and MGM’s partnership with Marriott Bonvoy, there’s ongoing speculation that the casino operator may be angling to buy out its online partner.

Entain’s interim CEO Stella David said during a recent earnings call that the company didn’t realise how high maintenance BetMGM would be.

“In the US, we’re very proud of the successes that we’ve had with BetMGM and its performance quite rightly is a key focus for us,” David said. “And where I like to think of MGM and ourselves, Entain, that we are the co-parents of BetMGM. But being fully transparent, it took us, and that is Entain, some time to realise just how quickly we needed to feed BetMGM with better product, better customer experiences and better, more focused US-tailored products.”

Regulatory risks for the US

The survey covered a wide range of questions around online sports betting and igaming to glean insights around consumer preferences, betting behaviour and overall health.

Truist says consumer health responses were predictable, as a more expensive cost of living seems to be having a moderate impact. The largest percentage of respondents (40%) say their gambling behaviour has not changed amid the cost of living crisis.

Truist received 554 eligible responses, 76% from online sports bettors and 77% from online casino players. Some 23% of respondents only bet on sports, 24% only play icasino and 54% do both.

Overall, Truist says the survey reinforces its positive view on US digital gaming. However, there’s a growing backlash against the industry, with attacks targeting advertising and perceived increases in problem gambling. Other markets at least offer an indication of what – or what not – to do, Jonas points out.

“It’s clearly incumbent on US operators to learn lessons from across the pond, the continent and Australia,” he says.

“Companies understand the risks and are actively working to prevent any irresponsible gaming and prevent improprieties. In many cases, DraftKings is taking the lead in spotting fraud.

“As long as they focus on responsible gambling, then they’re doing everything they can. In terms of federal regulation, gaming historically is under the state’s domain.”

The spectre of offshore gambling

The report also uncovered a sizeable percentage of players who admitted to betting offshore. It’s prevalent in states where online betting is not yet legal, Truist’s Patrick Keough notes, although in regulated states higher promotional bonuses and no limits on play do entice players.

“It’s not in anyone’s best interests for players to turn to illegal markets,” Keough adds. “There is player protection onshore that isn’t available offshore. I think longer term, it could be a tailwind if players bet exclusively onshore, but the path there is a little murky.”