Trust The Process
The fate of the PENN-ESPN sports betting mashup, ESPN Bet, hinges on the next six to nine months, with PENN CEO Jay Snowden saying both sides are committed.
The Bulletin Board
THE LEDE: Is the PENN and ESPN deal built to last?
ROUNDUP: Planet Hollywood reopens poker room; Texas casinos take another hit; Promo tax bill in CO; Alaska hearing; Reads of the Week.
NEWS: Does Ohio’s late push for online casinos have a chance?
KALSHI CORNER: Pope markets go haywire; Updates on Kalshi’s lawsuits against three states; Two measly letters.
AROUND the WATERCOOLER: Choose your fighter: IGRA vs. the CEA.
STRAY THOUGHTS: How
narrowwide is the Montana anti-sweepstakes bill?
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The Lede: Is PENN Ready to End the ESPN Deal?
ESPN Bet featured prominently during PENN’s Q1 Earnings Call last week, with CEO Jay Snowden reiterating his previous comments on the possibility of an early exit from the 10-year deal.
During PENN’s previous earnings call, Snowden hinted that a divorce may be on the table — August 2026 marks the third anniversary of the deal.
“When we announced our partnership with ESPN in the summer of '23, both sides of this partnership made it very clear that we expected to compete for a seat at the podium. And we're not on pace right now to do that.”
Snowden pointed to two possibilities.
The first would be a pullback in marketing and costs and relegating ESPN Bet to the kids’ table of sports betting operators. The second lever Penn could pull is severing its relationship with ESPN.
When asked about that possibility last week, Snowden said: “Both sides have the option at the third anniversary, if we haven't hit a threshold level of revenue market share, to decide if they want to rework the deal, continue on, or exit.”
Despite the possibility of dissolution, Snowden spoke very positively of the PENN-ESPN relationship, saying, “We're focused. Our partners are focused. We're excited about what's ahead of us.”
Snowden went on to say:
“Let's see where we are as we trend through the next couple of quarters. I think it will probably be not just obvious to us but obvious to others as well, what path is going to make the most sense, but we're staying focused and our teams are staying focused on working together to deliver a really great and differentiated experience. And we're confident that it's going to deliver solid results.
“And through football season going into 2026, we've got an opportunity to really show why we did this deal in the first place. And for whatever reason, if those things aren't working, then you've got optionality as you head into 2026. So I would say nothing has really changed there, but we're excited about what's in the queue.”
Despite its disappointing market share, there were several hints that the PENN isn’t necessarily seeking an exit (but will take that path if it becomes clear that ESPN Bet isn’t sustainable):
Snowden mentions PENN's capital investments at properties, including new ESPN Bet retail sportsbooks.
He also noted that OSB product enhancements were recently introduced, “including new features leveraging account linking, such as adding ESPN favorites to the app homepage and creating our new Mint Club rewards program.”
When asked about ESPN’s direct-to-consumer streaming service (slated to be unveiled in late summer or the fall), Snowden said, “It's a first-in-market integration and we're incredibly excited about it. It's very cool. And we think it will have a difference in terms of driving users and exposure to our platform.”
CTO Aaron LeBarge called the streaming service “the best in class and first of its kind experience as it relates to watching live events as it relates to bet integrations.”
Plans for even greater benefits for linked customers later this year, particularly around fantasy football — LeBarge said the fantasy-OSB link will be “integrated not only into the ESPN BET experience, but there will be a derivative version of that within the ESPN experience, and you'll seamlessly move across the two.”
Overhanging everything is the ongoing fight with activist investor HG Vora.
“HG Vora, a 4.8% stakeholder in PENN Entertainment, has filed a lawsuit against PENN, alleging it violated Pennsylvania law and federal securities regulations by shrinking its board from nine to eight and reducing the number of available board seats from three to two ahead of the June 17, 2025, shareholder meeting.
“Recall that Penn nominated two of the three board members proposed by HG Vora — Johnny Hartnett and Carlos Ruisanchez. The activist investor has been critical of the company’s foray into online betting. The move, HG Vora claims, was a “self-serving” attempt to block its third director nominee, William Clifford, amid a proxy battle.”
