In this photo illustration, the Penn Entertainment logo is displayed on a smartphone mobile screen.
Rafael Henrique SOPA Image | Lightrocket Getty Images
Penn Entertainment On Thursday, it became the first US gambling company to post a profit in its sports betting business in the last three months of the year.
Typically, it is difficult for sportsbooks to turn a profit in the third and fourth quarters because companies spend more on marketing and promotions during the football season.
Penn’s interactive business, which also includes online casino games, posted a profit of $5.2 million on revenue of $208 million in the fourth quarter of 2022. The performance helped boost the company’s overall revenue by about 1% to $1.6 billion for the period.
Sports betting turned a profit even with a highly publicized $10 million bet on Jim “Mattress Mac” McInvale on the Houston Astros winning the World Series in November – and winning.
Caesars also took a hit from Mattress Mac’s baseball bets, which blocked its own ability to make a profit in sports betting in the fourth quarter, according to pre-released results as a result of debt refinancing.
Fanduel, the US online sports betting leader for market share, announced a quarterly profit in the second quarter of last year and said it expects a profit for the full year. Its parent company, FlutterHas not announced earnings yet.
Draft KingsAnother rival, says it will be profitable by 2024 Its shares recovered more than 50% in January, after a punishing 2022, when investors focused on a lack of earnings despite heavy spending on promotions and marketing.
Penn attributes its gains in the interactive segment to a marketing approach that differs from its competitors. It relies on cross-platform promotions from Barstool, a sports media company that Penn will take full ownership of later this month, and powerhouse Canadian media brand theScore.
Penn said Ontario, where TheScore was founded, has become the top market in North America for sports betting and its iCasino business despite intense competition.
The company’s interactive business also experienced its most successful launch ever based on first-time deposits, when Ohio went live with sports betting on January 1. Penn credited the strength of the Barstool brand and said more than half of the money wagered came from its MyChoice customer rewards database.
Shares fell Thursday after CEO Jay Snowden, in an earnings call, blamed overall weak fourth-quarter earnings on bad weather in December. The company issued 2023 guidance that Deutsche Bank gaming analyst Carlo Santarelli called “realistic, though perhaps uninspiring.”
Snowden said the guidance is based on a conservative, broad economic outlook. “We took a haircut to what we expected to see in 2023, just to create some level of recessionary concern,” he said.
But, he added, January was very strong for both its brick-and-mortar casino and online platform. He said, if the current trend continues, the midpoint of the guidance may be lower.
