Penn Entertainment has expressed potential interest in expanding into the Las Vegas Strip, depending on the right circumstances, according to Chief Executive Jay Snowden. The regional casino operator posted a profit in the second quarter and has updated its expectations for its land-based operations for the full year.
Penn operates 42 casino properties throughout the United States and Canada, reporting a net income of $32.6 million, or 24 cents per share, for the quarter ending June 30, a significant turnaround from a net loss of $18.3 million, or 12 cents per share, during the same period last year. Revenues increased by 5.7%, reaching $1.86 billion, up from $1.76 billion.
Venturing into the Las Vegas Strip would enhance the company’s regional casino portfolio, supported by recent investments, including a $360 million renovation of Hollywood Casino Aurora and the transition of Hollywood Casino Joliet from a riverboat to a ground-based facility.
Additionally, Penn launched a $100 million hotel tower at Hollywood Casino Columbus in Ohio this June.
“We are not looking to acquire an asset that needs another $400 to $700 million in capital expenditures due to deferred maintenance,” Snowden noted regarding possible developments on the Strip. “It would need to fulfill several criteria.”
The CEO stated to investors that Penn would “love to be on the Las Vegas Strip” at the opportune moment, but emphasized the necessity for “the right price and the right asset.”
Penn’s regional casino business generated $1.5 billion in revenue, with an adjusted EBITDAR of $517.4 million, boasting an adjusted EBITDAR margin of 34.4%. The company’s retail operations beat analyst expectations in three out of four regions, enabling Penn to elevate the midpoint of its full-year retail adjusted EBITDAR guidance by $31 million.
The West Segment, which encompasses the M Resort in Henderson, Nevada, saw a 10% increase in revenue. The M Resort benefited from a $206 million hotel expansion opened in December, adding 375 rooms and nearly doubling its total room count to 765.
“The results surpassed expectations, with retail exceeding consensus in three out of four regions, along with an adjusted cash flow guidance increase of $31 million significantly exceeding the projected figures,” commented Jefferies gaming analyst David Katz.
Katz also mentioned that “Interactive has continued to show operational advancement” and indicated that these results reflect enhancements in operations, expected to be “neutral to modestly beneficial for shares.”
Penn’s Interactive segment reported $349.4 million in revenue along with an adjusted EBITDA loss of $9.4 million, narrowing its loss beyond what analysts anticipated. The company has readjusted its digital strategy to focus more on iGaming after facing challenges in sports betting.
“Our Interactive segment achieved another quarter of significant year-over-year adjusted EBITDA improvement. In the U.S., the standalone Hollywood iCasino recorded both quarter-over-quarter and year-over-year growth, reaching its highest quarterly revenues,” stated Snowden.
Penn’s online sportsbook also saw a surge in activity during the World Cup, with increased engagement and reactivation of users after rebranding from ESPN Bet to ScoreBet.
“On the sportsbook front, we plan to continue growing through the year,” remarked Snowden.
He noted that the Score brand has demonstrated substantial loyalty among its U.S. users despite being relatively new, with World Cup betting helping to boost engagement that Penn aims to maintain during the football season.
“We noticed promising engagement trends during the World Cup; around 70 of our sportsbook users placed a World Cup wager, with about 45 of those bettors trying soccer bets for the first time,” Snowden revealed.
This performance comes as investors assess Penn’s outlook in online gambling, focusing on early results from its Alberta launch, plans for capital investments, and the potential for industry consolidation.
Stifel analyst Jeffrey Stantial pointed out that uncertainties regarding iCasino execution and the speed of margin improvements might remain a concern, yet highlighted recent market share gains and Penn’s competitive edge in product and omnichannel strategies as potential growth catalysts.