PENN Entertainment Presents Picture Of An Upswing In Third Quarter

On its Q3 earnings call Thursday morning, PENN Entertainment reported revenue for the quarter of $1.64 billion, up narrowly from $1.62 billion in the same period last year, citing its expanding digital presence and successful brand partnerships. After a slower second quarter, PENN is projecting that investments will help the gaming company continue to grow — and its stock was up about 4% in early trading.

Despite challenges in some geographic markets, the company touted its resilience, particularly in its digital and sports betting segments. The recent integration between the ESPN app and the ESPN BET app was hailed as a significant milestone that the company believes will drive user growth.

Steady performance, rising liquidity

PENN’s third-quarter results reveal steady performance across its retail and digital businesses. The company achieved a year-over-year net gaming revenue growth of over 200% in its online sports betting segment.

In terms of liquidity, PENN reported $1.8 billion, including $834 million in cash and cash equivalents.

However, the third quarter presented certain regional challenges. Executives singled out unfavorable hold rates in the Northeast and adverse weather in the South impacting retail gaming revenue. Additionally, PENN fast-tracked hotel remodeling at L’uberge Lake Charles, which temporarily affected the property’s revenue.

Despite these headwinds, executives noted that PENN’s broad asset portfolio, combined with diversified revenue streams across states, softened these impacts and provided the stability needed for ongoing strategic investments.

Positive digital user growth and iCasino expansion

PENN’s digital ecosystem showed substantial growth in the third quarter, reporting over 1.8 million new digital members added since ESPN BET’s launch. In the online casino space, PENN reported considerable gains, with the Hollywood iCasino brand experiencing significant growth in both gross gaming revenue and net gaming revenue.

These results come as PENN prepares to launch a standalone iCasino app, which will initially be available in Pennsylvania in early 2025, pending regulatory approvals. In the online casino market, PENN sees vast potential for growth beyond its traditional OSB offerings.

ESPN BET partnership fuels digital expansion

A major highlight of PENN’s growth strategy is its collaboration with ESPN BET, which began operations in New York on Sept. 27. By linking ESPN and ESPN BET accounts, the partnership aims to enhance personalization and deliver a smoother user experience across platforms.

PENN reported a 127% year-over-year increase in monthly active users of ESPN BET in the third quarter.

Additionally, PENN unveiled seven new ESPN BET-branded retail sportsbooks across its properties, solidifying its commitment to expanding the ESPN BET brand within its existing portfolio. This retail presence, alongside the digital platform, is integral to PENN’s strategy. PENN entered into a $1.5 billion deal with ESPN in 2023 anticipating that the ESPN name would carry substantial weight with sports fans and bettors alike.

As PENN continues to integrate ESPN BET across its platforms, the company’s leadership believes the partnership will unlock new revenue streams and drive incremental growth.

Projections and growth initiatives

Looking ahead, PENN Entertainment says its investment in infrastructure and technology remains on track, with several key projects expected to come online in the coming years. The company is progressing with relocation and expansion projects in Illinois and Ohio, and a new hotel tower project at the M Resort in Nevada is slated for completion by the first half of 2026.

In the near term, PENN is also set to roll out advanced features in its OSB products, such as upgraded in-play betting and improved navigation. These enhancements are aimed at boosting user engagement and maintaining competitive parity with other major players in the market.

As of the third quarter, PENN operates 43 properties in 20 U.S. states, with 32 retail sportsbooks. With digital gaming and sports betting operations live in 19 states, PENN believes its omnichannel strategy is well-aligned with industry trends that prioritize flexible, multi-channel access to gaming services.