Penn Entertainment announced a second round of layoffs while its mobile sports betting app, ESPN Bet, is still waiting for regulatory approval in the nation’s largest digital gaming market.
Turbulent Times
Penn Entertainment CEO, Jay Snowden, has been under intense scrutiny by disgruntled stockholders as to the health of the company under his stewardship. Snowden took the helm of the Pennsylvania-based gaming company in 2021 and expanded its footprint from land-based casinos to the world of mobile sports betting.
So far, that has not worked out very well as evidenced by Penn’s stock price plummeting from a high of $130.47 in March 2021 to $20.08 at the close of business on Friday, September 20, 2024. That is a precipitous fall from grace and the man who has been running the ship during that time has remained steadfast in his belief that Penn Entertainment should be in the mobile sports betting market.
So much so, that he entered into a 10-year, $1.5 billion deal with Disney for the right to use the name ESPN and gain access to its platforms and media. But the competition is fierce and ruled by the duopoly of FanDuel and DraftKings. The rest of the sportsbooks are merely contending for third place and will be content with the scraps of whatever the formidable digital duo doesn’t gobble up.
Two months ago, Penn announced layoffs and we are now reporting that a second round of termination letters has been sent. A Penn spokesperson confirmed the layoffs saying, “These changes, affecting a limited number of positions at PENN Interactive, are part of the deferred organizational initiatives that followed our acquisition of theScore, which we have previously spoken about.”
An internal letter penned by Jay Snowden in July also surfaced and it read, “This week, we are implementing changes at PENN Interactive to help streamline reporting lines, enhance operational efficiencies, and leverage shared resources across PENN.”
“Unfortunately, these changes will result in a limited number of team member separations,” he added.
Failure to Launch
Penn’s purchase of Wynn Interactive Holdings’ New York license in February was one of the company’s most coveted transactions of the year. It was a ticket to ride in the nation’s busiest and most fiercely competitive sports betting market and the deal was done early enough that it would allow ESPN Bet to launch just in time for the football season.
However, those ambitious plans have been derailed as the New York State Gaming Commission (NYSGC) has yet to approve its license transfer application.
“We believe the item will be on the agenda for the next Commission meeting, which is scheduled for September 23, 2024,” Brad Maione, director of communications for the NYSGC, wrote in an email.
Snowden’s eagerness to launch in New York differs markedly from his comments in 2021 when Penn’s mobile sports betting site at the time, Barstool Sportsbook, was not granted a license in the Empire State.
“When you keep in mind that the 50% tax is in addition to a really high license fee as well as that 50% tax is on gross, pre-promo spend, not net, I don’t think anybody’s going to make money operator-wise. The state’s going to make money. I don’t think a single operator will make money in New York,” said Snowden at the time.
ESPN Bet is expected to get the green light at this week’s NYSGC meeting and will reportedly launch shortly thereafter.
