- Penn Entertainment said its interactive gambling business, which includes sports betting, was profitable in the fourth quarter.
- Sportsbooks spend more on marketing and promotions during the football season, making it harder to turn a profit in Q3 and Q4.
- “Mattress Mack” bet on the World Series-winning Houston Astros, despite his $10 million bet, which turned out to be profitable.
Penn Entertainment Thursday became the first US gambling company to turn a profit in its sports betting business in the last three months of the year.
Sportsbooks are typically more difficult to monetize in Q3 and Q4. This is because companies spend more on marketing and promotions during the football season.
Penn’s interactive business, which also includes online casino games, posted a profit of $5.2 million on revenue of $208 million in the fourth quarter of 2022.
Despite Jim “Mattress Mack” McKinvale’s $10 million bet on the Houston Astros, who won the World Series in November, and won, profits in sports betting have grown.
Caesars also took a hit from Mattress Mack’s baseball bets, hampering its ability to turn a profit on sports betting in the fourth quarter, according to pre-announced results as a result of the debt refinancing.
FanDuel, the US online sports betting leader by market share, announced quarterly earnings for the second quarter of last year and said it expects profits for the full year. Its parent company, his Flutter, has yet to announce earnings.
Another rival, DraftKings, says it will be profitable by 2024. The company’s stock price recovered more than 50% in January after his 2022 blow as investors noted a lack of profits despite spending heavily on promotions and marketing.
Penn attributes its profitability in the interactive segment to a different marketing approach than its competitors. It relies on Barstool, a sports media company that Penn will fully own later this month, and cross-platform promotions by theScore, a powerful Canadian media brand.
According to Penn, Ontario, where theScore was founded, has become North America’s largest market for sports betting and iCasino businesses despite fierce competition.
The company’s interactive business experienced its most successful launch to date, based on first-time deposits, when Ohio launched sports betting on January 1st. Its his MyChoice customer rewards database.
Shares were still down on Thursday after CEO Jay Snowden blamed poor weather in December for overall weak fourth-quarter earnings on an earnings call. The company has released guidance for 2023, which Deutsche Bank games analyst Carlo Santarelli said was “realistic, but probably not exciting.”
Snowden said the guidance is conservative based on the broader economic outlook. “We’ve given a haircut to what we expect in 2023 to factor in some recession fears,” he said.
However, January was a very strong month for both brick-and-mortar casinos and online platforms, he added.