PENN raises outlook, narrows online losses

PENN Entertainment reported its third-quarter results on November 5. The company raised its full-year earnings outlook for its retail casinos and reaffirmed its Interactive earnings target. Online betting and iCasino still lost money in the quarter, but operations improved.

Adjusted revenue for the Interactive segment was $157.0 million in the third quarter. That is 0.8 percent below $158.2 million a year earlier. Reported Interactive revenue rose from $297.7 million to $348.4 million. A large part of the gap comes from taxes refunded to PENN, which increased from $139.5 million to $191.4 million. These payments are gaming taxes paid on behalf of third-party operator partners and do not represent additional customer sales.

The mix of adjusted revenue changed. Online casino revenue rose from $71.7 million to $76.3 million. Sports betting revenue fell from $57.6 million to $50.3 million. Other revenue increased from $28.9 million to $30.4 million. The increase in casino only partly offset the decline in sports betting.

On the retail side, excluding completed development projects, revenue rose about 1 percent and EBITDAR rose about 5 percent. Total growth was about 5 and 8 percent. Ten retail properties set revenue records in the third quarter. The retail margin rose from 32.8 to 33.7, the third straight quarter of year-over-year improvement. The regions did not move in the same direction. In the West, revenue rose from $138.3 million to $147.5 million while EBITDAR fell from $51.1 million to $50.9 million.

The project effect is clear in the Midwest. Hollywood Aurora, relocated to Chicagoland, opened on June 24 and generated roughly twice the prior facility's revenue from a year earlier. Its active database grew 96 percent. Hollywood Columbus opened its hotel tower on June 12, and the property's revenue rose 18 percent year over year. The company said these gains reflect project effects and should be evaluated separately from underlying demand figures.