Penn Entertainment launched its new sportsbook dubbed ESPN Bet on November 14. The company scuttled its deal with Barstool Sports to invest $1.5 billion over 10 years to earn the right to use the ESPN name and logo to plug its site.
ESPN Bet expected to go into business in 17 states where Penn Entertainment functioned already. The network also shed Caesars Sportsbook as its odds provider in favor of ESPN Bet.
In Massachusetts, ESPN Bet will premiere this week online and at Penn’s Plainridge Park Casino as a retail sportsbook. During the Massachusetts Gaming Commission’s review of the ESPN Bet application, commissioners worried that the sportsbook was the first to use a third-party brand as its identity.
Will consumers be baffled between the roles of ESPN the program and ESPN Bet the sportsbook? Commissioner Jordan Maynard cited ESPN personality Pat McAfee discussing weekly college football predictions.
“He has the lines that are set,” Maynard told Casino.org. “He goes through each one and he starts talking about, with a panel, who he thinks is going to win. Is he an analyst? Is he marketing [for ESPN Bet] What’s he doing in that show? How do we protect consumers to make sure they’re not listening to Pat and then making a potentially bad bet?”
What concerns the regulators is whether the system is established to keep Penn Entertainment commentators from speaking about odds and games on ESPN.
Penn Entertainment insists it runs the sportsbook operation with no influence on the ESPN programming.
Still, to clarify the roles, ESPN developed sports betting guidelines for employees to help alleviate concerns. The guidelines lay out “prohibited betting activities clearly and serve as a reference to ensure compliance.”
ESPN can terminate any employee who violates the terms. It also said that no employee covering or working on the business side with any sports league cannot wager on any game within that league, according to LSR.
“Do not place bets on games or events you are assigned to work or cover,” the guidelines read. “For example, production personnel or journalists working on-site or off-site at or on a sporting event must abstain from betting on that particular game or event. Talent designated as Reporters and Insiders are prohibited from placing, soliciting, or facilitating any bet on the properties (e.g., NFL, college football, NBA) they regularly cover.”
Employees are also barred from withholding any insider information for gambling purposes. In addition, employees may not bet on awards and other markets that are determined by off-field metrics.
Employees who learn confidential information from reporters or insiders should never use such information for betting-related purposes. If there is any chance you have relevant information about awards, player personnel decisions, draft selections (e.g., “Who will be the first WR chosen in the NFL Draft?”) keep it to yourself, or other similar types of bets, according to the guidelines.
The prohibited betting activities include using, disclosing or providing access to non-public information that the employee has been exposed to as part of their job for any betting-related purposes, including influencing others to place bets or disclosing such information to any sportsbook operator.
“This includes but is not limited to (a) a player’s injury status or participation in a game or event; or (b) any other information about officials, players, coaches, or management,” the guidelines said.
To uphold journalistic integrity, ESPN says that no story should be reported, delayed, influenced or withheld with the intention of impacting betting lines. Employees must maintain strict boundaries that the company maintains between its journalistic enterprise and the operations of a sportsbook.
The company discourages employees from betting-related activities that could call into question their integrity, or otherwise create actual or perceived conflicts of interest.
“No illegal gambling. Employees are strictly prohibited from participating in or facilitating any form of illegal sports betting, including underage betting. Sports betting remains illegal in many states and jurisdictions.”
ESPN Bet has opened up shop in the same 17 states as Penn Entertainment and Barstool Sports:
- Arizona
- Colorado
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maryland
- Massachusetts
- Michigan
- New Jersey
- Ohio
- Pennsylvania
- Tennessee
- Virginia
That makes for a good starting point. But perhaps not a financial windfall for Penn Interactive. That remains to be seen. Still, launch of an ESPN-branded online sportsbook may have ramifications for the online industry in the U.S.
ESPN Bet—and by extension Penn Entertainment—will have no issue coming up with reliable content with the biggest name in sports as part of the mix. Can ESPN keep from becoming a promotion mill for ESPN Bet?
During an earnings call, Penn Entertainment told investors about the licensing deal and that it was dumping the problematic Barstool Sportsbook branding.
