ESPNBet growth leads to layoffs of approximately 100 employees at Penn.

• ESPNBet growth will lead to the layoff of approximately 100 employees at Penn Entertainment, which currently has a workforce of about 20,000 people.
• Jay Snowden, CEO, informed staff about the company's new growth phase in its interactive business, which includes a $2 billion branding partnership with Disney's ESPN.
• The rebranded sportsbook of Penn is not meeting the expectations of impatient investors, prompting activist investor Donerail Group to urge the board to sell the casino company.

will lay off about 100 employees as it focuses on growth for ESPNBet.

Jay Snowden, CEO, informed staff in an email that the acquisition of theScore in 2021 will improve operational efficiency.

The company employs about 20,000 people.

"According to Snowden's memo, which was viewed by CNBC, the build-out of our proprietary tech stack and the migration of our sportsbook to theScore's top-notch platform allowed us to quickly launch our operations after acquiring theScore. As a result, we temporarily put on hold any organizational changes that typically occur following a major acquisition."

ESPNBet, a $2 billion branding partnership with ESPN, is part of Penn's new phase of growth in its interactive business, which also includes product enhancements and deeper integration into ESPN's ecosystem, as Snowden stated.

The rebranded sportsbook of Penn is not meeting the expectations of impatient investors, prompting activist investor Donerail Group to urge the board to sell the casino company.

There have been rumors that several online gaming and brick-and-mortar casino companies have shown interest.

A sale is unlikely in the near term due to the complexity of a transaction that would require significant divestitures, according to Truist gaming analyst Barry Jonas in a note on Thursday.

According to Jonas, Penn's release of new ESPNBet features this fall during football season will significantly enhance its product, and the company's emphasis on costs demonstrates its dedication to achieving a return on its investment.

Penn shares have dropped 25% year to date due to missing earnings expectations in the last two quarters and lowering guidance.

Jonas observes that investors are still questioning what a successful ESPN Bet would entail and how much additional funding (beyond what's already been allocated) would be required to achieve it.

Penn has a buy rating from Truist with a predicted price target of $25.