ESPN BET Exceeds Expectations with $245 Million in Q3 Revenue
PENN Entertainment has announced its financial results for the third quarter ending September 30, 2024, showing stable revenue growth alongside certain challenges within individual segments.
Key Financial Highlights
PENN reported revenue of $1.639 billion, a slight increase compared to $1.619 billion in the same period last year. The company posted a net loss of $37.5 million, a significant improvement over the $725.1 million net loss in Q3 2023.
Adjusted EBITDA stood at $193.5 million, down from $298.5 million the previous year. Adjusted EBITDAR reached $348.4 million, also lower than the $445.1 million recorded in Q3 2023.
Performance across PENN’s business segments varied:
- The Northeast segment generated $684.8 million in revenue with an adjusted EBITDAR of $199.3 million.
- The South segment faced volume declines due to adverse weather and hotel renovations, with revenue at $288.1 million and adjusted EBITDAR at $106.4 million.
- ESPN BET outperformed forecasts with $244.6 million in revenue, alongside an adjusted EBITDA loss of $90.9 million.
ESPN BET Q3 2024 Performance
In Q3 2024, PENN’s Interactive segment, which includes ESPN BET, exceeded expectations with $244.6 million in revenue, despite an adjusted EBITDA loss of $90.9 million. Notably, this loss was lower than the forecasted $125 million loss communicated to investors.
Several factors contributed to ESPN BET’s improved results, including increased popularity of parlay betting. Product enhancements and reduced promotional spending led to a higher share of parlays in total bets. In September, parlays represented 28.3% of total handle, up by 5.8 percentage points year-over-year.
The September launch of ESPN BET in New York also played a key role in expanding PENN’s reach to new customers. The strategic launch in New York outperformed the average daily betting and deposit volume compared to other states.
However, it is important to note that the high share of parlays carries risk. When favorites, heavily favored in bets, win, operators can face losses. This occurred in October and early November, prompting a revision of full-year financial forecasts.
Despite these challenges, PENN Entertainment remains optimistic about ESPN BET’s future. The company plans further product enhancements, including the launch of a standalone iCasino app in Pennsylvania in early 2025.
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