In this photo illustration the Penn Entertainment logo displayed on a smartphone screen.
Rafael Henrique | SOPA images | Light Rocket | Getty Images
PennEntertainment on Thursday became the first US gaming company to turn a profit in its sports betting business for the last three months in a year.
It is usually harder to turn a sports betting profit in the third and fourth quarters as companies spend more on marketing and advertising during the football season.
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Penn’s interactive business, which includes online casino games, posted a profit of $5.2 million on sales of $208 million in the fourth quarter of 2022. The performance helped boost the company’s total revenue for the period by nearly 1% to $1.6 billion.
The sports betting win came despite a highly publicized $10 million bet Jim “Mattress Mack” McIngvale placed — and won — on the Houston Astros to win the World Series in November.
Caesars was also hit by Mattress Mack’s baseball bet, which blocked its own ability to turn a profit on sports betting in the fourth quarter, according to previously released results as a result of a debt refinancing.
FanDuel, the leading US online sportsbook by market share, reported quarterly earnings in the second quarter of last year and expected full-year profitability. its parent company, flutterShe has not yet announced earnings.
DraftKingsanother rival, has said it will be profitable by 2024. Its shares rallied more than 50% in January after a punishing 2022 as investors focused on missing earnings despite massive spending on advertising and marketing.
Penn attributes its profitability in the interactive segment to a marketing approach that differs from its competitors. It draws on cross-platform advertising from Barstool, a sports media company that Penn will fully own later this month, and powerful Canadian media brand theScore.
Penn said that Ontario, where theScore was founded, has become its most important market in North America for its sports betting and iCasino business, despite intense competition.
The company’s interactive business also enjoyed its most successful launch ever, based on first-time deposits, when Ohio went live with sportsbook on January 1st. Penn credited the strength of the Barstool brand, saying more than half of the money they put in came from their own MyChoice customer rewards database.
Still, shares fell on Thursday after CEO Jay Snowden on a conference call attributed overall weak fourth-quarter results to inclement weather in December. The company issued a forecast for 2023 that Deutsche Bank gaming analyst Carlo Santarelli called “realistic, if probably uninspiring.”
Snowden said the forecast is conservative based on the broader economic outlook. “We’ve discounted what we were expecting for 2023 just to build in some level of recession worries,” he said.
But, he added, January has been very strong for both brick-and-mortar casinos and the online platform. He said if the current trend continues, the midpoint of the guidance is likely to turn out to be low.
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