During a wide-ranging earnings call Thursday morning for the first quarter, Penn Entertainment executives were asked myriad questions about ongoing construction projects, the possible effect of tariffs, and omnichannel ventures.
But one question yielded no clarity: the future of Penn Entertainment’s strategic alliance with ESPN. Penn Entertainment CEO Jay Snowden noted that he had addressed the question during the fourth-quarter earnings call, and nothing had changed since then.
“Both sides have the option at the third anniversary (in 2026), if we haven’t hit a threshold level of revenue market share, to decide if they want to rework the deal or exit,” Snowden said. “And that hasn’t changed. So, we’re partners, we’re focused. We’re excited about what’s ahead of us. Let’s see where we are as we trend through the next couple of quarters.
“I think it will be not just obvious to us, but obvious to others as well, what happens.”
Penn Entertainment on Thursday morning reported revenue of $1.4 billion for the first quarter. Net income was $111.5 million, down from the $114.9 million posted in the first quarter of 2024. Adjusted EBITA was $457 million.
In the near future, ESPN will release an app that Snowden called a “bespoke integration.” It will create a rewards club called ESPN Mint Club. Aaron LaBerge, Penn’s Chief Technology Officer, said those eligible are logging into the site 2.7 times than to the product and are placing 60% more weekly bets.
“These are really out best customers, not just for ESPN Bet, but for ESPN as well,” LaBerge said. “And so, we think with flagship integrations … as it relates to the fantasy work we’re doing for football, it’s going to be a big accelerant to us, continuing to deliver against out guidance.”
Penn is keen to proceed with developments in Council Bluffs, Iowa; Columbus, Ohio; and Aurora and Joliet, Illinois. Executive Vice President, Operations Todd George emphasized that the projects in Aurora and Joliet are of particular interest because they are not just transitioning from riverboats to land-based casinos – they are moving from riverboats to better locations with as much as 10-12 times the traffic.
Snowden noted that some of assets that Penn views as challenged from an infrastructure standpoint could possibly present opportunities in Mississippi, Louisiana, and Illinois.
“There are some really interesting potential opportunities in some of those markets to do things along the lines of what we’re doing in Aurora and Joliet, as well as Council Bluffs,” said Snowden, noting the transitions from riverboats to land-based operations. “You should expect to hear more from us on some of those other opportunities that we think will have really strong return profiles.”
Regarding possible tariffs on building and other materials, George said Penn has not seen a substantial effect on the cost side.
“We have a tremendous procurement teams navigating pricing and supplier options, as well as excellent marketers and F&B (food and beverage) operators who are adjusting to promotions and F&B offerings to mitigate cost increases,” George said.
“You find alternative options to keep your pricing where it needs to be,” Snowden said, “and make sure you’re not having to raise prices on consumers. It’s one of the real benefits, I think, during times like now of regional gaming. You can walk in and our prices haven’t changed from last year or five years ago or 10 years ago, whether you’re a gaming customer or non-gaming customer.”
