During Penn Entertainment’s investors call Thursday, CEO Jay Snowden was asked about the company’s relationship with ESPN and ESPN Bet and it became apparent that the operator is not committed to a long-term relationship with ESPN.
“As you get into 2026, you get the third anniversary of our relationship with ESPN, and both sides expect to be in a really good place,” Snowden said. “We are head down, laser focused. We have tremendous plans in place for 2025 and 2026. But for one, if we’re not hitting the levels that we need to then, obviously, as you’re approaching that third anniversary, you have a three-year clause in the contract that both sides will have to do what’s in their best interest. That’s always out there.”
“Look, we have levers,” Snowden added. “We have not just the spend with ESPN, we have a pretty significant marketing spend outside of ESPN. And we have a cost structure in place today that is built for this business to be at scale. And if we’re not trending to be at scale, then you’re making changes to your cost structure. That’s just Business 101.”
Penn Entertainment reported revenue of $1.4 billion for the fourth quarter. Adjusted EBITDAR was $461.2 million, with adjusted EBITDAR margins of 33.1%.
Penn also announced plans to rebuy at least $350 million shares of its stock this year.
“We picked that number because we felt like if you’re going to do something, you want it to be substantive,” Snowden said. “That’s a little north of 10% of the market cap overall. I would say that our approach is to be opportunistic throughout the year, and it will be less programmatic and certainly with more options than previously. That’s the right approach, I think, as we move through the year.”
Penn Entertainment is working on projects in Omaha, Nebraska; Aurora and Joliet City, Illinois; and in Bossier City, Louisiana, which recently opened. Snowden said a proposed project in Council Bluffs, Iowa, moving from a water-based facility to a land-based operation with amenities “could generate really high returns.”
The other projects, according to Penn Entertainment Head of Operations Todd George, are proceeding ahead of schedule.
“Typically, when you open a property, you’re looking at a 90-day, maybe a six-month ramp to start creating some of those efficiencies,” George said. “You obviously open up, you always overhire knowing that there’ll be turnover, you spend a little bit more on marketing.
“The amazing thing about these projects … you can really trim that ramp timeline by half or more, because a lot of your staff is already hired, you already have a very active strong database. You’re simply, in the case of Aurora and Joliet, moving to a much better property, a much better offering.”
Snowden also commented on what seems to be a trend of increasing state taxes on gaming operations. He called the increases “a bit of a frustration,” and said the best way for states to fill gaps in budgets is to go after illegal operators.
“We are competing in many cases against the illegal or gray-market games in many of these states that don’t pay taxes, they’re not regulated,” Snowden said. “We compete against offshore illegal operators that are offering casino-like games and sports betting in many of these states that are unregulated and untaxed. And now we’re dealing with sweepstakes that are unregulated and untaxed as well as potential future market competitive futures markets, competitors and sports betting again, unregulated untaxed.
“So, there’s a lot of dollars there to pursue in one way, shape or form.”
Analyst David Katz of Jefferies ahead of the investors call noted that Penn’s results “present potential opportunities for value growth over time.”
“Although the core business performed a bit better than our expectations, the losses from the interactive segment were weaker than our marginally optimistic estimates,” Katz wrote. “Further, the inclusion of share repurchases — at least $350 million in 2025 —is neutral, in our view, given the lease-adjusted leverage levels and internal investment opportunities within the company.”
