The owner of an emerging legal sports betting operator reported lukewarm results to start the financial year.
PENN Entertainment, Inc. — the owner of Barstool Sportsbook — generated $1.67 billion in revenue for the first quarter ending March 31, 2023, a 7% increase year-over-year. The company reported a net income of $514.4 million during the quarter, up from $51.6 million in Q1 2022. PENN also posted an adjusted EBITDA of $332.2 million in Q1 2023, a 23.6% decrease year-over-year.
The gaming giant projects full-year revenue to range between $6.37 billion and $6.81 billion.
How we got here
PENN purchased a 36% stake in the Barstool Sports media brand in 2020 for $163 million. In February, the company acquired the remaining 64% of Barstool in a deal valued at $388 million.
“Barstool has more than doubled its annual revenues since our initial investment in February of 2020 by providing relevant and entertaining content to their growing, loyal audience,” said PENN CEO Jay Snowden. “Looking forward, we expect to unlock even greater value from the Barstool audience as we refine our cross-sell strategies and pursue new growth channels.”
Spread too thin?
PENN’s results in Q1 2023 came as the company expanded its reach in a growing U.S. sports betting market. The company’s interactive segment, which includes Barstool Sportsbook, posted $233.5 million in revenue in Q1 2023 but had an adjusted EBITDA loss of $5.7 million.
Barstool Sportsbook’s losses in the first quarter came on the heels of launching online betting sites in Ohio and Massachusetts. The sportsbook launched operations in Ohio on Jan. 1, while the operator gained market access in Massachusetts on March 10 when the Bay State authorized online wagering. PENN also has sports betting operations in Ontario through sports media and gaming company theScore, which it acquired in October 2021 for roughly $2 billion.
In Q1 2023, theScore’s media business reported a 22% year-over-year increase in total user sessions. Barstool Sportsbook currently has market access in 17 states, including New Jersey, Illinois, Indiana, Colorado, Arizona, Louisiana, Iowa, and others. In 2022, the operator failed to earn an online sports betting license in New York — America’s largest mobile sports betting market.
