The challenging launch and continued growing pains of ESPN Bet have left Penn Entertainment facing mounting pressure to justify its ambitious digital gaming strategy. Despite Penn’s leadership repeatedly voicing optimism about the platform’s future, ESPN Bet’s performance remains firmly below the initial targets set when it replaced Penn’s previous sportsbook brand in late 2023.
During Penn Entertainment’s recent fourth-quarter earnings call, CEO Jay Snowden highlighted some modest improvements within the digital segment, particularly in terms of reducing losses quarter-over-quarter. However, even those incremental gains failed to fully meet analysts’ expectations, reflecting how difficult it has been for ESPN Bet to establish itself as a top-tier player in the highly competitive sports betting landscape.
One of the least discussed factors contributing to ESPN Bet’s underwhelming performance is the rise of offshore casino platforms. These regulated operators, which operate outside of the legal U.S. market, have carved out a significant audience thanks to a combination of assertive promotions and expansive game libraries.
While ESPN Bet focuses primarily on sports betting, offshore platforms such as instant play casino websites have capitalized on a broader appeal by combining sports wagering with online slots, table games, and live dealer options. Their bonus structures are also far more generous, frequently offering bonuses with fewer strings attached than those found on regulated platforms.
This competition has eroded ESPN Bet’s potential customer base, especially among more casual players who value variety and bonus incentives over brand recognition or regulatory oversight. For Penn, combating this trend will require not just improved product offerings within ESPN Bet, but also a broader educational effort on public policy impacts on businesses to steer customers toward licensed, regulated options.
Another major challenge for ESPN Bet has been its inability to gain significant traction in the parlay betting space, a critical driver of revenue for sportsbooks. Multi-leg parlays, which combine multiple bets into a single wager with higher potential payouts, have become a preferred option for many bettors. Not only do they offer the appeal of big wins, but they are also some of the most profitable products for operators.
At ESPN Bet, however, parlay volume has lagged behind expectations. While other platforms see parlays making up roughly half of all wagers, ESPN Bet’s parlay handle accounts for only around 30%. This shortfall limits ESPN Bet’s profitability, as single-event wagers tend to have tighter margins.
Part of the issue stems from ESPN Bet’s still-developing user experience. While the platform has introduced more personalized betting recommendations and even integrated live streaming to enhance engagement, it has yet to build the type of intuitive parlay-building interface that some competitors have mastered. Without a seamless parlay experience, attracting and retaining value-seeking bettors becomes much harder.
Despite these persistent hurdles, Snowden remains publicly bullish about ESPN Bet’s long-term potential. During the earnings call, he noted Penn’s belief in the power of its partnership and emphasized ongoing improvements intended to enhance product features, user personalization, and cross-channel integration.
At the same time, Snowden was candid about the financial reality facing ESPN Bet. Currently, Penn operates ESPN Bet with a cost structure designed for eventual scale, an expensive bet on the platform’s future growth. If that growth fails to materialize at the pace required, Snowden made clear that Penn is prepared to take aggressive action.
That could include substantial cuts to ESPN Bet’s marketing spend, streamlining operational costs, and potentially even rethinking the overall digital strategy. With the ESPN partnership approaching a critical three-year opt-out window in 2026, Snowden signaled that Penn’s patience has limits. If ESPN Bet cannot demonstrate clear progress by the end of 2025, Penn will need to reassess whether its current strategy is sustainable, or if more drastic changes are warranted.
The mixed results and uncertain path forward have left industry analysts divided over ESPN Bet’s outlook. Some see promise in the platform’s improving loss trajectory and the potential for better product refinement. Others, however, worry that ESPN Bet’s underperformance could eventually force Penn to reconsider the entire project.
There is also speculation that Penn could explore ways to monetize parts of its digital portfolio, particularly if ESPN Bet’s struggles persist. Penn has built a valuable collection of technology and brand assets, and some analysts believe the company could look to unlock that value if ESPN Bet’s sports betting ambitions do not pan out.
ESPN Bet’s struggles at Penn Entertainment highlight the harsh realities of today’s crowded digital gaming landscape. From offshore competition to product-specific challenges with parlay betting, the platform’s path to relevance has been anything but smooth.
While Penn’s leadership maintains confidence in the long-term potential, that optimism comes with a clear caveat: if ESPN Bet cannot achieve meaningful growth soon, Penn will not hesitate to scale back investments and rethink its broader digital strategy.
