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Penn National posts $669.5m loss as Covid-19 drives revenue drop in 2020


Penn National Gaming (PNG) has reported a $669.5m net loss for 2020, primarily due to a sharp decline in revenue caused by the novel coronavirus (Covid-19) pandemic.

Revenue for the 12 months through to December 31 2020 amounted to $3.58bn, down 32.5% from $5.30bn in the previous year. Gaming revenue was down by 27.4% to $3.10bn, while food, beverage, hotel and other revenue fell 48.9% to $527.6m.

Like all other casino operators in the US, PNG was hit hard by the Covid-19 crisis in 2020, with its venues forced to close for large period of the year, in line with state restrictions to slow the spread of the virus.

Northeast operations totalled $1.64bn, down 31.7% year-on-year, while revenue from PNG’s south segment also declined by 24.1% to $849.6m. Midwest revenue was down 37.8% to $681.4m, while west operations revenue more than halved to $302.5m.

Other revenue was up 163.2% year-on-year to $125.0m. PNG’s other revenue was slightly boosted by the Barstool Sports mobile app, which launched in September after the operator acquired a 36% stake in media business Barstool Sports in January 2020. Stand-alone racing operations were also included in this segment.

Looking at costs for the year, operating expenses amounted to $4.0bn, which was 15.5% lower than $4.72bn last year. This was mainly due to the enforced closure of venues, with PNG spending less on gaming and amenities such as food and beverages.

After taking into account $424.0m in other expenses, losses before tax amounted to $834.2m, compared to a profit of $86.1m in 2019. PNG received $165.1m in tax benefits, which left an overall net loss of $669.5m, a stark contrast to $43.9m in profit in the previous year.

Much of PNG’s struggles in 2020 occurred in the second and third quarter, when its properties across the US were closed for large periods of time, and while PNG did see some recovery in the fourth quarter as certain restrictions were eased, revenue was still down year-on-year.

Revenue in the three months to December 31 amounted to $1027.4m, which was 23.4% lower than in Q4 of 2019. Gaming revenue tumbled 17.6% to $892.4m, while food, beverage, hotel and other revenue fell 48.8% to $132.0m.

Operating expenses were down 31.7% to $907.8m and after $99.8m in other expenses, including interest expenses and losses by its affiliates, PNG was able to post $19.8m in net profit before tax for the quarter.

The operator paid $7.1m in taxes, and after accounting for $1.6m in losses from non-controlling interests, this left a net profit for Q4, compared to a $92.5m loss in the same quarter in 2019.

“We have endured unprecedented changes to our business, created and implemented enhanced safety protocols for our team members and guests, and withstood natural disasters that brought damage to several of our southern properties and left many of our team members displaced in the midst of a global pandemic,” PNG president and chief executive Jay Snowden said.

“Yet, despite these challenges, the company has continued to execute on its long-term strategy by re-evaluating and re-imagining our operational norms and product offerings while accelerating our digital transformation.”

Snowden also highlighted the Barstool Sports investment as a key development for PNG in 2020, explaining that this and the subsequent launch of the app will allow it to expand its sports betting presence in the US

“Our investment in Barstool Sports provides us with a fully integrated media platform to support our evolution from the nation’s largest regional gaming operator to the best-in-class omni-channel provider of retail and online gaming and sports betting entertainment,” Snowden said.

“Having been battle tested throughout 2020, we look forward to the year ahead with great optimism and are confident the foundations we built over the last twelve months have positioned us to generate significant long-term shareholder value and stronger communities.”