Penn National Gaming outlined its long-term objectives last week as part of its first-quarter 2020 financial results, including the upcoming launch of its Barstool Sportsbook App in the third quarter.
Despite a solid start to the year, Penn National Gaming took a severe hit after the coronavirus pandemic resulted in the closure of all of its properties.
“Penn National saw a phenomenal start to 2020, with record results in January and February. Our Company was performing well ahead of guidance in every segment, driven in large part by the introduction of retail sports betting at several properties, which has served as a catalyst for both gaming and non-gaming revenue,” Penn National President and CEO Jay Snowden said. “That momentum was cut short in mid-March by the COVID-19 pandemic, which required the temporary closure of all 41 of our properties. As a result, our first-quarter revenues decreased $166.5 million year-over-year, to $1.12 billion, and we incurred a net loss of $608.6 million due to $616.1 million of impairment losses.”
According to reports, Penn National implemented several aggressive mitigation efforts immediately following the temporary closures of its facilities. As a result, the company finished March with $730.7 million of cash on the balance sheet, and its average cash burn (assuming complete closure of all properties) has been reduced to approximately $83 million per month from April through the end of the year.
“While we have faced unprecedented challenges in recent weeks, we are confident that the Company’s long-term growth strategy remains intact, supported by our differentiated omni-channel approach.”
Snowden also noted that Penn National is currently working on its post-pandemic strategy as well as strengthening its online growth.
“While our operating team has been busy reconfiguring our casinos for a post-COVID-19 world, our interactive team has been hard at work laying the foundation for future growth online,” he said. “We have been able to continue the development of our Barstool Sportsbook app and remain on schedule for launch in the third quarter of 2020 on what we anticipate will be a more level playing field with our competitors given the extended absence of major live sports in the months leading up to our launch. Our team of engineers is creating a best-in-class sports betting product, and the Barstool brand, loyal audience and marketing engine will help drive meaningful market share as the product is introduced across our database of 20 million casino customers and Barstool’s audience of over 66 million fans.”
Snowden said that Barstool has continued to create entertaining content in the absence of live sports, with blog traffic increasing 20 percent in April, video views up over 50 percent and social media accounts, including TikTok and Twitch, seeing meaningful growth.
Penn Gaming also operates an interactive gaming division through its subsidiary, Penn Interactive Ventures, LLC, which launched iCasino in Pennsylvania and, through strategic partnerships, operates online sports betting in Indiana, Pennsylvania and West Virginia. The company said it was encouraged by the early results of its iCasino product in Pennsylvania, which has seen 40,000 customers sign up for the product so far despite the state’s high tax rate.
“Penn National is the only operator in the U.S. with a large, geographically diversified land-based gaming footprint, a well-known sports brand, a fully aligned marketing partner and a wholly-owned sports betting and iCasino subsidiary,” Snowden said. “As such, we are strongly positioned to benefit from the continuing proliferation of sports betting and iCasino legislation – something we expect to accelerate as states seek new tax revenues in the aftermath of the virus. While the last several weeks have been challenging for the Company, our team members and the entire industry, we remain firmly convinced of the long-term potential of our highly differentiated omni-channel approach.”