Roundup: PH Poker Room; Texas Casinos; Promo Tax in CO; Alaska Sports Betting Hearing; Reads of the Week
Planet Hollywood reopens poker room ahead of WSOP [Media Release]: Per the media release, “Just in time for the start of the World Series of Poker, the PH Poker Room will officially open at Planet Hollywood Resort & Casino on Friday, May 9. The venue features 23 tables (12 cash game tables and 11 tournament tables) on the mezzanine level that overlooks the casino floor.” Friend of the newsletter and Las Vegas expert John Mehaffey has followed this development closely for quite some time.
Texas casino efforts dealt another blow [Dallas Express]: A Las Vegas Sands-affiliated PAC threw its financial support behind pro-casino candidates in Irving's City Council election. Despite significant financial backing, voters elected anti-casino incumbents and advanced candidates opposing casinos to a runoff. The strong anti-casino sentiment among voters is seen as the latest setback to Sands' push for casino development in Texas, following the earlier withdrawal of Sands’ casino rezoning proposal.
Will Colorado sportsbooks have to pay taxes on promotional bets [InGame]: The Colorado legislature has passed HB 1311, a bill that sunsets deductions for sports betting promotional bets. “The amended bill now goes back to the House for re-approval, and then to Gov. Jared Polis for his signature,” Jill Dorson reports. STTP Edit: The House concurred before adjourning on May 7.
Alaska sports betting bill gets a hearing [HB 145]: On Friday, the Alaska Labor & Commerce Committee will hold a hearing on HB 145 (first introduced in March), “An Act authorizing mobile sports wagering.” The hearing appears more for show, as the Alaska legislature adjourns on May 21.
Reads of the Week: What I’ve been reading (there’s another Read of the Week in the Stray Thoughts section).
Why The Emergence Of Prediction Markets May Be A Good Thing For Sports Bettors, by Marcus DiNitto at Comped.com
The Semantic Showdown: How Language Could Reshape Sports Betting, by Jeff Edelstein at InGame.com
Trading Up: Passion for trading motivates Alex Kane to launch Sporttrade, by Kathy Urban
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News: Ohio Makes a Late Push for Online Casinos
As reported last week, there is an effort afoot in Ohio to legalize online casino games and poker:
“Per local reporting, Ohio State Rep. Brian Stewart, the House Finance Committee chair, is drafting a bill to legalize online gambling, including online poker and casino games… the bill comes as the Ohio Senate reviews the budget.”
Considering Gov. Mike DeWine’s thoughts on online sports betting (having doubled the tax rate once, and attempted it a second time this year), and local opposition.
As I wrote in my March installment of the Ruddock Report at Casino Reports, online gambling “opposition has banded together, forming the National Association Against iGaming (NAAiG), and is notably concentrated in states considered candidates for online casino legalization, where these companies already hold a physical presence.”
In Ohio, that opposition comes from:
JACK Entertainment (NAAiG member)
Churchill Downs (NAAiG member)
PENN (soft opposition)
PENN CEO Jay Snowden was asked about the effort during the Q1 earnings call.
“We're obviously very involved and engaged in Ohio,” Snowden said. “A bill has not been put forward yet; I know there are articles being written about a bill being worked on right now.”
Snowden stopped well short of supporting or opposing the effort. That said, PENN has spoken out in opposition to bills (not online gambling) in multiple states, and Snowden said the company’s support depends on the state and “doing what's in the best interest of our shareholders.”
“Every state is a bit different. I mean, we're not going to necessarily be on the same page with every other company,” Snowden said. “In some markets, we have no casino. In some markets, we have a small casino. And some markets, like the State of Colorado, gaming laws were passed there, where the casinos are only in the mining towns in the mountains, 1.5 hours away from the population. So that's not a good scenario for us if we have one of those large casinos, which we do in Black Hawk, Colorado.”
