The bad news that emerged from Penn Entertainment’s investor’s call Thursday morning was the company posted losses of $37.5 million.
The good news was that those losses weren’t as bad as analysts expected.
“Penn described its land-based casino customer as stable in the retail business, offset by unfavorable hold in the Northeast segment and volume declines in its South segment related to severe weather disruptions and accelerated hotel remodeling,” wrote J.P. Morgan analyst Joseph Greff in a statement.
Across its interactive and land-based businesses, Penn posted revenue of $1.64 billion in the third quarter of 2024, just slightly up from 2023’s $1.62 billion. Adjusted EBITDAR for the quarter was $348.4 million. Land-based operations contributed $1.39 billion to the revenue total, while interactive contributed $244 million, a 2% decrease and a 20% increase, respectively.
“The results of the third quarter were strong year-over-year,” said Penn Entertainment CEO Jay Snowden. “Market share growth in Ohio, Massachusetts and Kansas helped offset unfavorable hold in our Northeast segment and volume declines in our South segment, largely as a result of severe weather disruptions.”
Snowden also said that bettors have been fortunate during the current football season.
“Having a higher parlay mix is great, other than when all the favorites are hitting and parlays are also hitting,” Snowden said. “So, that’s really been the last five weeks. The first weekend of November was very consistent with what we saw in October. Unfortunately, it’s just a luck thing. It does change, it switches, it reverses course.”
Snowden expressed optimism that ESPN Bet accounts can now be linked to ESPN accounts. According to Chief Technology Officer Aaron La Berge, the November 3 announcement of the linkage was greeted positively, with “tens of thousands” of customers already linking accounts.
“As you’d expect, they’re all placing significantly more bets,” LaBerge said. “There’s a higher handle, a higher GGR, and also, impressively, they’re consuming significantly more ESPN content as well. These are super fans that are linking, and we’re incredibly happy with the progress so far.”
LaBerge also called the ability to link accounts a “foundational development” that allows personalization “of every element of your betting experience.”
“We can start serving you personalized promos and offers in content related to your favorite teams and interests,” La Berge said, “but also in terms of how that manifests across ESPN’s digital platforms. In terms of bet tracking and things like that, you’ll start to see this seamless integration of highlighting of players and teams and results on ESPN without you doing any work.”
LaBerge added that the linkage also enables the ability for ESPN to discern fantasy sports rosters and create and target content based on that. And Executive Vice President, Operations Todd George said that plans for a free one-month trial membership for ESPN+, the online subscription service, will be released soon.
Snowden also expressed optimism based on voters in Missouri narrowly approving sports betting. Noting the presence of three land-based casinos in the state, and another on the Kansas side of Kansas City, Snowden said Penn was “well positioned” to enter the legal sports betting market.
“The tax rate is attractive. I think the structure is attractive,” Snowden said, noting that the number of skins the operator will have is still to be determined.
“We think this is good news for Penn, and obviously good news for cross-launching ESPN Bet. We feel like we’ve got a nice database that we can tap into across the state.”
Snowden did say that any speculation about the company’s 2025 prospects would be discussed on the next investor’s call. For now, plans are to concentrate on 4Q24.
“I would say that what we’re seeing right now, the core business across the country, if you exclude the markets where there are new supply, things are really stable,” Snowden said. “And we’ve actually seen a really nice uptick here in the fourth quarter. I’d be guessing if I said I knew exactly what’s driving that, whether that’s election, pre-election, post-election, not really sure. But in quarter four we’ve seen a nice bump up from where we were in the third quarter.”
