With much of its nationwide casino business still operating under COVID-19 health and safety guidelines and capacity limitations, Penn National Gaming leadership focused attention Thursday on the continued rollout of its Barstool sports wagering app.
CEO Jay Snowden told analysts during the company’s fourth quarter earnings conference call he expects the app to be in 10 or 11 states by the end of 2021. The Barstool app launched in Michigan in January, four months after its inaugural rollout in Pennsylvania.
That’s not to say the company is ignoring the casino side of the business. Even operating under capacity restraints, Penn National said its 41 properties in 19 states could provide “meaningful” cash flow growth when the first quarter is in the books.
“Management is encouraged by January’s trends as volumes approach prior-year levels,” Morgan Stanley gaming analyst Thomas Allen told investors.
In the fourth quarter that ended Dec. 31, Penn’s net revenues were nearly $1.03 billion, a decline of 23.4% from 2019. Net income, however, was $12.7 million compared to a net loss of $92.9 million.
Snowden the company was trending ahead of all forecasts before Illinois, Michigan and Pennsylvania mandated new COVID-19 closures in November that lasted through the end of December. Also, governors in Ohio and Massachusetts instituted additional restrictions beginning in November than tan through the end of the year.
For all of 2020, Penn’s total revenues of $3.6 billion was a decline of 32% over 2019 and reflected the nationwide shutdown of commercial and tribal casinos that began in March and lasted through the summer in some states.
Snowden, who took over as Penn’s CEO in January 2020, called the year, “one of the most difficult and surreal years” he has ever experienced. But Penn ended the year with $1.9 billion in cash on its balance sheet and total debt of $2.4 billion.
In 2020, Penn National created a relief fund foundation of $3.7 million to help displaced employees, paid out $13 million in on-time holiday bonuses during the fourth quarter to our non-executive employees companywide to help with the financial impact to families from the pandemic. A second relief fund was created to help employees in Louisiana deal with the impact of Hurricane Laura.
“I couldn’t be prouder of the resiliency and determination shown by our corporate and property team members during what was undoubtedly one of the most challenging years for any of us from a personal and professional standpoint,” Snowden said.
Penn National finally unveiled the Barstool app in the fall, which was created through a partnership with media platform Barstool Sports last year when Penn spent $163 million to acquire 36% of the company.
After launching the app in Pennsylvania, where its total sports wagers over the first four months topped $218.1 million – including $71.8 million in December – Penn unveiled the Barstool app in Michigan on January 22.
Over 10 days, the Barstool app had more than 48,400 registrants, which included more than 26,200 first time depositors. Gamblers wagered more than $27.5 million over those last 10 days of January, which accounted for more than $3.3 million in revenues.
Penn said Michigan’s opening weekend for the Barstool app had 68% more first-time deposits than Pennsylvania’s first weekend. Still, Penn National said it has registered more than 72,000 Barstool app customers in Pennsylvania.
“The value of Barstool Sports as a media company is an overlooked part of our story,” Snowden said. “Our valued partners at Barstool experienced an incredible year in 2020, as they continued to produce highly-engaging and relevant content for their growing audience of loyal fans despite the partial shutdown of live sports.”
He said Penn National plans to launch the Barstool app in Illinois in time for the “March Madness” NCAA basketball tournament. The company has three casinos in the state while Chicago rivals Boston as the second-highest number of Barstool followers among the media platforms 66 million viewers.
“It was an easy decision for us,” Snowden said of targeting Illinois. “We’re working with regulators in every state.”
He said the company is targeting states where it operates casinos with large populations for future launches, including Maryland, when Penn is in the process of completing its purchase of the Hollywood Casino Perryville operations and the state is getting ready to legalize sports betting.
Meanwhile, the company’s Barstool branded sportsbook at its casinos in Black Hawk, Colorado; Detroit, and Indiana have helped increase business at those properties.
Sports wagering at Ameristar East Chicago in Indiana increased by 35% following the rebranding while table games and slot volumes in the adjacent Barstool-themed gaming area both increased by more than 26%.
“We believe this demonstrates the ability of our Barstool-branded retail sportsbooks to attract younger guests to our casinos, which can help drive significant growth in gaming and non-gaming revenues from new demographics,” Snowden said.
Penn plans to rebrand additional retail sportsbooks in its casino portfolio, beginning with the company’s Pennsylvania properties in the first half of the year.
Shares of Penn, traded on the Nasdaq, hit a 52-week high Thursday, closing at $118.34, up $9.29 or 8.52%.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
