Penn Targeting Profitability, Ontario Over 'Irrational' U.S. Marketing Battle

February 4, 2022
Penn National Gaming expects to see profitability from its U.S. interactive division as early as this coming football season, CEO Jay Snowden said during a quarterly earnings call on Thursday.


Penn National Gaming expects to see profitability from its U.S. interactive division as early as this coming football season, CEO Jay Snowden said during a quarterly earnings call on Thursday (February 3).

The company has maintained that its path to profitability is easier than that of its competitors because of its ability to convert players from its Barstool Sports brand in the U.S., and ultimately, the Score Media brand in Canada.

“We have all seen the incredible level of marketing spend in this space, which we all know is not sustainable in a competitive environment,” Snowden said.

“We have not at Penn, and will not jump into that fray as we remain focused on channeling our investments into ownable and differentiated products, experiences, and technology platforms for our end users that will have long-term benefits versus spending irrationally on short-term marketing initiatives with very questionable returns.”

Snowden said when the company launches theScore Bet in Ontario’s regulated market in early April, it expects to gain a market share “no lower than low-double-digit” in sports betting, and a “mid-to-high single-digit” share in online casino.

theScore on Thursday announced that it had received a certificate of registration as an internet gaming operator from the Alcohol and Gaming Commission of Ontario (AGCO), one of two essential steps to launch, along with executing a commercial contract with AGCO’s iGaming Ontario subsidiary.

“We think we’re in a really strong position because I think it’s somewhere close to 20 percent of people in Ontario have theScore sports media app on their phone,” Snowden said.

“And so you think about the ability to convert from sports media to sports betting when you can do both on the same app and see all of the live odds if you’re just in there checking scores, you’re going to know very quickly if you’re a Score Media app user that we are now offering live sports betting with theScore Bet app.”

Snowden did note that the Ontario market comes with added complications that include competing with grey-market operators that have been active in Ontario in an offshore capacity for some time.

He also cited advertising restrictions that are very different than what has been seen in the U.S., which Snowden said the company welcomes.

Penn net rev

Snowden was speaking with investors after Penn National reported a 53 percent rise in fourth-quarter revenues to $1.57bn, bolstered by strong demand across its suite of land-based casinos prior to the spread of the Omicron variant. Quarterly adjusted EBITDA was $369m, up 44 percent on the prior year.

Before delving into the earnings call, however, Snowden addressed the latest in a series of stories from Business Insider accusing Barstool founder Dave Portnoy of sexual misconduct.

The online publication published a story in which three women accused Portnoy of misconduct, following another story last year in which an initial four women came forward with allegations.

“The allegations are from anonymous sources made about Dave and his personal life,” Snowden said, pointing out that Wednesday’s article was the second to coincide with a Penn earnings call. “And David has responded publicly, many of you have probably seen that just as he did last time.”

Despite the Portnoy controversy, Snowden said Penn continues to anticipate taking its ownership of Barstool from its current 36 percent to full ownership. In January 2023, the third anniversary of the initial agreement, the company will obtain an additional 14 percent of the sports media brand for $62m, and the company has call rights on the remaining shares.

“There really isn’t sort of a decision process, we look forward to being the owners of Barstool 100 percent,” he said. “They’ve been great partners of ours.”

Outside the online gaming businesses, the company also continues to observe the market for Las Vegas casino properties following several major transactions in recent months.

“It would be nice to have one in the portfolio,” Snowden said. “I just would really stress that we’re not going to take something that we can’t get a return on.

“And there’s been a couple of transactions recently, actually three transactions recently in Las Vegas, and they were at valuations that we weren’t comfortable with.

“One of them, I think that was worth stretching for because of the condition of the property and how new it is, but you should not expect Penn to be a leading bidder if it's an irrational competitive bid process.”

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