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Penn changes name, outlines plans for recession


Penn National Gaming has rebranded to Penn Entertainment and outlined actions it may take – including potential layoffs – in the event economic conditions hurt its business, as it reported its H1 earnings.

During its earnings call for its 2022 results, the business gave a particular focus to the prospects of a recession, and what this might mean for its business.

Chief executive Jay Snowden cited past data to argue that – as a regional operator – Penn would prove to be resilient against these conditions.

“Regional markets performed far better than the Las Vegas Strip following the 2007-08 downturn,” he said.

In addition, Snowden said that geographic diversification would help protect the business against market conditions.

The Penn chief executive also noted that – should revenue slow down – the business would be willing to take aggressive cost-cutting measures, which may include layoffs.

“If we do start to see revenues decline in a meaningful way, we are prepared to offset approximately 45% of the impact through aggressive cost mitigation measures including adjusting our offerings, labor management, marketing spend and pricing strategies to help keep costs in line.”

He added that after the impact of Covid-19, the business was prepared for an extreme event that may lead to lower business.

“We certainly have experience from the pandemic on what levers we can pull in the event of a downturn,” he said.

Penn Entertainment

In the earnings call, the business also announced that it would now go by Penn Entertainment, a name that Snowden said represents both the past and future of the operator.

“Today is an exciting day for us as we become Penn Entertainment. Over the past few years, Penn has transformed our business through a highly differentiated strategy focused on organic cross-sell opportunities, which is reinforced by our investments in market-leading retail casinos, sports media assets, owned technology, including a state-of-the-art, fully integrated digital sports and online casino betting platform, and an in-house icasino content studio. 

“Our new name maintains ties to our legacy while better reflecting our evolution into North America’s leading provider of integrated entertainment, sports content and casino gaming experiences.”

Revenue rise

Looking at the business’ earnings, revenue was up by 5.2% to $1.63bn. Gaming made up $1.33bn of the revenue total, with food, beverages retail and other sources contributing the remaining $301.3m.

Breaking revenue down by segment, the Penn Interactive division – which now includes theScore – brought in $154.9m, up by 61.4%.

Snowden also gave an update on its migration of online products to a platform built by theScore. Currently, the US-facing barstool brand uses a sportsbook built by Kambi.

“Our interactive segment further expanded its reach with the launch of theScore Bet mobile app in Ontario on April 4th,” he said. “In July, we successfully deployed our proprietary in-house risk and trading platform in Ontario, which significantly enhances theScore Bet’s online betting capabilities, mobile product offerings and overall integrated media and betting ecosystem. 

“Following the successful transition to our player account management and risk and trading platforms in Canada, we remain confident in our ability to migrate the Barstool Sportsbook in the U.S. onto our new tech stack in Q3 2023, and we are working with our existing providers to ensure a smooth transition process. 

“Post-migration, we will begin to realize the full benefits of our in-house technology stack, including meaningful cost synergies and improved marketing and promotional capabilities.”

Within the land-based sector, the northeast segment was the largest, bringing in $684.9m, up by 5.0%. Revenue from the south segment declined by 9.1% to $338.6m while midwest revenue was slightly up to $296.3m. Finally, the west segment brought in $153.8m, up 9.5%.

Costs grew more quickly than revenue, though, by 13.5% to $1.33bn.

Costs of sales for gaming were the largest expense, at $713.6m, while costs of sales for other products rose to $186.8m, both rising by more than 15%. General and administrative costs, though, declined.

As a result, operating income was down by 20.0% to $300.4m.

After other costs – mostly due to interest – pre-tax income was $82.4m, which was a third of the business’s pre-tax income in Q2 of 2021.

Penn paid $56.3m in tax for a final profit of $26.1m, which was down by 86.9% year-on-year.

“We are pleased with our second quarter results, Snowden said. Penn generated revenues of $1.6 billion and Adjusted EBITDAR of $504.5 million. Despite economic headwinds, we delivered consistent performance across our retail portfolio in the quarter and into July.

“Based on our second quarter performance and our outlook for the remainder of the year, we are reiterating our 2022 revenue and Adjusted EBITDAR guidance range of $6.15 billion to $6.55 billion and $1.875 billion to $2.00 billion, respectively.”