Penn National CEO Says It’s Not Expecting 20% Hold From Barstool Sports Bettors Consistently

Unusual success in taking customers' money in December might have been driven by a bad month for VIPs and parlays, the company says.
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Penn National Gaming’s Barstool Sportsbook attracted plenty of attention recently by reporting a hold percentage around 20% from Pennsylvania customers in December, and it didn’t escape the notice of financial analysts.

Penn National President and CEO Jay Snowden was asked about that disproportionate revenue success on a quarterly earnings conference call with analysts Thursday morning.

It stood out, after all, that Barstool retained 20.5% in gross revenue (before adjusting for promotional credits) from $71.8 million in wagers in December. The 11 other online sportsbooks operating in the state had a combined hold of 6.4% on $463.4 million in wagers.

It made for a great month for Penn National’s sportsbook, though customers who keep losing at that rate could get discouraged in the long run. Snowden said not to expect that to happen, while likening it to volatility of play at the blackjack table.

“You know, some months you get lucky and you hold well and sometimes you don’t,” he said. “I wouldn’t overly read into December. I don’t think you should expect 20% every month.”

Snowden reminded the analysts that the Barstool Sportsbook actually lost money in its first month of operation in September. The unusual success in December might have been influenced by two factors, he suggested: higher volume of big bets by VIPs who didn’t necessarily do well, and heavier use of parlays that are promoted as “exclusives” on the website/app.

VIP play and parlays “can really move that number significantly from one month to the next,” the CEO said.

Barstool succeeds without ads, but is starting some

Although the launch of the Barstool app in Michigan last month attracted more initial registrations and betting activity than was the case in Pennsylvania in September, Snowden attributed that to Penn National having been a late starter in the Keystone State. In Michigan, it started at the same time as nine other online sites.

He continues to view the site as a success in Pennsylvania. While its betting volume is well behind that of FanDuel and DraftKings, Barstool quickly reached No. 3 status in the state with per-customer acquisition costs well below the $300 to $800 that is standard in the industry, Snowden stressed.

That’s because the company has relied on the social media presence and personalities of its Barstool Sports omnichannel partner to drive traffic to the app. It thus avoids large advertising costs like those sustained in Pennsylvania by FanDuel, DraftKings, and now BetMGM.

The first paid ads for the Barstool app in Pennsylvania came on a small scale during the NFL conference championship games, Snowden said. Penn National has “so much cushion to be opportunistic” in targeting its paid advertising, he said, and will do more in the future, but still on a more modest basis than other operators.

Penn National using PA casinos to start a shift from cash

Penn National has begun remodeling its retail sportsbooks across the country with the Barstool brand, which hasn’t happened yet in Pennsylvania even though Snowden said those rebranded sportsbooks have seen a bump in betting activity afterward.

The sportsbooks at the company’s Hollywood and Meadows racetrack-casinos in the state and at two mini-casinos under construction in Berks and York counties are likely to bear the Barstool brand by year’s end.

One thing on which Pennsylvania casinos will be a leader for the company, Snowden said, is converting from all-cash gambling establishments to venues accepting money in other modern forms, utilizing new technology to which younger customers are accustomed in other commercial transactions.

While hoping customers of all ages will increasingly be drawn back to casinos in 2021 from efforts to address the COVID-19 pandemic, Snowden said, “When they do, they’re soon be met with the three C’s — our new cash-less, card-less, and contact-less technology, which will improve efficiency and provide a guest experience in line with other industries historically frequented by younger demographics.”

He said the Hollywood and Meadows casinos in the first half of 2021 could be the first of Penn National’s 40-plus properties nationally to shift away from only-cash transactions, though timing will depend on regulatory approval from the Pennsylvania Gaming Control Board.

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