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00:00Penn teams up with ESPN bet the ads ensue. ESPN says all the right things about their quarterly report, but the data shows different. So what's the disconnect here? Is this just false optimism?
00:19You know, Craig, I'm not sure. And it's so easy to say, you know, it was the first full quarter of earnings. And, you know, in a year from now, we could be laughing about this report.
00:31But in a year from now, we could also be saying, oh, my God, that would get worse. You know, it just is surprising what Penn reported yesterday. They marketed more than they wanted to. They had to spend more than they wanted to. And they didn't get anything for it.
00:47I mean, they have more players, but they're not getting — they lost wallet share. And Penn can say as much as they want that it's all the parlay product. And maybe it is all the parlay product. You know, we don't know.
01:01But it's interesting because when you look at some of these hold percentages, you know, the Masters, March Madness, Super Bowl, none of those really went great for anybody. But DraftKings, they still closed the quarter with a 9.5% hold. ESPN bet had a 4.4% hold.
01:22So it shows how these parlay products can definitely help give you a stable foundation when it comes to the big swings like this. But, man, I just don't know about ESPN bet at this point, Craig. This is not what we wanted to see for sure. And now Penn stock is at its lowest point since right when the COVID-19 closure started happening.
01:47So it's not looking great for Penn. What the tough part is for Penn, Craig, is that it's not easy to guide on what your marketing costs are going to be and what you may lose. Because marketing is something that you have to be dynamic with. You have to be able to shift when you see an opportunity. You should be pulling back when it gets a little too expensive.
02:08And I saw one of the analysts, he put it perfectly. He said, you know, this is difficult to do. Not sure why they're giving this because they gave guidance for the second quarter, too. So now we have another target to watch for Penn that if they miss, it's just going to be more people upset wondering what's happening. So, yeah, we're only a couple months into it now for ESPN bet, Craig. But it's tough sledding out there for Penn. And I don't know exactly how it turns around. We have to give them more time, of course.
02:38Definitely have to give them more time, especially if the tech team is saying, look, once we get these parlays up and going and once we get some integration with the ESPN app, you know, until we see all of that and until we see it fail, we can't say that it's failed. But not great coming out of the gate here, Craig.