US regional casino operator Penn National Gaming (PNG) says anyone who still claims that sports betting or online gambling cannibalize brick-and-mortar gaming revenue is a moron.
On Thursday, PNG released its financial report card for the three months ending September 30, during which revenue totaled $1.35b, up 71.5% from Q3 2018, while net income rose 21% to $43.7m.
As usual, keep in mind that PNG’s revenue was goosed by the acquisitions of Pinnacle Entertainment casinos and Detroit’s Greektown gaming venue, so comparisons will continue to be inelegant for another year or more, depending on whether PNG has any more M&A irons in the fire.
Timothy Wilmott, who will step down as PNG’s CEO at the end of 2019, said the company failed to meet its Q3 earnings guidance of $407.9m in part due to the Plainridge Park slots parlor’s performance suffering from “heavy promotional spending” by its new Massachusetts rival, Wynn Resorts’ Encore Boston Harbor.
SPORTS BETTORS ARE GLUTTONS, DRUNKS
Jay Snowden, who will assume the CEO position on January 1, 2020, was keen to celebrate PNG’s ongoing rollout of retail and online sports betting in states where such activity is legal.
In addition to betting handle rising 50% year-on-year at casinos where betting was active in Q3 2018, Snowden said that “the introduction of sports books, to no one’s surprise has not had a noticeable impact on our slot business.”
Moreover, Snowden said PNG properties with retail sportsbooks active over the last 15 months “have experienced an average of 15% year-over-year growth in table game revenue post-launch.” Food and beverage revenue is also up at these properties, and Snowden said “most” of the growth in table, food and beverage “has been driven by visitation and spend from new and reactivated guests to our properties.”
Wilmott noted that, while PNG has struck sports betting and iGaming deals with a number of firms, it doesn’t have “a sports brand to lead with,” unlike a growing number of its casino competitors. So PNG continues to have “conversations with a number of potential sports media partners.”
Wilmott added that PNG isn’t looking for just “an advertising deal with a big media company.” Ideally, PNG wants a sports media partnership to be “fully integrated” with “aligned incentives and mutual skin in the game to drive long-term success.”
ONLINE GAMBLING NO CANNIBAL
PNG also celebrated the Q3 launch of its real-money online gambling site (HollywoodCasino.com) in Pennsylvania, although the state’s high tax rates will make it “extremely difficult to generate profits.” PNG has integrated the site with its Mychoice player reward program so that points can now be earned or redeemed on an omni-channel basis.
Snowden said the “convergence of interactive between sports betting and iCasino” meant that it was increasingly important for PNG “to have a very localized omni-channel approach where you’re engaging with guests both digitally as well as in brick and mortar casinos.”
Wilmott noted the phenomenal growth in New Jersey’s online casino revenue over the past year, which “has not come at the expense of” brick-and-mortar revenue at Atlantic City casinos. Mobile gaming was also serving as a tool for acquiring newer, younger customers that will further drive retail gaming growth.