Penn National Gaming’s FY 2019 revenue jumps 48% as net income falls

US casino and racetrack operator Penn National Gaming (PNG) has reported revenue of $5.3bn for 2019 – a 48% rise over the $3.59bn generated in 2018 – following the completed $2.8bn acquisition in October of competitor Pinnacle Entertainment.

However, New York-listed PNG, which operates 41 properties in 19 states, revealed net income dropped by 53% from $93.5m in 2018 to $43.9m last year.

For the three months ending 31 December 2019, revenue amounted to $1.34bn, an increase of $185.9m (or 16%) over the $1.15bn generated in the corresponding quarter in 2018.

Overall, PNG’s president and CEO, Jay Snowden, described 2019 as “transformational” for the Pennsylvania-based company, which included the integration of Pinnacle Entertainment and its 12 new gaming properties in three states along with over 10,000 employees.

“We accomplished this while achieving record adjusted EBITDA, increasing margins, reducing debt, and just as importantly, coming together as one team under one company culture,” Snowden said.

Last month, PNG announced a statement of intent in the burgeoning sports betting sector when it acquired a 36% stake in controversial media company Barstool Sports for £163m in cash and stock.

The deal, which will include PNG becoming Barstool Sports’ exclusive gaming partner for up to 40 years, comes amid a wave of tie-ups involving gaming companies and US media brands.

Snowden added: “Barstool Sports is an ideal partner as it will allow us to attract a younger demographic that is complementary to our existing customer base.

“Barstool Sports’ 66 million monthly unique visitors, its significant reach and the loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs.”

PNG has the sole right to use the Barstool Sports brand for all the company’s online and retail sports betting as well as its online casino products.

A team of 50 product developers and engineers at PNG are currently building a Barstool Sports betting app slated for release in Q3 2020.

On the online gaming front, PNG said its online casino app in Pennsylvania was able to “turn a small profit” in Q4 despite the “onerous” 54% tax rate on online slot revenue.

“To date, a significant percentage of online play has been from existing mychoice guests, and more importantly, this business has been incremental to the brick-and-mortar business. In addition, icasino has allowed us to reengage with a large portion of inactive mychoice members,” Snowden said.

PNG’s shares closed yesterday at around $35, a 32% rise over this time last month and a 52-week high for the Nasdaq-listed stock.