PENN Entertainment’s interactive gains offset by retail declines in Q3

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PENN Entertainment has reported a drop in total revenue in the third quarter of 2023, as improvements in interactive were offset by some retail segments not matching the previous year’s numbers.

The company has also announced that its latest interactive gaming iteration – ESPN BET – will be launched later this month on November 14, which CEO and President Jay Snowden believes will help create “compelling cross-sell opportunities”.

Publishing its Q3 financials, PENN declared a total revenue of $1.62bn, down slightly in comparison to the previous year’s $1.63bn during the same period. Gaming revenue came in at $1.25bn (Q3 2022: $1.32bn) while food, beverage, hotel, and other revenue came in at $367.3m (2022: $307.5m).

Per segment, retail performance was described as “stable” by Snowden, dropping by three per cent year-over-year to $1.42bn (2022: $1.47bn). However, the Northeast was the only region to see gains in revenue YoY.

Meanwhile, interactive – online sports betting, icasino and social gaming operations, management of retail sports betting and media – reported revenues of $196.3m, up 23.7 per cent YoY (2022: $158.7m).

This figure could improve even further in Q4 following the launch of ESPN BET, which is set to take place on November 14 during NCAA college football rivalry week and the Super Bowl rematch of the Kansas City Chiefs and the Philadelphia Eagles.

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

“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. Finally, we are excited to announce that we plan to simultaneously launch ESPN BET on November 14 across the 17 states in which we operate online sports betting, subject to final approvals.

“This strategic alliance is expected to further expand our digital ecosystem and drive re-engagement with the millions of customers in our digital and retail databases, leading to compelling cross-sell opportunities.”

Per retail segment, PENN noted that the Northeast was the only region to see its revenue improve YoY, rising to $687m (2022: $685.4m).

Elsewhere, South dropped to $308.2m (2022: $329.8m), West declined to $135.1m (2022: $156.5m) and Midwest decreased to $293.4m (2022: $298.4m).

PENN suffered a net loss of $725.1m in Q3 compared to a net income of $123.2m during the same period the previous year. Adjusted EBITDA stood at $298.5m, down from $440.4m the previous year, while adjusted EBITDAR dropped slightly from $471.9m to $445.1m.

As of September 30, total liquidity was $2.3bn inclusive of $1.3bn in cash and cash equivalents. Traditional net debt as of the end of the quarter was $1.3bn.