PENN Entertainment Q3 lifted by Interactive revenue growth as ESPN Bet launch looms

PENN Entertainment has reported Q3 2023 group revenue of $1.61bn, down just under 0.5% year on year (YOY) with strong Interactive divisional growth offsetting declines in regional casino operations.

Releasing its financials for the period, the operator confirmed total net losses of $725m, down from a positive net income figure of $123.2m during the Q3 2022 period.

Company adjusted EBITDAR (inclusive of rental revenue) fell to $445.1m in Q3, down from $471.9m in Q3 2022, with adjusted EBITDA dropping from $440.4m in 2022 to $298.5m in Q3 2022.

At a divisional level, PENN Interactive continued its trajectory of being the only PENN division to report a percentage YOY revenue increase during the quarter, with interactive revenue increasing by 23% YOY to $196.3m in Q3.

However, PENN Interactive also reported an adjusted EBITDA loss of $50.2m, deepening from the $49.3m loss reported during Q3 2022.

The operator’s Northeast segment saw revenue growth of less than 0.5% in Q3 2023 to $687m, but saw its adjusted EBITDAR shrink by 4% YOY to $208.3m over the same period.

PENN’s other business segments, inclusive of the Southern, Western and Midwest divisions, all saw drops in both their respective revenue and adjusted EBITDAR over the quarter.

PENN Entertainment CEO Jay Snowden reflected on the Q3 performance, drawing attention in his remarks to the diversification in the firm’s retail portfolio, while at the same time lauding interactive gains arising from reduced marketing.

“Our property-level performance was stable in the third quarter, reflecting solid results from our rated traditional core customer,” Snowden said.

“We continued to see relative strength in several locations, including our casinos in Ohio, Kansas, Massachusetts, and Missouri, which highlights the benefits of our geographically diversified portfolio of premier regional gaming assets and the addition of retail sports betting offerings at many of our properties.

“Third-quarter Interactive segment results reflect curtailed marketing in the US as we prepared to transition our online sportsbook to the ESPN BET brand,” the PENN CEO added.

As in the run up to PENN’s Q2 financial results, PENN’s Q3 has been overshadowed by speculation concerning its $1.5bn partnership with ESPN and the impending launch of the ESPN Bet sportsbook.

The realisation of the partnership saw PENN ditch its Barstool Sportsbook brand, selling the Barstool Sports brand identity back to founder Dave Portnoy for just $1. In its Q3 report, PENN confirmed a loss of $923m arising from that sale.

Addressing the ESPN launch, Snowden confirmed ESPN Bet would launch simultaneously across PENN’s 17 online sports betting states on November 14, with the firm targeting extensive cross-sell from ESPN’s broadcasting empire.

Central to this, Snowden revealed, is the potential springboard of the Thanksgiving sporting calendar, which includes NCAA and NFL events.

“In connection with the launch, ESPN will be implementing an initial wave of exclusive integrations targeting their 200 million loyal fans across their linear and digital platforms, including an advertising campaign headlined by SportsCenter anchors Scott Van Pelt and Elle Duncan,” he explained.

“Looking ahead, we will be introducing even deeper platform and media integrations with ESPN over the upcoming months, providing an unmatched and seamless media/betting experience that will appeal to sports fans across the country,” the PENN CEO added.