A betting company unexpectedly lays off 100 employees

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Unfortunately, Penn Entertainment is set to lay off around 100 employees, as revealed in an internal email from CEO Jay Snowden. The move comes as the company shifts its focus to bolster its growth strategy for ESPN Bet, its newly rebranded sportsbook venture.

With a workforce of approximately 20,000, this decision marks a significant reorganization effort. Snowden's memo to staff, which CNBC has obtained, outlines the company's new direction. He mentioned that Penn Entertainment is entering a "new phase of growth" with its interactive business, particularly emphasizing its $2 billion branding partnership with Disney’s ESPN.

So, why the layoffs? The decision seems to be part of a broader strategy to streamline operations and better position Penn for future success. Following the acquisition of theScore, the company has been busy integrating its new tech stack and migrating its sportsbook to what Snowden describes as a “best-in-class platform.” This major shift temporarily put other organizational changes on hold, but now, it appears, the time has come to make adjustments.

The backdrop to this shake-up includes mounting pressure from investors who are eager to see tangible results from the rebranded sportsbook. Activist investor Donerail Group has been vocal about its desire for Penn’s board to consider selling the casino company, fueling speculation and concern among stakeholders.

Analyst Barry Jonas from Truist Gaming weighed in on the situation, noting that a sale of Penn Entertainment in the near term seems unlikely due to the complex nature of such a transaction. However, Jonas highlighted that the release of new ESPN Bet features this fall, coinciding with the football season, could significantly enhance the company’s product offerings.

Investors are keenly watching to see how much more investment will be required to make ESPN Bet a success and what impact it will have on Penn’s overall performance. In the meantime, this round of layoffs serves as a reminder of the intense pressure and high stakes in the competitive world of sports betting and casino operations.