Penn sports betting business posts fourth quarter profit

In this photo illustration the Penn Entertainment logo seen displayed on a smartphone mobile screen.

Raphael Henrique | SOPA Images | Light flare | Getty Images

Penn Entertainment Thursday became the first US gambling company to post a profit in its sports betting business in the last three months of a year.

Usually, it is more difficult to make a profit on sports betting in the third and fourth quarters as companies spend more on marketing and promotions during the football season.

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Penn’s interactive business, which also includes online casino gaming, earned $5.2 million on revenue of $208 million during the fourth quarter of 2022. This performance helped to increase the company’s overall revenue for the period by nearly 1% to $1.6 billion.

The sports betting profit came even despite a high-profile $10 million bet that Jim “Mattress Mack” McIngvale placed — and won — on the Houston Astros winning the World Series in November.

Caesars was also hit by Mattress Mack’s baseball bet, which blocked its own ability to generate sports betting profits in the fourth quarter, according to results released ahead of a debt refinance. .

FanDuel, the US online sportsbook leader by market share, reported quarterly profit in the second quarter of last year and said it expected full-year profitability. Its parent company, Beathas not yet announced results.

DraftKingsanother rival, said it would be profitable by 2024. Its shares rebounded more than 50% in January, after a trying 2022, when investors focused on lack of revenue despite massive spending on promotions and marketing.

Penn attributes its profitability in the interactive segment to a marketing approach different from its competitors. It builds on cross-platform promotion from Barstool, a sports media company that Penn will wholly own later this month, and powerful Canadian media brand theScore.

Penn said Ontario, where theScore was founded, has become its number one market in North America for sports betting and its iCasino business, despite intense competition.

The company’s interactive business also had its most successful launch ever, based on first deposits, when Ohio launched sports betting on Jan. 1. 1. Penn credited the power of the Barstool brand and said more than half of the money wagered came from those in its MyChoice customer rewards database.

Shares fell further on Thursday, after CEO Jay Snowden, in an earnings call, blamed the generally lackluster fourth-quarter results on poor weather in December. The company released a forecast for 2023 that Deutsche Bank gaming analyst Carlo Santarelli called “realistic, though probably uninspiring.”

Snowden said the forecast was cautious, based on the broader economic outlook. “We’ve scaled back what we expected to see in 2023, just to factor in some level of recession-related concerns,” he said.

But, he added, January was very strong for both its physical casinos and the online platform. He said that if the current trend continues, the midpoint of the forecast is likely to turn out low.


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