Penn National Gaming still not interested in Strip despite big M Resort wins

The operator of Henderson’s M Resort is pleased with the property’s first-quarter performance, but isn’t convinced the company should pursue a new asset on the Strip.

Penn National Gaming Inc., which also operates the Tropicana and sells its operations there to Bally’s Corp., posted record first-quarter results and is rapidly expanding its regional gaming empire through growth in sports betting.

“In Las Vegas, (Vice President and General Manager) Hussain Mahrous and our creative team at M Resort are now generating more cash flow per quarter than the property did annually just a few years ago,” said said Jay Snowden, president and CEO of Penn National. said during an earnings call with investors on Thursday. “With the growing population in this part of the Las Vegas Valley, we expect to see these results only strengthen in the years to come.”

But near the end of the call, in response to an investor’s question, Snowden said he was still not interested in adding a new Strip asset to Penn’s portfolio.

“We’re not going to kick the tires right now on anything,” Snowden said. “We’ve done that in the past and if there’s a really unique opportunity and a really unique asset and location, we’ll consider it. We are not looking at anything at the moment. »

Snowden made his comments as Penn saw a 22.7% increase in revenue but a 43.2% drop in net income due to promotional and marketing spending to bolster its sports betting units.

Penn generated net income of $51.6 million, 29 cents per share, on revenue of $1.564 billion for the quarter that ended March 31.

In the same quarter a year earlier, the company reported net income of $90.9 million – down 43.2% – 55 cents per share, on revenue of $1.275 billion.

Sports betting momentum

Penn’s sports betting unit, run by Barstool Sports in the US and theScore in Canada, grew rapidly with Barstool talk shows and podcasts proving popular with younger audiences, in particularly in the Northeast, Midwest and South.

“Our media business is gaining momentum as theScore grew revenue 42% year-over-year in the first quarter and continues to drive high levels of engagement,” Snowden said.

“Barstool Sports Inc. also continued to expand its audience and reach while seeking new growth opportunities,” he said. “On March 18, Barstool’s second freestanding sports bar opened in Philadelphia to high demand. Additionally, on May 7, Barstool will air an alternate commentary to the Canelo vs. Bivol boxing match on DAZN, representing another extension of the Barstool brand into live sporting events.

Penn also funds petition campaigns to support California tribal initiatives to legalize sports betting apps.

Gaming industry analyst Carlo Santarelli of Deutsche Bank’s New York office said Penn performed at the level of its peers.

“Simply put, we think Penn’s story is fundamentally good, with the bricks-and-mortar assets producing strong results and the interactive segment continuing to roll out its strategy, although we expect it to be small. size and much smaller than likely should be expected to be an additional buyer here,” Santarelli wrote in a note to investors Thursday.

Nasdaq-listed Penn closed down 17 cents per share, 5.6%, at $36.56 per share in slightly above-average volume on Thursday. There was a hint of an after-hours bounce, up 5 cents, 0.1%, to end at around $36.61 per share.

Contact Richard N. Velotta at [email protected] or 702-477-3893. To follow @RickVelotta on Twitter.

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