Penn Entertainment Lifts Guidance for Interactive Unit
Investors were informed on Monday by Penn Entertainment (NASDAQ: PENN) that its interactive division, which includes ESPN Bet, would report a third-quarter loss that is less than anticipated.
The regional casino operator stated in a Form 8-K filing with the Securities and Exchange Commission (SEC) that its digital gaming division will report a loss for the September quarter of $90 million to $100 million, which is better than the $115 million to $135 million loss that was first projected.
"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 remarks regarding hold and parlay mix may provide more support for ESPN Bet's recent momentum, as some analysts have noted. However, there has also been discussion that the online sports betting app needs to improve its parlay capabilities in order to more effectively compete with sites like DraftKings and FanDuel.
About three months after the operator announced it would eliminate an undisclosed number of jobs in the digital company, Penn Interactive released a strong financial update.
Penn Offers a Good Prospect for Regional Casinos
The company's regional casino operations, which are the main source of its earnings and revenue, have often been overshadowed by ESPN Bet and Penn's previous online sports wagering endeavors, much to the chagrin of some investors.
Penn provided a strong earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) prediction for its retail gaming businesses, despite pointing out that its quarter-end financial procedure isn't yet formally finished. Given reports that some patrons of area casinos have recently cut back on their spending, this may be to the satisfaction of some investors.
“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.”
On Thursday, November 7, before US markets open, Penn is expected to report its third-quarter results.
Impressive September Numbers for ESPN Bet
Although it may take some time for ESPN Bet or any other rival to really disrupt the DraftKings/FanDuel sports betting duopoly, progress must be made somewhere, and it seems like Penn's sports betting app is doing so.
Penn informed analysts and shareholders during an investor event held on Monday at its M Resort & Casino in Henderson, Nevada, that ESPN Bet's monthly unique users increased 161% year over year in September, while parlay users increased 211%.
With a 151% growth in gross gaming revenue, ESPN Bet's hold rate went up 430 basis points and its parlay mix grew 608 basis points year over year.
