Penn Entertainment Lifts Guidance for Interactive Unit

Posted on: October 7, 2024, 06:02h. 

Last updated on: October 8, 2024, 09:31h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Penn Entertainment (NASDAQ: PENN) told investors Monday that its interactive unit, which includes ESPN Bet, will post a lower-than-expected third-quarter loss.

In a Form 8-K filing with the Securities and Exchange Commission (SEC), the regional casino operator said its digital gaming business will post a loss of $90 million to $100 million for the September quarter, better than the originally forecast loss of $115 million to $135 million.

Better than expected hold driven by a higher parlay mix from our improving product and lower promotional expenses accounted for the upside,” according to the regulator document.

Penn’s commentary on hold and parlay mix could be further evidence of momentum for ESPN Bet, which some analysts have recently mentioned, though there’s also been talk that the online sports betting application needs to do more on the parlay front to better challenge the likes of DraftKings and FanDuel.

The positive update on Penn Interactive’s financials arrived about three months after the operator said it would cut an unspecified number of jobs in the digital business.

Penn Provides Solid Regional Casino Outlook

To the dismay of some investors, ESPN Bet and Penn’s prior online sports wagering efforts have tended to overshadow the company’s regional casino operations, which are the primary source of its earnings and revenue.

“The Company expects third quarter 2024 Retail Operations Adjusted EBITDAR to be in the range of $465 million to $475 million,” added Penn in the SEC filing. “Estimated third quarter 2024 Retail Operations Adjusted EBITDAR was negatively impacted by approximately $10 million due to unfavorable hold rates within our Northeast segment and volume declines in our South segment associated with severe weather disruptions and hotel remodeling.  As disclosed in our Form 10-Q for the quarter ended September 30, 2023, third quarter 2023 Retail Operations Adjusted EBITDAR was positively impacted by $14 million in business interruption proceeds related to Hurricane Laura, which was recorded in the South segment.”

Penn is scheduled to release third-quarter results prior to the open of US markets on Thursday, November 7.

ESPN Bet September Numbers Impress

It might be a while before ESPN Bet — or any other competitor, for that matter — makes notable progress in encroaching upon the DraftKings/FanDuel sports betting duopoly, but growth has to start somewhere, and it appears Penn’s sports wagering app is making progress.

ESPN Bet’s parlay mix jumped 608 basis points year over year while its hold rate increased by 430 basis points as gross gaming revenue rose 151%.