Kalshi Corner: Pope Markets, Lawsuit Updates, and 2 Missing Letters
Pope Markets [The Closing Line / InGame]: Kalshi’s markets on the next Pope made headlines for two reasons. First, touted as the arbiters of truth, the market missed, as the new Pope, Leo VIV, formerly Robert Prevost, traded at about 1%. Second, Kalshi went offline at the most inopportune time (more on Pope markets here, h/t to Dustin Gouker). And as Dustin Goulker noted, Kalshi only saw $10 million traded on Pope contracts.
New Jersey Responds to Kalshi [X Thread from Andrew Kim and another from Daniel Wallach]: New Jersey has filed an appeal after Kalshi was granted a preliminary injunction. Attorney Andrew Kim (STTP Podcast guest, Episode #48) believes the appeal will take at least a year to play out. At the same time, Daniel Wallach highlights New Jersey’s arguments that federal laws “demonstrate the federal policy of disfavoring sports-gambling.”
Kalshi Responds to Nevada, Minus Two Letters [InGame]: As Daniel O’Boyle noted over at InGame, in its response to Nevada, “Kalshi appears to have misquoted the Murphy opinion, in which Justice Samuel Alito wrote that ‘Congress can regulate sports gambling directly.’ While just a difference of two letters, words have meaning, and the crucial rule §40.11(a)(1) of the Commodity and Securities Exchanges federal regulations refers to gaming.”
Maryland Responds to Kalshi [X Thread from Daniel Wallach]: Maryland’s response to Kalshi’s claims argue “that "outcomes"’ of sports contracts do not have economic consequence other than to participants; contracts are barred by Wire Act & Rule 40.11; and Wire Act & PASPA foreclose federal preemption,” per Daniel Wallach. “Regardless of whether Rory McIlroy or Justin Rose won their epic, sudden-death playoff, the outcome of the event had no financial, economic, or commercial consequences for anyone other than McIlroy or Rose,” Maryland’s response reads in part.
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Around the Watercooler
Social media conversations, rumors, and gossip.
As the Editor-in-Chief of said journal, I’ve read Professor Rodenberg’s article (it’s behind a paywall here, and will be available in the June issue of Gaming Law Review), and I’d highlight this specific passage from his prepared statement (he never got to deliver):
The Indian Gaming Regulatory Act (“IGRA”) will likely be at the forefront when considering how sports-related event contracts operating pursuant to the Commodity Exchange Act (“CEA”) interact with the thicket of federal laws tethered to sports gambling. Given that sports betting can potentially be included in any tribal-state gaming compact, IGRA vis-à-vis CEA issues could give rise to litigation at “the intersection and complimentarity of these two federal laws.”
Stray Thoughts
A really interesting column from Jessica Welman, who has stated multiple times that the language used in many sweepstakes prohibition bills is a bit too ambiguous — I totally agree, and cannot wait for the day when a gambling bill means what it says and says what it means.
My reading of the bill is that Montana’s sweepstakes ban does not capture promotional sweepstakes (the bill expressly excludes “promotional games of chance” from the definition of gambling) and free-to-play social sites, but might include freemium games.
SB 555 Overview:
Section (i): “The term [Internet gambling] includes online casinos… that knowingly transmit or receive gambling information, allow consumers to place a bet or wager using any form of currency, and make payouts of any form of currency.”
Section (ii): “Online casinos that do not allow the use of currency of any kind are not considered a gambling activity and therefore are permitted.”
The exemption in Section (ii) covers free-to-play social casinos. However, freemium games — where players buy non-redeemable currencies for gameplay — face risk, as courts may view purchases as involving “currency,” especially if they confer value, as in Kater v. Churchill Downs Inc., 886 F.3d 784 (9th Cir. 2018).
SB 555 does not define ‘currency’ but includes cryptocurrency, suggesting courts may interpret it broadly to cover legal tender, digital currencies, and virtual currencies with value.
Bottom Line: If your site allows cash withdrawals, you violate SB 555 (assuming Governor Gianforte signs it). If your site is exclusively free-to-play with non-redeemable currencies and no purchases, you are exempt. If your site allows purchases of non-redeemable currencies or awards prizes (even without purchase), you risk violation, as courts may interpret these as involving “currency,” or they may not.