While the gaming world has spent plenty of time analyzing the details of the new ESPN-PENN Entertainment partnership, the focus has been on sports betting and the excitement around the idea that the “Worldwide Leader in Sports” may now also aim to become the “Worldwide Leader in Sports Betting.”
Somewhat overlooked is that when PENN sold Barstool Sports back to founder Dave Portnoy, it also created the opportunity for PENN to leverage its own brand — Hollywood Casino — in the online casino world. It’s an accepted truth in the gaming industry that sports betting is an accessory and the real money is in mobile casinos. And by shedding the Barstool name, PENN now has a chance to take its retail Hollywood Casinos digital in several states.
“The Hollywood brand for us on the brick-and-mortar side is roughly two-thirds of our properties,” PENN CEO Jay Snowden said last week during the company’s second-quarter earnings call. “We’ve invested a lot of capital across the portfolio, and we feel — we’re very proud of that Hollywood brand, and we think that it creates a really nice linkage from digital online casino. The five markets that we’re live in today, that’s going to grow over time. And we think in markets where we’ve got land-based casinos, branded Hollywood, it creates a really nice cross-sell opportunity, not just digitally, but also on the brick-and-mortar side.”
PENN has digital casino products in Michigan, New Jersey, Pennsylvania, and West Virginia, all currently branded as Barstool — except in Pennsylvania it has both a Barstool app and a Hollywood-branded iCasino. PENN additionally has one mobile casino in Ontario, branded as theScore, the Canadian-based sports betting media company PENN purchased in 2021. PENN operates more than 20 Hollywood-branded brick-and mortar casinos in a dozen states.
Deal creates opportunity for cross-promotion
It appears the plan initially will be to convert all online properties to the Hollywood brand, but Snowden suggested that there could be additional brands in the future. And while those platforms won’t carry the ESPN name, they will be accessible from the ESPN BET platform.
“On the online casino side, we’re of the opinion, as I think most are, by the way, that you really need multiple brands long term,” Snowden said. “Some might cater more to a slot player, some might cater more and appeal more to a table game player. So we thought a lot about that. We thought it was a good time for us to pivot to really focusing on Hollywood Casino and the Hollywood brand.
PENN won’t be the first company to take advantage of the cross-promotional opportunities available — companies like Caesars and MGM traditionally have offered in-casino customers promotional deals to try online casino and have offered digital players access to special events or pricing at physical locations. The most recent example is the rebranding of some Caesars online casinos to Caesars Palace.
To date, though, PENN hasn’t had the opportunity for the seamless marketing that will be available by leveraging the retail brand for digital use.
Customer databases a key get in deal
Where PENN came out a big winner when it agreed to sell Barstool Sports back to Portnoy for $1 and then agree to pay ESPN $1.5 billion over 10 years is in customer databases and acquisition, one analyst told US Bets.
“It all starts with Penn’s potential to source new users using the Barstool sports brand, whatever that was, vs. the ability to source new sports betting customers using the brand ESPN BET,” Susquehanna’s Joe Stauff said. “Naturally the ESPN brand appeals to a much wider audience than Barstool. So the way it is more valuable to your iCasino situation is you have a much larger customer acquisition funnel, you have a much larger group of customers that you can convert to iCasino.”
Those databases of potential customers should serve PENN’s Hollywood online casinos the same way that Fanatics Sportsbook is currently leveraging its merchandise database and DraftKings and FanDuel have leveraged their daily fantasy sports databases since they introduced digital sports betting.
