Talks have been swirling over the last month or so of Pennsylvania-based PENN Entertainment selling assets amid poor performance, especially with its online business. The rumors got louder during July 4 weekend as The Deal reported that Flutter has shown interest in teaming up with Boyd Gaming to purchase PENN Entertainment.
Boyd Gaming would take over PENN Entertainment’s retail gambling business while Flutter would gain control of ESPN BET.
Pennsylvania Gaming Control Board Director of Communications, Doug Harbach, told PlayPennsylvania on Monday morning that Flutter, also operating FanDuel Sportsbook PA, would also be able to keep ESPN BET in PA.
Late last month, Earnings+More reported PENN Entertainment exploring a sale went from unlikely to possible. It seems even more likely the more chatter there is.
Flutter would become even bigger powerhouse in PA sports betting market
Operating FanDuel, the market leader among PA online sportsbooks, already makes Flutter a powerful company. However, acquiring ESPN BET, the No. 3 sportsbook in the Keystone State in terms of handle in 2024, would make Flutter even stronger.
PENN came under fire in early June when top shareholder, The Donerail Group, published a letter voicing concerns about the direction of the company. Despite producing the third-most handle in 2024, ESPN had lost market share in every month this year, so far:
- January: 8.9%
- February: 7.9%
- March: 6.8%
- April: 6.4%
- June: 5.5%
The Deal reported, according to Earnings+More, that “each company was taking steps to ready themselves for potential M&A.” Should a buyout move forward, that would give Flutter access to two of the top three sportsbooks in Pennsylvania.
There is no limit to the amount of skins, both online casino and sportsbook, a gaming can operate, as Harbach indicated. Flutter also owned Fox Bet, which shut down operations last August.
Despite not having success with Fox Bet, the ESPN BET in itself would hold a different weight for Flutter. Perhaps it learned from its mistakes with Fox Bet and has some better ideas with a brand as prestigious and well-known as ESPN’s.
Also, adding former Disney executive Christine McCarthy to Flutter’s board appears to be a calculated play to help it acquire ESPN BET.
What happens to PENN Entertainment’s retail business?
Since reports are indicating a tag-team approach, Boyd would acquire all 43 of PENN’s retail Hollywood properties across the country, including the four in Pennsylvania:
- Penn National Race Course
- The Meadows
- Morgantown
- York
Morgantown and York are the newest of the four, both mini-casinos, opening in 2021.
Sale of PENN would impact some 500 jobs in Pennsylvania
Boyd owning PENN’s retail locations likely would not have an impact on employees at those locations. There are around 1,000 employees at The Meadows and 800 employees at Penn National Race Course. Morgantown and York employ a combined 500 people.
However, the PENN’s headquarters, which is in Wyomissing, has around 200 employees. Should Boyd, located in Las Vegas, take over PENN’s properties, the status of Wyomissing employees could be up in the air.
Also, estimates are that there are 300 PENN employees that work on the online product in Philadelphia. Their status would also be in doubt should Flutter move forward with a bid.
That means some 500 PENN employees in Pennsylvania could face an uncertain future if there is a takeover by Boyd/Flutter.
PENN’s stock price coincides with sale news
It appears as if PENN investors drive up the price when there are talks of a sale. Since Friday’s open, the price has increased from $18.70 to $20.43, which is a rate of 9.3%.
It has jumped as high as 13% last month after Boyd’s potential interest in acquiring PENN’s assets. However, when an Earnings+More newsletter refuted the report, the price dropped back down 11%.
A lot needs to happen for Flutter and Boyd to swoop in and acquire PENN. It would also be surprising to see PENN give up on ESPN BET before giving the sportsbook a full football season. Remember, it is making a $1.5 billion payment to ESPN over the course of the 10-year agreement and launched in mid-November last year.
While PENN might want to wait, investors don’t appear to be as patient. It’ll be interesting to see what happens with three gaming giants just two months before football season.
