It’s ironic that the guy known in sports betting social media circles for coining the phrase “(Fill in your blank) to the moon!” is no longer directly tied to the industry’s upward spiral when it comes to handle.

Dave Portnoy is now just another big bettor — albeit one with an enormous following. That was the result of PENN Entertainment selling Barstool Sports back to him in August while newly partnering with ESPN. That decision came approximately one year after PENN exercised the option to buy 100% of Barstool and created a $450 million valuation.

Sans Portnoy, sports wagering is rolling right along heading into 2024. Handle topped $100 billion in a calendar year for the first time in 2023 without a single dollar yet reported for December, when the all-time handle will crest over $300 billion. It has been a banner year for sportsbook operators, who are in uncharted territory for sports betting revenue with a chance to reach $10 billion in gross winnings for the year.

Some of the growth came via expansion as five states entered the marketplace, led by Ohio and Massachusetts. Some of that growth came from New York, the first state to reach $2 billion monthly handle in October. Some of that growth came in an increased shift from single-event wagering to parlays.

Though everyone is eagerly awaiting the arrival of North Carolina sports betting and a definitive legal determination of Hard Rock Bet‘s status in Florida, the biggest potential key to growth in 2024 in terms of handle and revenue may be Barstool’s successor at PENN — ESPN BET.

From PENN/Portnoy to ESPN BET

PENN and Portnoy were not a failed partnership as much as one that reached its ceiling. Attention via social media works up to a point, and while Barstool Sports made quality — and occasionally edgy — content that raised PENN’s profile and market share in the sports betting ecosphere, the two held each other at arm’s length like two seventh graders at a school dance, while state regulators served as vigilant chaperones.

That certain lack of synergy — by design — was one reason Barstool Sportsbook never truly got over the hump. It never found that gravitational slingshot to get “to the moon.”

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PENN reloaded by launching ESPN BET nationwide in mid-November in aggressive fashion via a mobile betting app with sign-up bonuses while leveraging traditional media at an unprecedented level. Though ESPN BET was not around for October’s record $12.8 billion handle, every indication is pointing to the new kid on the block notably contributing to a November number even bigger.

November handle nationwide is bumping against $10 billion without reports yet from multiple large-market states, including Illinois, Ohio, Virginia, Colorado, and Arizona. There could be two states with $1 billion individual handles or close to it among those five, and another $1.8 billion combined from the other three. Throw newcomer Kentucky into the mix, with the ability to legally wager on in-state college basketball for the first time, and a $14 billion national handle is in play.

PENN’s partnership with ESPN is, to overuse a sports cliché, a game-changer. It is a media champion instantly recognizable to sports fans, from the iconic SportsCenter theme to the “Bad Beats” segment anchor Scott Van Pelt and sidekick Stanford Steve have made must-watch viewing for sports bettors of all types.

ESPN BET, however, was not simply going to launch itself and be instantly successful. FanDuel and DraftKings are not cowering in fear — those unquestioned market leaders plus BetMGM and Caesars are fairly entrenched in their own right. The chart below shows numbers for how PENN’s sportsbook fared in November, with ESPN BET having replaced Barstool on Nov. 14.

A strong 2023 finish portends a big 2024 start

The small sample of states where ESPN BET’s promotional spend is known is PENN’s shot across the bows of rivals, letting them know it will not be content maintaining the market share Barstool Sportsbook attained. After all, CEO Jay Snowden publicly targeted 20% market share as a goal by the end of 2027.

Also realize these promotional spends covered only the second half of November. While no one knows how deep PENN’s pockets will reach, since it is also paying ESPN an average of $150 million annually as part of its 10-year agreement, PENN’s overall promotional spend in the six-plus weeks to close out 2023 once December’s numbers start rolling in likely will exceed that $150 million total.

In that vein, ESPN BET is helping position the first quarter of 2024 to be a free-for-all among sports betting sites. January brings the frenzy of what looks to be a wide-open NFL playoffs, setting up the February crescendo of Super Bowl LVIII taking place in the mothership of sports betting — Las Vegas.

ESPN’s coverage across two weeks will include hundreds of hours of on-site programming. Its audience will include many willing to take advantage of sign-up offers and player specials, especially with repeated in-house ESPN BET spots during said programming.

