Penn National Gaming CEO Jay Snowden is bullish on the company’s prospects for many reasons. But in a Thursday conference call to release its first-quarter earnings, Snowden emphasized the company’s partnership with Barstool Sports, the sports and pop culture blog founded by Dave Portnoy, as a reason for optimism.
“Barstool’s promotion of Penn National’s retail sportsbooks have driven significant visitation to our land-based properties,” Snowden said. “This is especially true of properties that have introduced Barstool-branded sportsbooks.”
Penn National Gaming reported revenues of $1.27 billion for the quarter that ended March 31, an increase of 14.2% from $1.12 billion generated in the first quarter of 2020, which was impacted by casino closures across Penn’s network in 19 states due to the COVID-19 pandemic. Net income was $90.9 million for the quarter, compared to a loss of $608.8 million during the same quarter a year ago.
Snowden cited the rollout of vaccines and relaxation of health-related mandates due to the pandemic as a positive for the company’s brick-and-mortar casinos. He expects to add six more Barstool Sportsbooks at the company’s properties later this year. The Barstool Sportsbook app, currently available in Illinois, Michigan, and Pennsylvania should be available in eight states (including Indiana in a couple of weeks) by the start of football season in September. The goal is to have 10 states live with the app by year’s end.
“We’re going to be a lot more aggressive in terms of spending to acquire customers as we head into football season (2021) than we were in football season (2020) because we now have scale,” Snowden said. “We were in launching in one state a year ago for football season, and this year we’re going to be in eight states.”
J.P. Morgan gaming analyst Joe Greff noted the initial results from the March launch of Barstool in Illinois exceeded first-time deposit conversions relative to what it had generated in Pennsylvania or Michigan in its first 30 days of operation.
“We also (still) like its unique approach utilizing Barstool Sports to profitably attack share in the growing U.S. Sports betting industry in a way that is less costly and will only scale up from here,” Greff said.
However, Deutsche Bank gaming analyst Carlo Santarelli told investors, “the hype around the Barstool online business drove unfounded expectations, in our view, around future fundamental performance of the icasino and online sports betting verticals.”
Stifel gaming analyst Steven Wieczynski, however, said the “continued success in the Barstool Sportsbook app should keep the sports betting investor base happy.”
Because of the affiliation with Barstool, Penn National’s sports betting customers tend to be younger, with the majority of bettors between the ages of 21 and 27.
“I think that bodes really well for the future prospects of Penn,” Snowden said, “both online and in our brick-and-mortar casinos.”
As Penn National increases its presence in new markets, there won’t be gaudy rollouts or ad campaigns. Again, the gaming operator is going to leverage its partnership with Barstool to build brand loyalty.
“Switching sports betting apps takes about three minutes,” Snowden said. “You download the app, you register, you deposit and then you gamble. I think what’s going to happen over time the winners that have real strategic structural advantages and media integration and loyal audiences, whether that’s some combination of a daily fantasy sports database or a casino database or a very strong following of a media asset, like a Barstool Sports, those are the ones that are going to have bulletproof market share.”
Earlier this week Penn National announced the formation of Penn Game Studios (PGS), an in-house content developer, to create exclusive icasino content for customers. To launch PGS, Penn National acquired game developer HitPoint Studios and its spinoff real-money gaming company, LuckyPoint.
Barstool Sports will loom large as PGS starts to launch icasino games.
“You should anticipate Dave Portnoy blackjack games and ‘Big Cat’ craps and roulette, and their dealers and their players interacting and talking with you,” Snowden said.
The Penn National CEO also said there are no current plans to acquire a property in the Las Vegas market after it sold the Tropicana Las Vegas to Gaming and Leisure Properties in 2020. GLPI sold the operations to Bally’s Corp in April, but Penn will operate the Strip resort until Bally’s is licensed. Penn National owns M Resort at the far southern end of the Las Vegas Valley.
Snowden told analysts if a Strip property came up for sale in a great location, he could envision Penn National being interested.
Shares of Penn National, traded on the Nasdaq, closed at $83.93, down $7.48 or 8.18%.
