Bolstered by increasing revenues and diminishing losses, PENN Entertainment executives reiterated Thursday their online gaming division was on pace for full-year profitability in 2026.
- PENN expects its online gaming division to reach profitability by the end of 2025, following company record Q1 2025 revenue of $162 million and narrowing losses
- ESPN BET continues to lag competitors like FanDuel in market share and product features despite integration efforts and major brand recognition
- Investor pressure is mounting on PENN’s online strategy following past losses and underwhelming user growth
The company’s interactive division, which encompasses the ESPN BET (sports betting), Hollywood iCasino (iGaming) and theScore BET (both options), reported its highest revenue totals since ESPN BET’s launch in November 2023. Combined revenue was $162 million in Q1 2025, compared to $142 million in the prior quarter and $91 million in Q1 2024.
Adjusted EBITDA also reached its highest mark since the ESPN BET launch. Q1 2025 saw a loss of $89 million, an improvement from a loss of $110 million the quarter prior and $196 million in Q1 2024.
During Thursday’s earnings call, CEO Jay Snowden reaffirmed that the company expects to improve its AEBITDA in each of the next three quarters. By the fourth quarter and the lucrative college and professional football seasons, the company expects its online gaming division to be contribution positive for the first time since ESPN BET’s launch.
ESPN BET looks to build momentum
The gains come as pressure grows for meaningful profitability from PENN’s online division after billions in losses.
PENN spent several billion dollars aquiring Ontario-based theScore as well as Barstool Sports to anchor its online gaming platform in Canada and the U.S., respectively. After the Barstool Sportsbook failed to gain more than single-digit market share in the U.S., PENN sold the company back to founder Dave Portnoy for $1 in 2023 as part of a deal with ESPN.
PENN pays ESPN-owner Disney $150 million a year as part of a licensing deal to use the branding of the “Worldwide Leader in Sports.” Snowden said during the deal announcement the company was expecting to reach roughly 20% national market share. Instead, ESPN BET has struggled to keep up with Barstool’s pace.
The primary ESPN app has roughly 25 million monthly active users but only about 560,000 thousand customers use the ESPN BET monthly. FanDuel, the U.S. market share leader, announced Wednesday it had more than 4 million monthly active users.
$PENN Entertainment ESPN BET, theScore Bet, and Hollywood iCasino revenue / AEBITDAR Q1 2024 -> Q1 2025:
— Ryan Butler (@ButlerBets) May 8, 2025
Revenue: $208 million -> $290 million
AEBITDAR: ($196) million -> ($89) million
Both Q1 2025 figures were the company's highest totals since ESPN BET launched in Q4 2023
ESPN’s reach has not been able to overcome the multi-year launch head start of competitors including FanDuel and DraftKings nor has the company, by its own admission, been able to keep up with the tech capabilities of the market leaders. ESPN BET trails its larger rivals in live betting and single game parlay offerings, bet types that have proven increasingly popular among bettors and offer the books significantly higher profit margins than standard straight bets.
To counter this, ESPN BET has increasingly promoted integration with the eponymous app, which remains far and away the sports app that is interacted with most in the U.S. The company also launched its Mint Club rewards program for users who link the two accounts, offering bonuses and other promotions.
PENN execs said Thursday the company will also further integrate ESPN BET with ESPN’s fantasy football offerings ahead of the fall 2025 season. Next week ESPN is also set to announce the launch and price point for its direct-to-consumer streaming service, which will also feature customized integrations with the sportsbook.
Either party can opt out of the deal in summer 2026, placing added pressure for meaningful growth in the upcoming football season.
These moves come as investor discontent has grown.
