The entertainment giant reported revenues of $1.67 billion for the quarter, with a net income of $78.1 million, marking a substantial improvement from the $26.1 million recorded during the same period in the prior year.
Despite these promising figures, the company’s Q2 earnings call was dominated by discussions about two monumental developments. The first is a transformative agreement with ESPN, which will see Penn’s Barstool Sportsbook rebranded as ESPN BET later this year. This strategic partnership entails a cash payment of $1.5 billion to ESPN over a decade, along with the issuance of approximately $500 million worth of warrants for Penn Entertainment’s common shares. This major move is expected to significantly expand Penn Entertainment’s digital presence in the sports betting arena.
The second key development is the divestiture of the Barstool brand back to its founder, Dave Portnoy. This decision reflects Penn’s strategic shift as it recognizes Barstool Sports’ unique nature and its natural fit with an independent owner. Despite initial positive sentiment, both parties agreed that Barstool Sports’ outspoken nature did not quite mesh with Penn Entertainment’s corporate structure.
In February, PENN Entertainment finalized the acquisition of the remaining share of Barstool Sports for around $388 million, marking the second phase of the sports media brand acquisition, after PENN acquired a 36% stake in February 2020. The acquisition also involved migrating Barstool to PENN’s proprietary technology stack to improve its product offerings.
Penn’s Interactive Segment Records 66.2% YoY Revenue Increase in Q2
Penn’s Q2 earnings report showcased the strength of its Interactive division, boasting a 66.2% year-on-year growth in revenue, which amounted to $257.5 million. The relaunch of the sportsbook on a proprietary technology platform contributed significantly to this achievement.
Jay Snowden, CEO and president, said: “The Company experienced stable property level performance this quarter with each month showing sequential improvement. Additionally, we are excited to have successfully re-launched our sportsbook app, which features major product improvements that significantly upgrade the user experience, including streamlined navigation, faster load times, expanded wagering markets, enhanced promotions and deeper media integrations.”
Snowden acknowledged the challenges of launching ESPN BET midway through the NFL season but remained optimistic, drawing parallels with the successful launch of Barstool sportsbooks in 2020. By timing the launch for November, Penn aims to offer unique value to customers who may have already utilized promotional offerings from competitors.