Penn National Gaming ($PENN) stock went from $4 to near $130 per share in less than a year. Absolutely on fire. Penn is one of those stocks that everyone wishes they would have bought near the lows in March 2020.
Dave Portnoy, leader of the now famous DDTG global, accelerated attention on PENN National. Hosting his daily live DTTG feeds and breaking out the green hammer, Portnoy has created a massive retail stock following.
Just before the DDTG global feeds started, Penn National purchased a 36% stake in Portnoy’s Barstool Sports, putting the company’s valuation at $450 million. Skipping ahead to today, the stake proved it was a great decision from Penn National to get involved with Portnoy & Barstool Sports.
For now, let’s put aside the buzz from Portnoy and take a look at how Penn National Gaming generates revenue.
Penn National Casino Revenue Breakdown
Penn National as a company has approximately 36 retail brick and mortar Casinos, according to their 2019 annual report. A few of which were not fully operational. Penn breaks down the casino revenues into a few categories:
- Food, Beverage, Hotel, & Other
- Management fees, licenses, etc
Food, Beverage, & Hotel is self explanatory. However, gaming revenues are a bit more complicated. Taking a further drill down of gaming revenues, they are split into four different categories: slots, table games, sports betting, and iGaming.
According to the American Gaming Association as of November 2020, slot & table games were down over 34% YTD. COVID regulations have had a large impact on Casinos. Conversely, sports betting and iGaming are up well over 50% YTD, with iGaming up 200% YTD.
If you look at Penn National without Barstool Sports hype, it might have been a disastrous year. As I discussed in a similar iGaming article relating to GAN, legalized sports betting is gaining traction in the United States. With legalization increasing in the United States, Penn National was ahead of the curve creating a relationship with Portnoy and Barstool.
Impact of Barstool Sports on Penn National Revenue
For the nine months ended of 2020 thus far, Barstool sports & Penn Interactive is allocated in the company’s “other” revenue segment shown below. The northeast, south, west, and midwest are all segments grouped together by casino locations around the United States.
It’s important to dissect and establish what Penn Interactive makes up of he overall business. This way, moving forward we can directly focus on the impact of the iGaming trend, which is expected to double in the 2020’s.
I anticipate there will also be indirect impact of Barstool sports at the brick and mortar casinos. Penn National has started incorporating physical branded Sportsbooks in the brick and mortar casinos such as Greektown, in Detroit, MI.
Revenue Segment Comparison: 2020 vs. 2019
In comparison to 2019 as of the nine months ending November 30, 2020, all 2020 revenue segments were down excluding the “other” segment. iGaming & Penn Interactive is the only area reflecting growth, highlighted in red. I cannot say the results below show a profound impact on revenue for Penn National just yet.
Future Analysis – iGaming & Sportsbooks
Moving forward, expect a breakout the specific casinos that incorporate a Barstool Sportsbook. We need to see if the brand name and legalization of sports betting will promote growth at the physical locations, which generate the most revenue for the company.
Penn National has not released the 10-K or 10-Q for the remainder of 2020. I anticipate this will happen in the next few weeks. Be sure to check back for updated numbers and outlook on the impact of Barstool Sports. STONKS!
At the time of publication, the author of this article does not hold shares of PENN.