Impairment losses worth $173.1m drove a net loss of $92.9m for Penn National Gaming Inc in its fourth quarter, while revenues of $1.34bn were ahead by $185.9m year-on-year according to financial results for the three months and year ended December 31, 2019.
Adjusted EBITDA was $304m, showing a decrease of $16.1m year-on-year, while adjusted EBITDAR of $399.4m increased by $75.5m year-on-year, which exceeded guidance for the fourth quarter.
Jay Snowden, President and CEO, commented: “This past year has been transformational for Penn National, our team members and our shareholders and we are proud of what our team has accomplished in 2019.
“Our quarterly adjusted EBITDAR of $399.4m exceeded our guidance of $394.5m, which demonstrates the size and strength of our regional gaming footprint and our focus on execution. Despite new competition in the Northeast, all our segments generated year over year adjusted EBITDAR growth and margin expansion.
Turning to sports betting, Snowden told investors that that segment of the business has helped drive outsized table games volume and increased food and beverage business revenues. “We are very excited about our growth prospects and the recent developments that set us up well for 2020 and beyond,” he explained.
Snowden went on to summarize the recent deal with Barstool Sports, in which it entered into an agreement to acquire circa 36% equity interest in the company. “This investment creates a unique opportunity, allowing us to execute on our strategy to evolve from the nation’s largest regional gaming operator to a best-in-class omni-channel provider of retail and online gaming and sports betting entertainment.
“Barstool Sports is an ideal partner as it will allow us to attract a younger demographic that is complementary to our existing customer base. Barstool Sports’ 66 million monthly unique visitors, its significant reach and the loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs.”
He added: “In connection with our partnership, we have the sole right to utilize the Barstool Sports brand for all the company’s online and retail sports betting and icasino products. We took a long-term perspective with our investment, retaining 100% of the economics from the retail and online sportsbook, as well as casino and non-gaming revenues. We see meaningful cross-selling opportunities and would expect recently enacted sports betting legislation in states such as Colorado and Michigan to positively impact our brick and mortar business.
Snowden anticipates going live with sports betting in those markets on receipt of all necessary regulatory approval. “In addition, apart from Nevada, which will be converted by February 2021, we expect our in-house team at Penn Interactive to manage all of Penn National’s retail sportsbooks by the end of the first quarter of 2020,” he said.
“Our team of over 50 talented product developers and engineers are creating a best-in-class sports betting app that will introduce our 20 million mychoice customers and Barstool Sports’ 66 million monthly unique visitors to the Barstool Sportsbook brand, expected to be launched in the third quarter of 2020.
“Finally, on the sports betting front, we compared the performance of our properties where we launched new sportsbooks in 2019 to their performance in 2018. The analysis showed that existing guests, who started engaging in sports betting, visited our properties more frequently and contributed to meaningfully higher revenues in 2019 than they did in 2018.
“At Hollywood Casino Lawrenceburg, for instance, we saw a significant increase in gross gaming revenues, particularly driven by the table games segment. Likewise, our food and beverage business benefited substantially from the introduction of sports betting at this property.”