ESPN Bet’s Next Move: Securing Cross-Channel Bettors
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Jordan Rutner, Sports Innovation Lab's Director of Analytics, wrote an awesome article (linked here) that was recently featured in Sports Business Journal. You can visit their site or read the article below:
Penn’s August swap of Barstool for ESPN was a major shake-up for sports betting. With the deal done, in which markets will we see ESPN put its chips down?
The answer lies where media rights availability meets active bettor populations ready for experiential spending.
On the media front, ESPN may utilize its influx of capital from Penn to engage MLB at a team level on ESPN+, replacing the role of failing regional sports networks. Using this approach, they could strategically pick markets in the 16 states where ESPN Bet is accessible and the highest volume of current and potential betting customers exist.
To forecast where this partnership may be tested first, Sports Innovation Lab (SIL) leveraged its transactional data set to examine the teams that had the highest concentration of Barstool Sportsbook customers.
SIL data shows that the Pittsburgh Steelers own the highest overlap, with 5.1% of their fan base having made a BS deposit over the past 18 months, followed by the Cleveland Browns, Philadelphia Phillies, Washington Commanders, and Cincinnati Bengals to round out the top five franchises. Factors in these results include state-by-state gambling legality (Pennsylvania and Ohio represent well) and a team’s past and current experience with sports betting partners.
The Steelers named Unibet their official sportsbook partner.
The Browns have Bally’s Interactive as their official sports betting partner.
The Commanders have a deal with Fanatics for an on-site sportsbook.
The Bengals have Betfred as their official sports betting partner.
*The Phillies do not have an official sports betting partner. However, NBC’s prevalence in Philadelphia and MLB’s partnership with BetMGM makes the team a less-viable target unless ESPN’s strategy is to poach.
Among all markets, however, Cleveland presents the strongest opportunity for ESPN Bet to capture streaming audience:
The Browns are a top fan base for Barstool Sportsbook customers.
Referencing SIL’s Fluid Fan theory, there is likely a high crossover of fans who root for the Browns and a Cleveland sports team affected by the fall of Bally’s Regional Sports Network - such as the Guardians. According to SIL data, 45% of active Browns fans also spent on the Guardians during the same 18-month time period.
About 3% of Guardians fans also spent with Barstool Sportsbook during this time period, suggesting the presence of some affinity with room to grow.
In Pursuit of The Cross-Channel Bettor
In the 2022 report, How to Capture The Growth Of The U.S. Fantasy & Sports Betting Community, SIL identified a population referred to as the Cross-Channel Bettor: Someone who places bets both with an online gambling company and in-person at casinos. The Cross-Channel Bettor is heavily sought after, as it spends more per person than those who classify as retail-only or online-only bettors.
Staggeringly, cross-channel bettors make 10x the number of transactions of retail-only consumers.
Teams are tapping into this trend, witnessed by the growing volume of on-prem sportsbooks in stadiums and arenas. FanDuel’s sportsbook in Phoenix’s Footprint Center, DraftKings’ Wrigleyville sportsbook in Chicago, and Fanatics’ upcoming retail sportsbook in partnership with the Columbus Blue Jackets provide excellent opportunities to dive into how these on-prem partnerships are shifting fan behavior, and best practice strategies for converting fans into bettors for revenue. Like these competitor products, ESPN Bet is expected to explore how to capture the cross-channel bettor through a direct-to-sports-fan presence.
So which franchise has the greatest advantage in this category? Per SIL data, the Vegas Golden Knights fan base leads all major sports leagues in cross-channel bettor population at 8%. This finding aligns with the sensical thesis that in-market availability of in-person casinos drives cross-channel betting activity. Vegas was followed by the Arizona Diamondbacks, Detroit Lions, Detroit Tigers, and Phoenix Suns - providing further thesis validation given that Arizona and Michigan also have casinos and online gambling accessible to fans.
The Lions and Tigers’ presence on this list is notable, as SIL tabbed Michigan as the “Market to Watch” in last year’s aforementioned betting report. Casinos have been prominent in Michigan for years but the state only legalized online gambling in January 2021. Once they did, Michigan became the fastest state to acquire 10% of its potential available market as customers, as sports bettors were clamoring over the opportunity to place a wager.
Penn already has a strong presence in Michigan with both their online platform and a branded sportsbook in the Greektown Casino. Now with SIL data showing that Detroit is home to two of the top cross-channel bettor fan bases, Michigan becomes an even more enticing destination for ESPN Bet to lay heavy marketing into.
As a bonus, SIL’s Fluid Fan theory and research shows that supporting one team can lead to capturing fans from another: 26% of fans that spent directly with the Detroit Lions (via tickets or team store) have also made a purchase directly with the Detroit Tigers. Note that this crossover of fandom is likely much higher than 26% considering that game tickets are often bought in groups (i.e. four seats) by a single purchaser.
Experiential as an Extension
Sports Innovation Lab believes experiential betting is the onramp that will bring it to the masses. Fortunately for ESPN, they’re familiar with brick-and-mortar brand extensions. The nostalgia-inducing ESPN Zone was a restaurant & entertainment space set up as a modern day sportsbook, just without the betting. Perhaps the Penn deal is an opportunity to resurrect the concept under a more lucrative model that captures the most sought-after customers in sports betting.
Summary
ESPN Bet has a unique opportunity to acquire, convert, and retain customers through two major approaches: direct-to-consumer streaming and appealing to the cross-channel bettor. Penn’s $1.5 billion trademark fee to ESPN over the next 10 years can help fund the DTC streaming efforts with targeted regional campaigns, and pairing these DTC markets with on-site branded sportsbooks can be a strategic play worth watching as consumer demand for experiential betting increases.
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