That exhaustive style of coverage will return in March, starting with college basketball’s Championship Week. ESPN may not be a rights holder for the men’s NCAA Tournament, but few can match its depth of coverage around the games being played. It will have the chance to market sports betting during the NCAA Women’s Tournament as the rights holder — a potential angle it seems poised to explore by having anchor Elle Duncan as one of ESPN BET’s two primary faces in advertising.

As ESPN BET gears up its war machine, other operators — looking mostly at you, FanDuel and DraftKings — will spend to protect their turf. While the online titans didn’t match ESPN BET dollar-for-dollar in last month’s promotional spend in Michigan, a combined outlay of close to $12 million against ESPN BET’s $16 million shows they are ready for the fight. There was no ground ceded in mid-size markets — the pair spent more than $5.8 million combined to offset ESPN BET’s $6.3 million in credits in Kansas in November.

Now picture that fight spreading nationwide on a state-by-state basis. In Ohio, PENN averaged close to $1.9 million in promotional spend monthly with Barstool Sportsbook in the first 10 months of 2023. Nineteen million dollars is not an insignificant amount of money, yet it was only 7.7% of FanDuel’s $244.9 million outlay and 11.3% of DraftKings’ $166.3 million.

The latter two may not continue that spend rate averaging a combined $40 million per month just to combat ESPN BET’s promo play, but note that FanDuel’s lightest monthly spend in Ohio this year was $14 million. That is roughly seven times PENN’s monthly average with Barstool.

If PENN is willing to drop $16 million into Michigan, what is $20 million to it in Ohio? How about $25 million? All that free money in the betting ecosphere practically guarantees the opening three months of 2024 will have at least one or even two national handle records and year-over-year growth from January through March.

That has the potential to create residual churn during the leaner summer months. June-to-August handle nationally in 2023 was close to $20.7 billion, up 38.5% compared to 2022 in the months before the upward cycle returns with September’s start of the NFL season.

Will revenue growth follow that of handle?

It would make sense, that at the very least, there would be year-over-year revenue growth based solely on baseline figures. North Carolina will make a notable footprint as the fifth-largest state with legal betting (this excludes Florida until its legal status is formally defined), while Massachusetts, Kentucky, and Maine will have full-year figures for the first time in 2024.

But will revenue grow at a double-digit rate once more? That is difficult to answer because it depends on a multitude of factors. As a thought exercise, projecting December handle to be $12 billion with a 9% hold would create $1.08 billion in gross revenue. The outstanding states for November could combine for $4 billion handle and a 6.5% hold, resulting in $260 million in operator winnings.

That would result in $118.6 billion handle for 2023, up 26.4% from 2022. Gross revenue would total close to $10.6 billion, an increase of nearly 40%. That sounds impossible to duplicate until recalling year-over-year gross revenue growth from 2021 to 2022 was 74%. Operator winnings jumped to close to $7.6 billion that year as handle growth of 62.4% was a bigger factor than operator success; the increase in hold was barely above one-half percentage point.

This year in sports betting could be summed up as the year of the parlay. There is a reason the known year-to-date hold (subtract Tennessee handle and Nebraska revenue from the total figures, then divide revenue into handle) as of writing is more than one full percentage point higher at 9.15% compared to 8.06% for all of 2022, and it is not bettors being unlucky.

It has been noted time and again parlays primarily serve as a sports-based lottery ticket, and that has fueled solid revenue growth beyond simply more states legalizing. As long as bettors have disposable income to responsibly construct 4-leg, 7-leg, or even 10-leg parlays like proud grade-school art projects to display on social media and wager $1, $5, and $10 to chase those big-ticket dreams, the win rate will continue to be well above the now-outdated 7% industry standard.

The fact November could mark the first time in SEVENTEEN months the known hold will be below 7.9% — skip 7%, it has been mainly a losing fight for the public to get below even 8% since July 2022 — is the tell-tale sign parlays have shifted the needle of operator success. And credit should go to operators for making the proverbial better mousetrap in the form of same-game parlays that are so wildly popular.

But that success comes with the price of operators potentially playing themselves into a gilt-edged cage moving the public toward more parlay wagering and away from single-event betting. And to bring this full circle, revenue growth in 2024 may also depend on how ESPN BET markets its parlay products to the betting public as it tries to grow both its market share and the overall sports betting handle pie.

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