Penn National Gaming raised $932.1 million through a stock sale that concluded Tuesday with the casino company saying that the proceeds would help accelerate the launch of its Barstool sports betting app into new markets.
Penn, which operates 41 casinos in 19 states, unveiled the app two weeks ago in Pennsylvania and is looking to launch in Michigan in November. Other states are currently targeted for early 2021.
In a statement, Penn CEO Jay Snowden said wagers on the Barstool app grew by 14% last weekend over the previous week’s launch, “despite (Penn) continuing to spend $0 in external marketing.”
The company sold 16.1 million shares on the open market – 14 million for the company and 2.1 million exercised by the underwriters. The company’s stock was valued at $61 per share for the sale. Shares of Penn closed Tuesday at $69.41 on the Nasdaq, down $3.51, or 4.81%.
“This successful offering provides our company with additional resources to accelerate our unique omni-channel strategy, including launching the Barstool Sportsbook app in new markets,” Snowden said.
He added that the company plans to develop new products and features for the app while establishing Barstool-branded sports bars and retail sportsbooks at the company’s casinos.
Penn National spent $163 million in January to acquire 36% of sports media platform Barstool, which has roughly 66 million viewers of its website and social media content. The plan was to rebrand Penn’s retail sportsbooks under the Barstool brand and launch the app, with the hopes of changing and increasing the demographic make-up of Penn’s customer base, which skews to age 45 and older.
Snowden has said that, following the Pennsylvania launch and an upcoming launch in Michigan, the company would roll out the Barstool app in New Jersey, Indiana, Iowa, West Virginia, and Colorado in early 2021. That could change, based on the stock sale and the reception by sports bettors in Pennsylvania.
The company saw some 65,000 downloads of the Barstool app during the opening weekend. Deposits to the app totaled approximately $11 million that weekend.
In its Securities and Exchange Commission filing associated with the stock sale, Penn said its third-quarter net revenue is expected to be between $1.04 billion and $1.145 billion when the period ends next week. Cash flow is expected to be between $410 million and $450 million.
“We believe our company is incredibly well-positioned for long-term success based on its highly differentiated approach to both land-based and interactive gaming and sports betting,” Snowden said.
Penn’s stock has rallied considerably since cratering in late March when the fast-advancing coronavirus pandemic caused state leaders and tribal governments to close nearly 1,000 commercial and Indian casinos in 43 states.
Penn closed its properties and furloughed some 26,000 employees by early April. It traded ownership of Tropicana Las Vegas and an under-construction casino in Pennsylvania for $337.5 million in rent credits to Gaming and Leisure Properties (GLPI). Penn retained the management of the Las Vegas Strip resort, which has since reopened.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
