PENN Entertainment’s interactive division reported a 9.7% revenue loss year-over-year in the second quarter at a critical time for the gaming company.
Heading into an important football season with sports betting platform ESPN BET while potential buyers eye a PENN acquisition, the company took an Adjusted EBITDA loss of $102.8 million in Q2. Tax gross rose $82.1 million in the three-month quarter that ended June 30.
However, PENN’s online sports betting and iGaming sector did see 65% quarter-over-quarter revenue growth despite a slower sports period.
“In our interactive segment, we delivered record quarterly gaming revenue driven by enhanced risk and trading processes and deliberate reinvestment strategies,” PENN CEO Jay Snowden said.
Building retail
Including PENN’s retail sector, the company reported a total revenue of $1.66 billion, down less than 1% from the same quarter in 2023, and a $26.8 million net loss.
The retail business produced quarterly revenue of $1.4 billion, nearly identical to 2023’s Q2. Adjusted EBITDAR reached $496.6 million with margins of 34.8%.
“Our retail business remained stable as consistent consumer trends, our diverse portfolio, and recent capital investments offset known, new supply in certain markets,” Snowden said. “We remain focused on database growth and driving engagement through new technology, continued investment in our gaming and non-gaming offerings, and local and national partnerships related to our food and beverage offerings.”
PENN’s total liquidity was $1.9 billion, inclusive of $877.6 million in cash and cash equivalents, while traditional net debt reached $1.7 billion at the end of the quarter.
PENN reported a database growth to roughly 31 million members, including 3.8 million from digital products. Since the ESPN BET launch in November 2023, customers have increased by more than 81%.
“While 2024 is an investment year at PENN, our biggest losses in digital are now behind us,” Snowden said. “Looking ahead, 2025 will be a year of deleveraging the balance sheet as monetization approves with ESPN BET and as we launch our stand-along (iGaming) app later in the year.”
Markets report
ESPN BET’s 8.2% hold in six U.S. states was third among competitors, according to Eilers & Krejcik reports in PENN’s financial release. The parlay hold of 24.2% in Illinois ranked second among online sportsbooks from April through May.
PENN announced that ESPN BET’s New York launch will come in time for college football this month, pending regulatory approval. The company purchased the operating license of exiting WynnBet earlier this year, and ESPN BET will see its population presence increase by 15% with entry into the U.S.’s most lucrative sports betting market.
“We plan to maintain our disciplined approach when it comes to customer acquisition and engagement when we launch in New York,” Snowden said. “Despite the challenging tax rate (51%), we will benefit greatly from ESPN’s linear and digital reach there.”
On the retail side, PENN has seen strong market share growth across several states, and eight brick-and-mortar sportsbook rebrands are coming this fall in Louisiana, Kansas, Massachusetts, Maryland, and Ohio.
PENN is also gearing up for an expansion of theScore bet brand in Alberta when gaming regulations open up that robust Canadian market.
Product upgrades
While PENN has struggled to make significant gains in U.S. market share, the upcoming football season could be a major boost for the ESPN BET brand or a strong indicator of the company’s place among competitors.
That’s a reason why PENN announced several new product offerings coming this fall, including an enhanced parlay feature set to launch by Week 1 of the NFL season.
ESPN BET will receive a new user interface with home page improvements, parlay carousel functionally, dark mode, and rebranded same-game parlays.
Other new app features include a referral program, early-win payouts, and an integration into theScore Media App in the U.S., which adds a betslip functionality.
PENN will also integrate ESPN features into the sports betting app, like Gamecast and watch options. ESPN’s app will enhance ESPN BET by adding a fantasy app integration, score and home page interactions, and a dedicated odds page to the popular and established media platform.
