Penn National Gaming’s Barstool Sports wagering app is currently live in just one state – Pennsylvania.
But the results – both real and anecdotal – have been enough to entice the investment community.
On a day in which the beginning of vaccine inoculations for COVID-19 gave the stock prices of various sectors a boost, shares of Penn National flew up nearly 8% in trading, hitting an all-time high of $84.49 per share on the Nasdaq.
Investors believe regional casino operators will see a long-term benefit as availability for the vaccine becomes more widespread.
For Penn, however, sports betting is one of the company’s key growth vehicles.
The Barstool-branded app accounts for roughly 13% of all wagers in Pennsylvania. Penn paid $163 million in January to acquire 36% of Barstool, which has roughly 66 million followers nationally to its website and social media channels.
Penn Management told Truist Securities gaming analyst Barry Jonas last week that it expects 2020 Barstool revenue to be higher than 2019 due to the strength of merchandise sales and podcast advertisements, despite the mid-year shutdown of sports.
The sports betting app is expected to launch in Michigan by the end of the month or in early January. The company believes it can convert Barstool consumers into online sports betting and igaming customers “with very limited external marketing spend.”
Penn said in October the Barstool app had been downloaded more than 61,000 times in Pennsylvania, with 48,000 registrations following its launch. Sports bettors wagered more than $78 million during the app’s initial five weeks.
Penn’s shares closed at $79.01 on the Nasdaq, up $4.59 or 6.17%. The company’s share price is up more than 191% year-to-date, more than double the performance of any other regional casino operator.
Earlier in the year, Penn saw its entire casino portfolio of 41 properties in 19 states closed due to the coronavirus pandemic, a handful of them for up to six months. However, resurging COVID-19 numbers have led to the closures of six Penn-operated casinos in Michigan, Illinois, and New Mexico. The operations of additional Penn properties are being affected by curfews in Ohio, Massachusetts, and Maine.
“November data tracked poorly after a strong October, but management does not expect weakness to extend much into 2021,” Jonas wrote in a research note. “Penn is consequently not planning on furloughing as many employees at affected properties, so there could be some margin pressure.”
Penn CEO Jay Snowden said in October the company had almost $1.9 billion available between cash on hand and credit to help it through any speedbumps.
“We’re in a comfortable position from a cash access position,” Snowden said.
Jonas said Penn will do some mostly digital-focused external marketing for the app, but not the traditional media ad campaigns. He suggested the Penn interactive division “has a good chance of turning profitable in 2021, with 2022 more certain.”
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
