The Barstool Sportsbook app had a much stronger debut in Michigan than Pennsylvania, having benefited from the recent start on an even playing field with competitors, Penn National Gaming officials described Thursday morning.
Penn National’s Barstool site was able to launch in Michigan Jan. 22 along with nine other Michigan online sportsbooks. Over the three-day weekend it received 24,445 registrations, 18,946 first-time deposits, and $13.7 million in handle, the company reported for a quarterly earnings call with analysts.
By comparison, over its initial Sept. 18-20 weekend launch in Pennsylvania — a bigger state — the Barstool Sportsbook had 21,865 registrations, 11,294 first-time deposits, and $8.1 million in handle.
Penn National President and CEO Jay Snowden noted that instead of coming late into a market like Pennsylvania, which already had nine sites, Barstool could get started in Michigan at the same time as FanDuel Sportsbook Michigan, DraftKings, and other key competitors.
“We can get out of the starting gate the same way everyone else can,” Snowden said. “Starting at the same time makes a huge difference. You’re not trying to convince sports bettors to leave the app they’re betting on and download ours.”
Illinois to be third, and then more follow
Pennsylvania, as Penn National’s home state, was the debut market for its long-awaited sports betting site.
Michigan was second, receiving priority for the very reason that it could start there at the same time as others, Snowden said.
And now Illinois will be third, he said, hopefully before the start of the NCAA’s March Madness tournament but dependent on the timing of formal approval from state regulators. By year’s end, the company hopes to be taking online sports bets in at least 10 states, with Indiana, New Jersey, Colorado, Virginia, West Virginia, Iowa, and Tennessee the others Snowden identified, while allowing that legislative approval in any new states could impact planning.
In Pennsylvania, Penn National quickly slotted into a third-place market share in sports betting handle behind FanDuel and DraftKings. In that state in December, it took $71.8 million in bets (13.4% of online handle statewide) behind FanDuel with $207.6 million (38.8%) and DraftKings with $130.9 million (24.5%).
Snowden was wary of predicting just how that would compare with Michigan, where the Michigan Gaming Control Board is at least a week away from reporting the monthly revenue figures for all operators in January. A hint of a comparison came from a Bank of America report on early app downloads, which placed the Barstool Sportsbook in a second tier with BetMGM Sportsbook Michigan behind DraftKings and FanDuel.
Snowden said it’s risky to predict sportsbook market share from that early Michigan download information, as the operators launched iCasinos also — including Penn National on the Barstool site — and it’s uncertain how much activity was related to that gambling instead of sports betting.
More bullish than ever about Barstool brand
Penn National has emphasized that it wants to be a top three online sportsbook performer in every state in which it operates, and Snowden said the early performance in its first two states has only reinforced the idea that it has the right strategy to do that.
Penn National acquired a 36% share in the Barstool Sports media company a year ago, opting to use the brand for its sportsbook because that Boston-based, omnichannel company was so savvy in using personalities and social media to attract a young demographic of followers. The relationship has succeeded in giving Penn National all kinds of customers it never would have had otherwise, and without having to spend on advertising like its competitors, Snowden said.
“Barstool Sports by itself was probably worth X and had the potential to get to Y. Penn National was A and had the chance to get to B. You put the two companies together and it became exponential,” Snowden said, noting Penn National intends in two years to follow through on an option to fully own Barstool Sports.
“The companies were very complementary for each other. That value is only going to continue to grow given all the great things they’ve done and how they’ve proved to be so agile. … They’re marketing geniuses.”
He said the Michigan launch has been boosted by Barstool exec Dave Portnoy’s ties to the state as a University of Michigan graduate, with him and other Barstool personalities participating in promotional activities at the recently rebranded Barstool retail sportsbook at Penn National’s Greektown Casino in Detroit.
Penn National is gradually converting existing retail sportsbooks to the Barstool brand, and it has seen favorable impact so far from doing so, Snowden said. The Ameristar East Chicago sportsbook in Indiana increased handle by 35% following the rebranding compared to the prior six-week period, the company reported.
Worst may be over for brick-and-mortar casinos
Snowden discussed the sports betting trends as part of a broader discussion with analysts in which he said “trends in January thus far are encouraging” for overall casino operations in recovering from COVID-19’s impact.
Overall, Penn National, which has 41 properties in 19 states, saw fourth quarter 2020 revenue of $1.03 billion compared to $1.34 billion for the last quarter of 2019. By reducing its costs to address that 23% decline in revenue, the company’s adjusted EBITDAR was reported as down just 9%, from $399 million to $365 million for the quarter. It listed net income of $13 million for October-December.
The company’s financial picture for the quarter would have been stronger if not for unanticipated, state-mandated shutdowns during part of the period for its properties in key jurisdictions such as Michigan and Pennsylvania, Snowden said.
With shutdowns lifted, and signs of strong pent-up demand among gambling patrons — including older customers who in many cases shied away from casinos last year — there’s reason to be optimistic about 2021, he said.
“The past weekend saw the highest Friday-Saturday combined slot volume across properties since the first quarter of 2020,” Snowden said. “What we’re seeing in states that loosen some curfews and restrictions is you see a bump the next calendar day. People want to get out of the house.”
What lies ahead in 2021 is hard to predict with confidence, however, he noted, whether discussing efforts in society to ease COVID concerns or in state legislatures to expand gambling in a way from which Penn National could profit.
He said the company is particularly focused on the action that lawmakers in Maryland and Louisiana will be taking to implement voter-approved sports betting referendums, as well as the potential legalization in New York, Massachusetts, Ohio, and elsewhere.
“You can’t just snap your fingers and be in every state tomorrow,” Snowden said, but “what you should expect [from Penn National] is the cadence from here on out is going to be much more rapid than what you saw from state one to state two,” referring to the four months between Barstool Sportsbook launches in Pennsylvania and Michigan.
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