Penn Entertainment CEO Jay Snowden told investors a DraftKings-style customer surge was not on its radar in its Q2 earnings call.
Penn Entertainment CEO Jay Snowden told investors a DraftKings-style customer surge was not on the firm’s radar in its Q2 earnings call.
Snowden hesitated to completely rule out such a scheme, but said for now the company had no surcharge plans of its own.
DraftKings announced the controversial policy last week, which would impose an additional charge on customer winnings in high-tax, non-monopoly states.
Snowden said: “It was unexpected from our perspective, but definitely interesting.
“I mean, really as you think about Penn’s view on this, you should expect us to be observers. We have a lot going on in front of us right now over the coming quarters.
“We’ll see what the reaction is assuming that it does launch in early ‘25, and then we’ll probably have more to share with all of you on our quarterly earnings calls throughout 2025.”
No operators have yet followed DraftKings’ lead in planning the winnings surcharge, with Rush Street Interactive specifically ruling it out this week.
Penn saw its share price jump 9.7% yesterday after publishing a better-than-expected Q2 report that saw green shoots in its troubled digital division.
M&A rumours: ‘don’t believe everything you read’
Snowden was also quizzed about rumours published in financial and trade media that the business may be acquired.
Potential buyers included Hard Rock, as well as a touted three-way deal involving Boyd Gaming and Flutter Entertainment.
While Snowden said the business didn’t comment on market rumours and speculation, he said Penn was happy with its current approach.
“We’re very confident in our strategy and the value that it’s going to deliver for shareholders over the short-term, medium-term, long-term.
“So, that’s the way I would answer that question. And, I would say, don’t believe everything you read.
“With regard to your specific question on assets, just remember that our assets, land-based assets are all part of different leases, and so it’s not as simple and easy as though you just sell off an asset.”
Analysts at Truist Securities said they took management’s limited commentary to minimally highlight the strong position of its REIT landlord Gaming & Leisure Properties.
Aaron LaBerge’s impact on product
Former Disney president Aaron LaBerge was appointed Penn CTO in April as part of a bid to improve its ESPN Bet product, which has been seen as behind competitor offerings.
LaBerge highlighted upcoming integrations with ESPN, the country’s largest sports news portal, as providing a unique strength to the business.
He also pointed to the announced account linking that will be in place from November this year.
“When you think about knowing the funnelability, personalisation, usage preferences of all those people and then being able to target them, whether it’s introducing them to sports betting or people that are already sports bettors, giving them personalised offers and then moving them seamlessly between the apps with no friction, it is a massive opportunity,” he said.
Analysts at JMP Securities said the improved product was likely to prove a crutch in the year ahead.
The analysts said they did not expect Penn to spend outside its means to acquire customers, including taking a more conservative approach to the New York market.
The analysts said: “Therefore, the new upgraded product launch into football season could result in a more gradual increase from a market share perspective, especially with CPAs across the industry down 40% to 50% YoY, minimising losses near term, as it relies on product to help it gain market share.”