PENN Bets $20M on Alberta as It Chases Digital Profit

^{Ontario is now PENN’s single biggest market for online sports betting, generating an estimated two to two-and-a-half times the revenue of its home state, Pennsylvania. (Image courtesy of  PENN Entertainment.)} 

PENN Entertainment has committed about US$20 million to Alberta this year, chief executive Jay Snowden told investors.

The spend is central to the company’s push to turn its digital arm profitable, built around its three platforms now live in Alberta’s regulated online market.

PENN launched Hollywood Casino Alberta, theScore Casino Alberta and theScore Bet in the province on July 13, day one of the regulated market.

Reporting second-quarter results on Aug. 6, PENN said its Interactive segment narrowed its adjusted EBITDA loss to US$9.5 million, from US$62 million a year earlier.

Consolidated adjusted EBITDA rose 32.4 per cent to US$312.6 million, and the group swung to net income of US$32.6 million from a loss a year earlier.

Alberta Is the Big Bet

Chief financial officer Felicia Hendrix put the Alberta online gambling investment at “approximately $20 million for the year.”

“The third quarter is expected to be the largest quarterly loss of the year given our investment in Alberta, and we expect the fourth-quarter Interactive segment adjusted EBITDA to be positive,” Hendrix told investors.

In other words, PENN expects Alberta to make its numbers look worse before they get better.

The company trimmed its full-year Interactive revenue guidance to US$1.57 billion, from US$1.60 billion, while holding its earnings outlook.

Leaning on the Ontario Playbook

Snowden said the Ontario online casino market is now PENN’s single biggest market for online sports betting, generating an estimated two to two-and-a-half times the revenue of its home state, Pennsylvania.

He credited strong World Cup engagement and the cross-sell of sports bettors into online casino for the Ontario momentum.

Snowden said the company was encouraged by Alberta’s early user and handle volumes on a per-capita basis.

PENN is also leaning on its exclusive Canadian partnership with the Toronto Blue Jays and a commercial deal with the Canadian Football League to build theScore Bet’s profile in the province.

There are now 27 digital and sports-betting platforms taking wagers in Alberta, out of 50 operators that registered when the market launched.

That leaves room for more brands to go live before the end of the year, intensifying the competition as PENN spends to win.