Is ESPN Bet Positioned For Success?

PENN Entertainment recently signed a $2bn deal to co-launch ESPN Bet.

Under the terms of the deal, PENN will pay ESPN $1.5bn in cash over a 10-year period and issue warrants for ESPN to be able to buy $500m worth of PENN stock.

In return, PENN will launch a sportsbook utilising the name ‘ESPN Bet’ and receive a ton of promotional value across ESPN’s owned and operated media properties.

But is this an optimal strategy, through the lens of positioning theory?

In other words, is ESPN Bet aligned with how consumers think?

That answer is “no”.

ESPN, as a brand, is not positioned in the mind as a sportsbook. It’s positioned as sports media.

This matters. ‘ESPN Bet’ will create cognitive dissonance between how ESPN is categorised in the mind versus the new sportsbook proposition.

Not good. Cognitive dissonance creates mental friction to instil or reinforce an idea that triggers buying behaviour.

It dilutes the focus of both ESPN as a brand and the new sportsbook, weakening both.

The strength of the ESPN brand in the context of its existing perception will suffer little. It is ESPN Bet that faces cognitive resistance.

How so?

The mind naturally favours specialists. ESPN’s core competency is not perceived to be sports betting, thereby undermining the sportsbook proposition.

‘ESPN Bet’ is a line extension, a conceptually flawed approach to brand utilisation that generates short-term interest but long-term disinterest.

This is especially true when the parent brand is appended to products in categories far removed from what it’s known for – like the now-defunct ESPN Zone.

Due to the massive exposure ESPN Bet will get across ESPN’s owned and operated media properties, it’s inevitable the app will get a lot of downloads and usage — particularly at launch.

But, at what cost? Opportunity cost, that is.

Other media property brand tie-ins have massively underperformed.

Barstool Sportsbook did not deliver anywhere near expectations. Fox Bet is shuttering (though it may make a comeback). MaximBet, theScore Bet, and the Sports Illustrated and Fubo sportsbooks are ‘also rans’ in the sports betting race.

These brands are not positioned in the mind as sportsbooks, they are positioned as media properties. Prospects favour specialists like FanDuel and DraftKings over media brands with ‘side hustles’.

That’s not my opinion. That’s the way the mind works.

It’s a weak position to convert the minds of customers from these brands. And, a weak position to lure new bettors.

What should PENN do?

Positioning strategy is guided by objectives. So, let's start there.

PENN aims to establish a national sportsbook brand that’ll legitimately compete with leading competitors DraftKings and FanDuel. They’re targeting a 20% market share within the first 5 years of their 10-year agreement with ESPN.

Positioning theory dictates the optimal strategy for PENN and ESPN to execute from their partnership would be to introduce a new, standalone, brand.

That is, create a new dedicated sportsbook brand and then leverage ESPN’s owned and operated media properties to build and promote that brand.

Why?

To legitimately challenge the perception of FanDuel and DraftKings in the mind of customers as preferred sportsbooks, the challenger must attack a weakness in their perceived strength.

That weakness? They’re not pure sportsbook brands.

A new focused sportsbook brand and supporting product can be specifically designed to expose that weakness.

ESPN Bet does not achieve that. In fact, it further reinforces DraftKings and FanDuel as the preferred sportsbook options and perceived leaders.

Amongst the serious contenders vying for national supremacy, their perception in the mind of customers is closest to that of a sportsbook. The most authentic, by default.

Originating with real money daily fantasy sports in the early 2010s, the mental leap to a sportsbook proposition for FanDuel and DraftKings post-PAPSA was not that far.

Comparatively, for Caesars Sportsbook and BetMGM, the mental leap is further.

Caesars and MGM are positioned in the mind as casinos. There’s a gambling perception strongly associated with those brands, so it works. But, that perception is slots and table gaming-oriented, less so sports wagering.

Consequently, they’re in a perceptionally weaker position than FanDuel and DraftKings for sports betting. This is reflected in their runners-up market share.

Unfortunately for ESPN Bet and other sports media brands, they’re in a weaker perceptional position than casino brands like Caesars Sportsbook and BetMGM. They’re another wrung or two down on the mental leap pecking order.

The more non-sportsbook focussed brands there are in the ecosystem like this, the stronger FanDuel and DraftKings become by default.

What’s the specific play?

ESPN and PENN should attack the weakness in DraftKing’s and FanDuel's strength with a sharp, radically focused idea.

How?

If you take a look at what DraftKings and FanDuel are perceived to be in the mind today, they’re not as focused as they once were. This is an opportunity. A weakness.

They both started as daily fantasy sports offerings and have gradually expanded into sports books, casinos, horse racing, and skill-based gaming (FanDuel Faceoff).

This expansion looks set to continue as both of them attempt to build a suite of products to cater to every possible online gambling need.

The more gambling categories DraftKings and FanDuel expand into, the weaker their brand strength becomes in the mind for each of them. This creates an opening for a focused brand to come in and claim one.

Underdog Fantasy is making incredible progress against DraftKings and FanDuel with this exact strategy, by focusing on daily fantasy sports.

The big opportunity available to ESPN and PENN over the next 10 years, therefore, is to build a pure sportsbook betting brand. To be focussed where DraftKings and FanDuel are not. To become the true sportsbook specialist in the mind of bettors, nationwide.

DraftKings and FanDuel haven’t definitively claimed the ‘sportsbook’ mental category in the mind of bettors yet. We are still in the first inning.

Therefore, ESPN and PENN’s objective should be to claim ‘sportsbook’ in the mind by clearly defining this idea with a devoted brand name and radically focused product catered to the U.S. sports fan.

Once this is in place, build interest and importance around the brand and idea by utilising ESPN’s owned and operated media properties.

Then, when bettors think ‘sportsbook’, their minds will default to that brand.

That’s a home run.

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