Last Thursday, Penn National Gaming Inc., reported record adjusted earnings margins that soundly topped Wall Street estimates.
The operator of gaming venues under the Hollywood and Argosy brands (among others), which runs the Tropicana and the M Resort in Nevada, said it earned 93 cents a share on revenue of $1.13 billion in the third quarter.
Penn’s big news was the Sept. 18 debut of the Barstool Sportsbook mobile betting app in its home state, and the launch didn’t disappoint. The revenue figures included activity from the first two weeks of Penn National Gaming’s Barstool Sportsbook product.
During a third-quarter earnings call with investment analysts, Penn National CEO Jay Snowden said Pennsylvania’s online sportsbook is generating a high volume of both new and younger customers. A key point the CEO noted was that this success for the company came without them needing to spend any money on traditional advertising.
“Month-to-date in October, the app has generated $48.4 million in the handle while only having a 3% promo credit percentage of handle,” he said. “This is important to us, as we want to see PENN/ Barstool stay calm as it relates to promotions/ advertising.”
Penn’s early success has all the signs of the “Barstool effect”. Led by its founder, Dave Portnoy, and CEO Erika Nardini, Barstool Sports has millions of loyal followers in the desired 18-34 demographic. The fanbase loves everything Barstool, from its blog posts, podcasts, and its popular One Bite Pizza video reviews fronted by Portnoy.
Penn’s early success has all the signs of the “Barstool effect”. Led by its founder, Dave Portnoy, and CEO Erika Nardini, Barstool Sports has millions of loyal followers in the desired 18-34 demographic. The fanbase loves everything Barstool, from its blog posts, podcasts, and itsBarstool Cheesesteak Review – Steve’s Prince of Steaks (Philadelphia, PA) pic.twitter.com/mmFHLTkyZC
— Dave Portnoy (@stoolpresidente) November 2, 2020
Barstool’s talent has been into gambling for some time now, but, since the partnership, the company has stepped up its gambling content, including shows, podcasts and live gambling watch parties. All the more reason the positive quarter makes sense.
“We set internal goals when we launched the app in Pennsylvania,” Snowden noted. “It’s still early, but so far, the Barstool Sportsbook app has exceeded almost every internal goal Penn National set for it.”
The exception to those goals is the percentage of in-game betting. That should come with time and better technology as Penn gets better at promoting those opportunities, like via push notifications. Also, with an increased marketing spend.
According to Penn, as of Oct. 24, nearly 48,000 people have registered through the app in Pennsylvania alone, and over the course of the first 37 days of operation, the app generated a total handle of $78 million across 30,000 first-time depositors.
So, what’s next for Penn National? The company plans to market the app in Michigan as soon as regulators allow and then in all of the other jurisdictions where mobile sports betting is authorized in 2021.
While the news of expanding to other jurisdictions was a given, Snowden also pointed out that Penn is working with Barstool to launch stand-alone Barstool-branded entertainment destinations that will act as virtual sportsbooks in large metropolitan areas. The new endeavor should help the company attract and acquire new customers.
“With Barstool actively promoting our retail and online sports betting offerings to their massive and growing audience, we believe we can retain and cross sell these customers to visit our land-based casinos and play our iCasino products,” Snowden said. “We also have a database of over 20 million gaming customers in our mychoice loyalty program to cross promote our sports betting and iCasino products, an approach that has already proven successful in Pennsylvania.”
Penn also outlined four retail sportsbooks in development: Ameristar Black Hawk (Colorado), which launches this week, Greektown in Michigan, which should be finished soon and launched once the state is live, Ameristar East Chicago, which will open in December, and Hollywood Lawrenceburg, which is projected to open in January of 2021.