Although the exact terms of the licensing deal are not public, it’s likely that ESPN is set to receive some form of residual income. For that reason, ESPN has a vested interest in ESPN Bet succeeding.
Toward that end, ESPN has already announced some content initiatives. Elle Duncan and Scott Van Pelt for example. ESPN has also rebranded its former “Daily Wager” show to “ESPN Bet Live.”
Furthermore, depictions and mentions of markets and odds on ESPN products will come exclusively from ESPN Bet. While it remains uncertain exactly how pervasive ESPN Bet marketing will be on ESPN products as a whole, it might be a situation where ESPN feels that situation out as it goes.
In addition, the powerful hand of ESPN’s overlord—Disney—may play a large role in the promotion of ESPN Bet moving forward.
In early November, Disney reached an agreement with NBCUniversal to buy out the Comcast stake in the streaming video product Hulu. Disney currently owns 67 percent of Hulu while Comcast controls the other 33 percent.
Todd Spangler of Variety reports that Disney expects to send almost $9 billion NBCUniversal’s way in December. While there are contract terms to wrangle over yet according to Spangler, Disney will dominate one of the most consistently popular streaming platforms in the US.
While that means Disney will control what brands advertise on Hulu, that shouldn’t be taken to mean that Hulu will overnight become a promotion mill for ESPN Bet. To a large extent, ESPN and Hulu will continue to operate as separate entities despite their common ownership.
That’s especially true given the similarly fluid future of ESPN.
Reports indicated that Disney is open to taking on investors in ESPN, But Disney CEO Bob Iger has confirmed that Disney wants to offer an ESPN streaming video service as an over-the-top option in 2025.
In plain English, ESPN video products will be available without a cable or satellite subscription at that time. Customers will be able to buy access to channels like ESPN, ESPN2, ESPNEWS, etc. directly from ESPN.
That would also circumvent the need for a Hulu Live subscription for people who just want ESPN content. In theory, ESPN+ as a proprietary product is a more direct path to ESPN Bet promotion. Even within that context, though, fears that ESPN content will become one big ESPN Bet commercial could be exaggerated.
Simplistic thinking states that because of ESPN’s likely residuals from ESPN Bet’s revenue, ESPN is motivated to promote ESPN Bet ad nauseam to sports fans. In fact, ESPN’s desire to see ESPN Bet succeed could provide the reverse motivation.
A 2021 study found that survey respondents were more likely to take on a negative view of a company or its products/services when associated with excessive advertising than they were to develop a negative association with a brand connected to controversial content.
It’s less damaging to a brand for consumers to associate it with something controversial than for the same brand to be associated with excessive advertising.
Thus ESPN might hold back to avoid that saturation threshold. Another reason for ESPN to show some restraint in this regard is the concerns of gambling regulators.
For example, there was significant hesitation in approving the rebrand in Massachusetts due to that issue. If ESPN content simply becomes a long-form commercial for ESPN Bet, regulators will take notice and could act in a way detrimental to Penn’s licensure.
Even on streaming platforms, advertisement space is a finite commodity. Devoting such space to a partner like ESPN Bet could represent a loss of revenue if Penn isn’t paying the standard price to ESPN or Hulu for that airtime.
Given that Disney via ESPN would only be getting a portion of ESPN Bet revenue, that could add up to a loss compared to what Disney would pull from simply selling that airtime to a different brand.
If Disney is getting a straight percentage of ESPN Bet’s revenue, the volatile nature of sports wagering might be unattractive. Even if ESPN Bet is successful in gaining market share, revenue can still fluctuate wildly from one month to the next.
In comparison, rates for advertising on Hulu and ESPN are more predictable. Disney also has greater control over that revenue, being able to ask its price to an extent. At its simplest level, ESPN Bet is a way for ESPN to make some more revenue on its existing products.
Because of the uncertainty of online sports betting and how popular ESPN Bet will become, it’s unlikely Disney will invest heavily in promotion. Much of that could be left to Penn to take on. Even amid changes to Disney’s streaming products, don’t expect to see one ESPN Bet promo after another.
