In a strategic move to enhance its position in the hyper-competitive online sports betting market, Penn Entertainment (NASDAQ: PENN) is reportedly considering a technology-focused acquisition to strengthen its ESPN Bet platform. This potential deal, which could materialise in 2025, aims to address key performance gaps, improve the live-betting experience, and give ESPN Bet a distinctive edge over its rivals.
The Current Landscape
ESPN Bet—rebranded from Barstool Sportsbook—launched on November 14, 2023, across 16 states where Barstool Sportsbook held licenses. These states include Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. Penn took over the Barstool brand in a previous partnership, but pivoted after securing a $1.5 billion, 10-year deal for ESPN’s naming rights.
The transition leverages ESPN’s ubiquitous brand and, according to Penn, has already attracted a younger demographic compared to leading competitors DraftKings and FanDuel.
However, recent testing by Eilers & Krejcik Gaming (EKG) showed that ESPN Bet ranked relatively low in NFL live betting uptime—a vital metric for user engagement and revenue generation.
ESPN Bet ranked fairly low in our recent testing of NFL live betting uptime, and we wouldn’t be surprised to see ESPN Bet operator Penn National buy some tech to boost its performance here,” according to the research firm.
Live (in-game) betting has become a key source of growth for sportsbooks, especially as operators seek to offer profitable same-game parlays (SGPs) and frictionless user experiences. In this increasingly crowded market, technology is no longer just a back-end function; it is at the forefront of competitive differentiation.
Potential Acquisition Targets
While Penn Entertainment has yet to confirm any specific acquisition, talk among industry insiders points to specialised gaming technology providers and software developers as potential targets. In one report, EKG highlighted
Huddle Tech—formed by the merger of Huddle Gaming and Deck Prism Sports—as “currently running a sales process.” Huddle Tech excels in real-time data and in-play betting markets for major sports leagues, which could significantly boost ESPN Bet’s technological infrastructure and reliability during high-volume events.
Financial Scope
Penn signaled its readiness to invest by committing $1.5 billion over a decade in its partnership with ESPN, illustrating a determination to capture substantial market share. Depending on factors like a target company’s scale, technology stack, and existing client base, a tech-focused acquisition could range from tens of millions to several hundred million dollars—an outlay Penn could absorb if it accelerates ESPN Bet’s climb up the sports betting ranks.
The Technology Imperative
Penn Entertainment’s pursuit of a tech acquisition mirrors a larger shift in the sports wagering arena, where innovation, scalability, and reliability underpin success. Key priorities include:
Improving Live Betting Performance and Uptime
Enhancing Customer Acquisition and Retention Tools
Developing Unique Features (e.g., SGPs) to Differentiate
Leveraging Data Analytics for Odds-Setting and Risk Management
Earlier in 2023, Penn hired Aaron LaBerge, a former Disney and ESPN executive, as Chief Technology Officer to lead these initiatives. Acquiring a specialised tech platform could further accelerate ESPN Bet’s product roadmap, especially during popular events like NFL Sundays, when user traffic peaks.
Market Share & Competitive Analysis
The U.S. market is largely dominated by DraftKings and FanDuel, which command60–70% of market share in some states, according toLegal Sports Report. Other key brands, including BetMGM and Caesars, divide the remainder with various smaller operators.
ESPN Bet’s Ambitions: Penn executives have referenced a goal of securing 10–15% market share in the near term by leveraging ESPN’s extensive media reach and superior tech solutions, as discussed during the company’s Q3 2023 Earnings Call.
Long-Term Outlook: Analysts predict that, if Penn can integrate new technology effectively and maintain consistent marketing, ESPN Bet’s market share could eventually climb to 20% or more.
Regulatory Landscape
State-by-state legislation continues to be a major factor in determining the scope of sports betting. Critical markets likeTexas and California remain on the sidelines for now, though debates over legalisation in these states persist. As more jurisdictions open up or extend legal betting provisions, the importance of a compliant, scalable platform grows in tandem.
Compliance Challenges: Meeting diverse state regulations on data security, advertising practices, and responsible gambling demands sophisticated technology that can adapt seamlessly to each jurisdiction.
Expansion Potential: Should states like Texas and California legalise sports betting, operators with flexible, well-integrated platforms will be best equipped to secure licenses and capture market share, according to the American Gaming Association.
Integration Challenges
Acquiring an external platform or tech firm can deliver a competitive boost, but the consolidation process is inherently complex. Potential hurdles include:
Platform Alignment: Ensuring new data feeds and systems mesh well with existing user-facing products.
Organisational Culture: Merging disparate teams under a single strategic roadmap.
Scalability & Reliability: Maintaining uptime and user experience during high-traffic sporting events.
Regulatory Compliance: Keeping pace with evolving state requirements while launching frequent product updates.
However, Penn’s substantial resources and ESPN’s well-established brand could mitigate many of these challenges—provided the company chooses a target whose technology complements Penn’s existing offerings.
Industry Implications
An effective tech acquisition by Penn Entertainment could recalibrate the competitive balance within the online sports betting space. By resolving current weaknesses such as subpar NFL live betting uptime and unveiling fresh features, ESPN Bet may more directly vie with DraftKings and FanDuel for mindshare and market share.
This development also hints at a potential wave of M&A activity in sports betting technology. Projections from firms like Morgan Stanley suggest that the U.S. online market could exceed $25 billion annually by the end of the decade. In pursuit of a share of those billions, operators are likely to prioritise deals that augment their technology portfolios and pave the way for sustained growth.
Looking Ahead
As online sports wagering matures, technology will be the pivotal factor in shaping long-term leadership. Penn Entertainment’s strategic acquisition for ESPN Bet underscores the increasing importance of innovation and seamless functionality in this fiercely competitive arena. By pairing ESPN’s iconic brand with top-tier tech solutions, Penn hopes to deliver an immersive, reliable betting experience—especially when it matters most, during marquee events.
For bettors, improvements in live betting and real-time analytics promise heightened engagement and convenience. For the broader industry, Penn’s roadmap signals a future defined by technical prowess, intensifying competition, and further consolidation as major players vie to stay ahead in a market on track to skyrocket.