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Penn Entertainment, formerly Penn National Gaming, announced a name change along with 2022 Q2 results that show consistent performance with some growing pains. The company had $1.6 billion in net revenue and $476.5 million in adjusted EBITDA. Revenue growth was driven by its interactive segment, which includes mobile sports betting and iCasino through Barstool Sports and theScore. The segment brought in $154.9 million in revenues.

However, adjusted EBITDAR was down 14% year over year from $587 million to $505 million. And the interactive segment had an adjusted EBITDA loss of $20.8 million. The company’s diluted earnings per share were also down from $1.17 in June 2021 to $0.15 in June 2022. 

The company explained the losses in EBITDA as it sees a post-Covid resurgence and needs to invest in technology to keep ahead of competition. For interactive, the costs primarily came from technology integrations and investments in bringing in new customers. 

Facing a possible recession, the presentation included a chart that demonstrated different levels of resilience to softening customer spending. On the call, CFO Felicia Hendrix explained that the company ended the second quarter with total liquidity of $2.7 billion, with $1.7 billion in cash, and a leverage of 4.7x. The company estimates that 45% of any revenue declines can be offset by expense reductions. 

Early Ontario Results and Future of theScore

Penn Entertainment was one of several operators to launch in Ontario in April 2022 and has had strong results with its all-in-one platform theScore. While the company leadership declined to share any hard numbers for Ontario, they did describe successes with the platform and educating about the gray market. 

The company has been focusing on bringing in new bettors in the province, those who hadn’t previously participated in the gray market. For bettors who were betting before it was regulated, the company has launched an education ad campaign to teach people the differences between the gray market and regulated betting. With these efforts, the company is expecting a double-digit market share in Ontario. 

In July, the company successfully migrated theScore in Ontario to its in-house trading platform. After this switch, 76% of bettors used theScore app. This led to a 37% increase in deposits and a 67% increase in handle per user. Additionally, the cross-sell between online sports betting and iCasino was over 50%. 

The future of theScore is big for the company, which plans to fully integrate all of its technology and platform into the app. With the long-term plan to fully purchase Barstool Sports in the first quarter of 2023, the company is looking to integrate the sports betting platform into the app as well.

Second-Half Outlook 

In the second half of 2022, the company is keeping its eyes on Kansas, Ontario, and Massachusetts. As the football season nears, it is hoping that investments in Ontario over the first half of the year will help the market have strong returns during the season. 

The company expects to see profitability in the third quarter, even with launches in new states, which will contribute around $50 million in losses. 

For Kansas, the potential start date for online sports betting is the end of August. 

Massachusetts lawmakers reached an agreement on August 1 to legalize sports betting. Since the state is home to Plainridge Park Casino, owned by Penn Entertainment, the company is optimistic about the state for its Barstool brand when it goes live. Massachusetts regulators say they’re taking their time with a launch.

About the Author
Stephanie Wood

Stephanie Wood

Writer and Contributor
Stephanie is a New York-based writer. Following her graduation from the University of Colorado with a degree in Business Administration, she worked at The Wall Street Journal. She also holds her MFA in Creative Writing from Arcadia University. She has written for Augusta Free Press, Toronto Sports Media, CU Independent, and several other publications. When she's not writing, you can find her rooting for the Colorado Avalanche, taking care of her plants, and fostering dogs.

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