Penn National Gaming said its cash flow in the third quarter was its best in company history and that its 40 operating properties in 19 states are successfully navigating the various state-mandated COVID-19 health and safety guidelines.
However, the spiking coronavirus numbers around the country brought out a question toward the end of Penn’s quarterly conference call Thursday that CEO Jay Snowden reluctantly answered.
What if the spreading virus causes a new round of casino shutdowns or operational rollbacks?
Snowden said the company is dealing with this issue in Illinois, where the governor has rolled back hours and operations for some businesses, including casinos, and several parts of the state. Penn has three riverboat casinos in Illinois. In Colorado, where the company operates Ameristar Black Hawk, Snowden the company is paying attention to the statistics.
“We’re all looking at the same stats and very fluid situation,” Snowden said. “We’re staying in close contact with the health experts.”
But unlike March, when the nationwide casino shutdown put in a precarious financial condition, Snowden said the regional casino giant is on much stronger footing thanks to several financial moves. Penn has almost $1.9 billion available through cash on hand and credit.
“We’re in a comfortable position from a cash access position,” he said.
Snowden, who is in his first year as CEO, spent much of the conference call discussing Penn’s rollout of its highly anticipated Barstool-branded sports wagering app, that launched in the middle of September. The app is the product of Penn’s $163 million deal with the sports media giant to focus on both retail and online sports wagering, igaming and growing Penn’s customer base.
Through Oct. 24, the Barstool app has downloaded more than 61,000 times in Pennsylvania with 48,000 registrations. Sports bettors have wagered more than $78 million during the five weeks the app has been live.
Surprisingly, the Barstool app has recorded 310,000 downloads throughout the U.S. in states where customers are awaiting its launch. Snowden noted, however, California has seen a remarkable number of Barstool app downloads, even though sports betting is not yet legal in the state.
Penn National CEO Jay Snowden
“These results were achieved with very limited external marketing spend, highlighting the ability of Barstool Sports to convert its growing audience to our sports betting product,” Snowden said.
Penn plans to launch the Barstool app before the end of the year in Michigan and will target additional states throughout 2021. The goal, Snowden said, is to launch sports betting in every state where Penn has gaming property and the activity has been legalized, which could be as high as 20 states.
Deutsche Bank gaming analyst Carlo Santarelli the details in the Penn-Barstool agreement could get weighed down as sports betting continues to expand in the U.S. There are currently 18 states and Washington D.C. that have the activity and Tennessee is launching online sports betting on Sunday.
“We believe the Penn momentum story is beginning to fade, as reality sets in around the long path to meaningful contributions from the iCasino and sports betting verticals, upon which the momentum story has been predicated,” Santarelli said following earnings.
Snowden said Penn will exercise its option to acquire the operations of Hollywood Casino Perryville in Maryland from real estate investment trust Gaming and Leisure Properties later this year. A sports betting referendum is on the ballot in Maryland next week.
Penn is planning to roll out Barstool-branded retail sportsbooks between November and January at Ameristar Black Hawk in Colorado, Greektown in Detroit, and Ameristar East Chicago and Hollywood Casino Lawrenceburg, both in Indiana.
Penn is developing standalone Barstool-branded entertainment destinations in various markets.
“These locations will serve as virtual sportsbooks in large metropolitan areas in states with approved online sports betting, which we believe will further expand the reach of the Barstool brand and help us acquire new customers at attractive economics,” Snowden said.
During the quarter that ended Sept. 30, Penn’s total revenue was $1.13 billion, a decline of 16.6%. Penn’s cash flow increased 11% to $452.6 million while net income more than doubled to $141.9 million.
The results were achieved despite the impact of Hurricane Laura on L’Auberge Lake Charles, the late-quarter reopening of Tropicana Las Vegas, and the ongoing temporary closure of Zia Park in New Mexico.
Snowden was not asked about the Tropicana Las Vegas, which the company is leasing from GLPI after a sale-leaseback deal in April. GLPI is seeking to sell the Las Vegas Strip resort and CEO Peter Carlino told analysts Wednesday there has been a “surprising amount of interest” in the property.
“We had more than 18 non-disclosure agreements out,” Carlino said. “There’s a lot of tire kickers, not necessarily a lot of check writers. Our focus is to reach a transaction as early as we plausibly can.”
Penn still operated the M Resort in Henderson, south of the Las Vegas Strip by roughly 10 miles.
Shares of Penn, traded on the Nasdaq, closed at $55.74 Thursday, down 85 cents or 1.50%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
