00:00A pivotal year for one of the sports betting operators, otherwise known as ESPN Bet, trying to, you know, really become, if they can, I guess, the third most popular sports betting company in the country behind FanDuel DraftKings.
00:14You know, that progress is, honestly, Sam, from what I see, a little bit stalled.
00:17Some new board members coming in.
00:20Are these things that I'm discussing with you correlated at all to try and improve, or is just common business practice?
00:27Yeah, it's a great question, Craig.
00:29The short answer is they're all correlated, but not necessarily into helping Penn make ESPN Bet a real player in this space.
00:37They've tried for years to become this number three sports book, previously with Barstool Sports and now with ESPN Bet.
00:44And in the backdrop of all of that, there's been some real pushes to make changes at the top.
00:49There's a big group of investors calling for not only the resignation of Penn's CEO, but they really want to overhaul the company's strategy and kind of say, you know, maybe online sports betting isn't for us.
01:04Maybe we should just focus on our retail properties, our casinos.
01:07So there was another development this week.
01:10There's this ongoing shareholder battle with this investor called HG Vora, which wanted to nominate three new board members to Penn's board to essentially shake up the leadership amid this ongoing proxy fight.
01:25Penn came in and ended up only getting two of those three through.
01:29And now HG Vora is coming back, trying to sue Penn, saying that they're basically not listening to shareholders.
01:37And this this is a move to try to retain power all while they struggle to try to grow ESPN Bet.
01:42We've seen them ramp up their efforts.
01:44You know, I just saw a commercial yesterday talking about how you can now link the ESPN app to the ESPN Bet app.
01:51And we're only going to see more of those efforts to the public as we approach football season.
01:57This is the time they're really going to try to ramp it up and kind of their final push to make good on this.
02:02If they don't, you have this backdrop of the proxy battle going on with the shareholders, this big legal fight that they probably don't want to have to deal with.
02:11In the meantime, Penn has only had about three percent of the market, which is not even third, not even fourth.
02:17It's six behind FanDuel and DraftKings for now anyways.
02:20So we've also heard Penn Brass talk about the ability to opt out of this deal if it's no longer, you know, making us money or if we're just going to keep losing money here by 2026 if they don't hit certain measures in terms of market share.
02:35Penn and ESPN can both walk away, which I think would be really interesting to kind of see, you know, it took ESPN a very long time to get in the space.
02:43I know they they kind of waited for the highest bidder and Penn threw a lot of money at them.
02:48Part of that was giving Barstool back to its founder for just one dollar.
02:51What happens if all of a sudden they get out of sports betting?
02:54What happens to the ESPN bet brand?
02:56It's a lot of details we don't know about there.
02:58And then what's next for Penn?
02:59What happens to this company?
03:01You know, it's been one of those that has kind of hung on while we've seen many others in this space give up.
03:06So it will be really interesting to see what all happens there.
03:09You know, in the meantime, they're going to try to push to grow ESPN bet as much as they can ahead of football season.
03:14But, yeah, this investor pressure sure is boiling over right now.
