The chief executive of PENN Entertainment Inc. says the legal outlook for prediction markets is “clear as mud” and that the ongoing litigation involving the federally regulated exchanges can’t get in front of the U.S. Supreme Court soon enough.
- PENN Entertainment CEO Jay Snowden says the legal status of prediction markets is highly uncertain.
- PENN will not launch its own prediction market platform because it does not want to risk its valuable state gaming licenses.
- While some rivals expand into prediction markets, PENN is focusing on improving its financial performance, rebranding its sportsbook, aiming for its interactive division to break even this year.
PENN CEO Jay Snowden has previously made it clear that he sees prediction markets as “a major threat” to the gambling industry.
On Thursday, during his company’s latest earnings call, Snowden said his thinking hasn’t changed. What he suggested is constantly changing, though, are the legal fortunes of prediction markets and the state gambling regulators taking them on in court.
“What has continued to evolve is that it's really clear as mud today in terms of where this is going from a legal perspective,” Snowden said. “You've got regulators and attorneys general that are suing prediction markets, and then you have the prediction markets that are suing regulators and trying to beat them to the punch.”
Meanwhile, it doesn’t sound like Wyomissing, Pa.-based PENN is about to roll out its own prediction market platform anytime soon, as some of its rivals in the online sports betting business have.
It is “obvious” to anybody in and out of the gambling business that “sports betting is gambling,” Snowden said. And state gambling regulators see the sports-related event contracts offered for trading by prediction markets as illegal gambling, he noted.
This, the PENN CEO said, puts land-based casino operators like them in “a very awkward” spot, given the cash flow from those facilities and the people they employ.
“We're big contributors to our communities, and those gaming licenses are the most valuable assets we have,” Snowden said. “We're not going to put those at risk. So when regulators say, ‘This is illegal gambling, don't do it,’ we don't do it. But there are those that are able to do it and are doing it in other states. It's confusing.”
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While it's unclear exactly how much legal sports betting handle prediction markets are currently stealing away from state-regulated sportsbooks, they are having some effect, Snowden suggested. However, it sounds like what Snowden and PENN truly want is some legal certainty from the highest court in the land.
“This really can't get in front of the U.S. Supreme Court fast enough,” Snowden said on Thursday. “I mean, that would be my ultimate perspective and answer, because we're just going to keep seeing this get delayed and delayed and delayed, and the businesses get bigger and broader. And what are they doing? We don't know the answers to some of those questions.”
The PENN CEO added again that "the best defense is offense" when it comes to prediction markets. Snowden said he has shared with others, including state regulators and lawmakers, his ideas on how to do that.
The comments from Snowden come as there is seemingly a new legal development involving prediction markets every day.
Lawsuits involving state gambling regulators and the federally regulated exchanges, which facilitate wagering on politics, economics, and most controversially, sports, are raging across the U.S., from New York to California. There have been wins and losses for both sides, and who will ultimately emerge victorious is anyone’s guess at this point.
When and whether the U.S. Supreme Court weighs in on the legality of sports event contracts is still to be determined; it may still be many months away. In the meantime, prediction markets continue to offer their “yes/no” style of wagering all over the U.S., providing both an alternative and competition to state-regulated gambling operators.
As Snowden noted, there is also a divide in the gambling industry on how to approach prediction markets. While online sports betting operators like DraftKings and FanDuel have launched their own prediction platforms, land-based casino operators like PENN and MGM Resorts International may have more to worry about from state gambling regulators and have steered clear.
Back to business
PENN has plenty of other things to worry about at the moment as well.
On Thursday, the company reported $1.8 billion of revenue for the three months that ended Dec. 31, up from about $1.7 billion a year ago and better than Wall Street analysts were expecting. PENN also reported a net loss of $73.4 million, smaller than its $133.8 million deficit a year earlier.
Snowden noted that PENN “successfully” rebranded its U.S.-facing online sportsbook from ESPN BET to theScore Bet on Dec. 1, and that the company’s “interactive” segment notched positive adjusted earnings for the month that followed. For the quarter, PENN’s online gambling segment still produced a loss of almost $40 million on an adjusted basis.
PENN also made its last branding-related payment to ESPN in December and is expecting its online sports betting marketing costs to fall significantly this year. The company is now projecting that its interactive business, post-ESPN BET, will break-even this year on an adjusted earnings basis, which would be a $268-million improvement over 2025.
The plan for PENN’s iGaming business going forward is to “strategically invest more” in Canada (including in Alberta, where the company expects to launch theScore Bet later this year), as well as U.S. states with both iCasino and online sports betting, Snowden said.
“Importantly, we've retained users through theScore Bet rebrand and continue to engage them across our ecosystem,” the CEO added. “Retention and new user growth will remain our top interactive priorities and the foundation for our long-term growth in that segment.”
