- Sports Betting
- NJ Sports Betting
- PA Sports Betting
- Indiana Sports Betting
- US Betting
- LSR Podcast
Penn National Gaming released its Q2 earnings on Thursday morning, and the numbers look good once again. Revenue and income continue to trend upward as the group prepares to explore new markets and new verticals.
Sports betting was a recurring theme of the presentation. According to CEO Tim Wilmott, Penn plans to open sportsbooks in at least two and possibly three states this year.
You can read the full report here.
The last time Penn held an earnings call, it was patiently waiting for the Supreme Court to decide the fate of US sports betting. The court voted to repeal the federal prohibition on May 14, and states are now lining up to legalize and regulate the activity.
Penn’s portfolio is anchored in states with legal betting, some of which are lined up at the starting gate. Here’s Wilmott on the immediate plans:
We anticipate accepting wagers on sporting events at our casinos in Mississippi, West Virginia, and potentially Pennsylvania prior to the start of the National Football League’s season opener in September.
Pennsylvania sports betting will likely lag a bit, considering regulators are still waiting to receive the first applications. Penn has not held back in expressing displeasure for the $10 million license and 36-percent tax, but the state does not appear ready to blink.
The release says that Penn is “continuing to engage with state lawmakers” in other jurisdictions, as well, advocating for regulated sports betting under a more reasonable framework.
Penn is in the middle of a growth spurt, headlined by its ongoing acquisition of Pinnacle Entertainment. The group hopes to realize $100 million in synergetic savings as the two entities combine.
An expanding portfolio necessitates regulatory approval across new jurisdictions. That process, which is a condition of closing, appears to be moving along. According to Wilmott, seven states have signed off on the transaction:
The first three have all legalized sports betting, and legislation appears on the to-do list in the other four, as well.
Here’s more on the acquisition from the CEO:
Over the last several months, we have worked diligently with Pinnacle’s leadership to better understand the company’s culture and processes and engaged with leaders and team members from all corporate functions. With that knowledge, we have developed a new corporate organizational structure that blends proven leaders from both Penn National and Pinnacle …
Penn also announced plans to acquire Margaritaville Resort Casino in Louisiana during this quarter. Wilmott expects both transactions to close during Q4.
Headquartered in Pennsylvania, Penn maintains a clear focus on its home state. It owns both Hollywood Casino and Meadows, and it’s preparing to add two more.
The group is in the process of securing licenses for the mini-casinos it won at auction — one in York County and the other in Lancaster. Each of those Category 4 properties is permitted to operate up to 750 slot machines and 30 gaming tables.
According to Wilmott, Penn will submit its first mini-casino application by Sept. 12. Both properties should open sometime next year.
“Despite the state’s high tax rate,” Wilmott said, “we chose to proceed with the hope that we can continue to work to bring the tax rate in line with that of other gaming jurisdictions around the world …” Pennsylvania will tax online slot revenue at 54 percent, the steepest in the country.
Meadows did not apply for online gambling, an indication that Penn intends to ride the more-established Hollywood brand into the market. The group expects to launch online casino products during the first quarter of 2019.
Rumors of a partnership with supplier Scientific Games have been floating around for some time without official confirmation.
Penn earned net revenue of $826.9 million during Q2, a fractional increase from the previous quarter. Other important figures include:
Here’s what Wilmott sees in the numbers:
Penn National delivered another strong quarter in which we exceeded our guidance for income from operations and adjusted EBITDA. Our solid second-quarter results are largely attributable to same-store revenue growth at nearly two-thirds of our gaming operations and the continued success of our ongoing margin enhancement initiatives.
Each of Penn’s three regional segments — Northeast, South/West and Midwest — posted year-over-year increases during the quarter.