Penn Entertainment’s financial disclosure for Q3 September 30 was accompanied by the announcement of a significant “realignment” of its “digital focus.” This strategic pivot comes as the company confirms the early termination of its high-profile U.S. online sports betting (OSB) partnership with ESPN.
For the Q3, Penn Entertainment reported a total revenue of US$1.72 billion, marking an increase from $1.64 billion year-on-year.
However, this growth was overshadowed by a substantial net loss of $865.1 million, a sharp downturn from the $37.5 million loss recorded in the corresponding period last year. Consolidated adjusted EBITDA for the quarter was $194.9 million, slightly up from $193.5 million year-on-year.
The interactive segment, comprising the digital business, generated revenues of $297.7 million but posted an Adjusted EBITDA loss of $76.6 million. This performance was attributed to lower than anticipated OSB volumes and customer-favorable hold rates across digital operations.
In contrast, the retail property segment demonstrated stability, contributing revenues of $1.4 billion and an Adjusted EBITDAR of $465.8 million. The core retail business, encompassing gaming and non-gaming amenities, maintained generally stable demand, particularly at properties not facing new competition.
Strong results were highlighted in the West segment, as well as in Ohio, St. Louis, and Illinois, with noted growth in visitation and spend across all rated worth customer segments.
The core of the new strategy is to shift investment towards its most profitable channels. Penn is now focusing on the strength of its North American iCasino and Canadian operations.
The company’s North America iCasino business recorded its highest quarterly gaming revenue to date, showing a year-over-year improvement of nearly 40%. This growth was significantly driven by a record 62% cross-sell rate from online sports betting and momentum from its standalone Hollywood and theScore Bet iCasino applications.
The OSB offerings will now primarily serve as a critical, top-of-funnel customer acquisition channel designed to drive high-value users into the iCasino and retail ecosystem, leveraging its extensive retail footprint and the PENN Play loyalty program.
Jay Snowden, CEO and President of Penn Entertainment:
Penn’s unique omnichannel strategy is anchored in a diverse portfolio of market-leading regional casinos and a complementary digital business. We are realigning our digital focus to leverage the strength of our US iCasino and Canadian operations, while continuing to use OSB to drive both the acquisition of customers with significant lifetime value and unique cross-sell opportunities across Penn’s retail and digital assets.
