PENN Entertainment was hoping to make a big splash in the online gambling world when it struck a partnership with ESPN.
Since launching ESPN BET in Michigan last November, the online sportsbook has seen increased traffic.
But, perhaps a bigger aspect of the deal is the added traffic it has brought to PENN’s online casino.
Hollywood MI online casino is coming off a record month of revenue for PENN in Michigan in December.
Is this a credit to cross-sell traffic from ESPN BET? Will Hollywood Casino continue this upward revenue trend in 2024?
ESPN BET and Hollywood Casino’s impact in Michigan
The impact of the ESPN BET/Hollywood Casino launch was immediate in Michigan.
When it comes to online sports betting, the change to ESPN BET has been evident since launch.
November saw $49.9 million in wagers between Barstool/ESPN BET. That was the highest mark for PENN’s online sportsbook since January 2022.
That was followed by $55.2 million in December, a new monthly record for PENN. The $105.1 million in online handle over the final two months of 2023 accounted for nearly 38% of the yearly total for PENN.
The added traffic to ESPN BET opened the door for easy cross-sell to Hollywood Casino, which remains part of the ESPN BET app. There is no standalone app for Hollywood Casino, so users must log in to ESPN BET for iGaming.
In November, Hollywood Casino/Barstool produced $4.13 million in online casino revenue. That was the highest mark PENN’s brand had hit since March. It was also a 24.3% jump from October’s $3.32 million in Barstool’s final full month of operation.
That was followed by $6.44 million in revenue in December, the highest PENN has ever hit in a single month with its online casino. That was a big 56% jump from November.
Where can Hollywood Casino go in 2024?
What was established in 2023 for Michigan online casinos was that the Hollywood Casino has yet to peak.
Overall revenue throughout the state climbed by 21.6% to $1.92 billion in 2023 when compared to 2022.
PENN wasn’t part of that growth, as the Bartstool saw a 13.9% revenue drop last year even with the last six weeks of Hollywood Casino impact. Overall, PENN brought in $44.8 million in Michigan in 2023 compared to $52 million in 2022.
While you can’t count on record revenue each month for Hollywood Casino in 2024, the December mark gives us some indication of where things could be headed.
PENN should be shooting for at least $5 million in monthly online revenue from Hollywood Casino Michigan.
After the launch and promotions crowd wears down for ESPN BET, that could see the traffic take a slight hit for the iGaming platform as well.
Still, the strong branding and ties to Hollywood Casino at Greektown give PENN an opportunity to build a healthy base. The $5 million monthly should be a floor for PENN, with stronger months pushing toward or past $7 million.
Either way, 2024 should see PENN draw in at least $60 million in online casino revenue for the year, it not pushing toward $75 million.
If PENN wants to be a true player in the online casino industry, it needs to push for being a top-five platform in Michigan before the end of 2025.
Caesars landed fifth in Michigan for 2023 iGaming revenue with $87.4 million. That benchmark number is likely to continue to grow in 2024 as well.
Can ESPN BET make up ground on OSB leaders?
Michigan online sports betting isn’t on the same upward trajectory as online casinos.
Thanks to a late surge during football season, online sportsbooks narrowly set new records for handle and revenue in 2023. That isn’t a guarantee to continue in 2024.
Only about half of the online operators improved business in 2023 when compared to 2022. Barstool was not part of that, as it dropped 18% in handle year-over-year with $278.6 million in wagers. That was even with the large boost from ESPN BET to end the year.
PENN has boasted its goals to be among the sports betting market share leaders with ESPN BET.
While it still finished fifth in online handle in Michigan for 2023, it has a lot of ground to make up on the leaders, FanDuel Sportsbook Michigan and DraftKings Sportsbook Michigan. Each of those surpassed $1.25 billion in handle in 2023, with FanDuel the runaway leader at $1.6 billion.
There’s no trajectory that would see ESPN BET make up that ground in 2024.
The 73.7% PENN grew in handle over the final two months of 2023 compared to 2022 could provide some optimistic measurement. While not likely to carry that growth over a year as new customer acquisition dies down, 50% year-over-year growth in handle is a reasonable goal to pursue.
PENN’s partnership with ESPN allows for endless promotion through ESPN’s series of networks and online presence.
If 50% growth was obtained, it would put ESPN BET at $417.9 million in 2024. That would give PENN a little more footing to continue climbing up the sports betting market share ladder.
It would also aid in continuing to build Hollywood Casino through cross-sell opportunities.
