Penn’s sports betting business posts head-turning fourth quarter profit

Pan Entertainment On Thursday, it became the first US gambling company to turn a profit in its sports betting business during the last three months of a year.

Generally, it is difficult for sportsbooks to make a profit during the third and fourth quarters because companies spend more on marketing and promotions during the football season.

Penn’s interactive business, which includes online casino games, generated a profit of $5.2 million on revenue of $208 million during the fourth quarter of 2022. The performance helped boost the company’s overall revenue by nearly 1% to $1.6 billion for the period.

Sports Betting Profits Jim “Matrix Mack” McIngwell made despite his highly publicized $10 million bet on the Houston Astros winning the World Series in November.

Caesars also divested from Mattress Mack’s baseball bet, which curbed its ability to turn a profit in sports betting in the fourth quarter, as a result of debt refinancing, according to previously released results.

FanDuel, the U.S. online sports betting leader by market share, announced a quarterly profit in the second quarter last year and said it expected a profit for the full year. Its parent company, flutterhas not yet announced earnings.

Draft KingsAnother rival has said it will be profitable by 2024. Its shares surged more than 50 percent in January, after a punishing 2022, as investors focused on a lack of earnings despite massive spending on promotions and marketing.

Penn attributes its gains in the interactive segment to a marketing approach that differs from its competitors. It relies on cross-platform promotion from sports media company Barstool, which Penn will own outright later this month, and powerhouse Canadian media brand theScore.

Penn said Ontario, where Score was founded, has become its largest market in North America for sports betting and its iCasino business, despite fierce competition.

The company’s interactive business also experienced its most successful launch ever, based on first-time deposits, when Ohio went live with sports betting on January 1. Penn credited the strength of the Barstool brand and said more than half of the money at stake came from insiders. Its MyChoice customer rewards database.

Shares still fell on Thursday after CEO Jay Snowden blamed overall weaker fourth-quarter earnings on bad weather in December on an earnings call. The company issued 2023 guidance that Deutsche Bank gaming analyst Carlo Santarelli called “realistic, though potentially uninspiring.”

Snowden said the guidance is conservative, based on a broader economic outlook. “We decided to take a haircut for what we expected to be in 2023, only to raise recessionary concerns somewhat,” he said.

But, he added, January has been very strong for both its brick-and-mortar casinos and online platforms. If the current trend continues, the mid-point of the guidance is likely to be lower, he said.