PENN - Earnings call 2 2023 | PENN Entertainment, Inc.

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Operator

Greetings and welcome to the PENN Entertainment Second Quarter and ESPN Transaction Conference Call. [Operator Instructions]

I would now like to turn the conference over to Mr. Joe Jaffoni, Investor Relations. Please go ahead.

Joseph Jaffoni

Frank. you, Thank and Quarter everyone, for PENN joining Good ESPN thank Transaction Second and Conference Entertainment's morning, you Call. We'll get as answers. well momentarily comments to management's your presentation questions and as and Instructions] [Operator

that safe disclosure. the review contains I'll Please Now note statements. forward-looking today's harbor discussion

assumptions statements could cause materially. uncertainties actual Forward-looking and that to results risks, differ involve

press For our -- details release more information, please on for and see specific factors. risk

CEO, ahead. now the call the company's turn my go over please to Jay pleasure it's Jay, that, With Snowden. to

Jay Snowden

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Frank, And the happy up line with that, to open for questions. I'm

Operator

[Operator question Jonas with Instructions] first Barry comes Truist Our Securities. from

Barry Jonas

is how a possible deal. it to together came Congrats Jay, the give overall? color this more on about little

Jay Snowden

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Barry Jonas

just trying is there? positioning perspective, to what with Understood. compared Barstool? strategy previously And guess Bet just how a demographics to new omnichannel to overall understand from you ESPN how the guess about your I'm think I I then had

Jay Snowden

average No, the Obviously, brand Barstool XX -- the Yes. digital question. in it's side, years compared great the ESPN our Barstool database a SKUs is brand old. on to younger age the around

great. think that's I

that before in X.X that Sportsbook. weren't we have people launched We there database million Barstool

been of younger a have on iCasino. frequented foundation and So we've also we've land-based great customers cross-sell casinos got into our the to that side, able

for brand. And about that of It's brand. everybody you're There's I brand, brand that old a think lot affinity It's a knows not an talking everything with the not in it's ESPN, about. a an young brand. world

And the the we've X what years. be so extremely we think it's last going of complementary over to to course built

masses. got to X to appeal And sports of clear, We the recipe, really one out scale excited. in to a call in you've and compete amongst recipe certain to thing we the to of compete. scale there's we've is over And betting our at And top all continue And years, presentation. Barry, this I the yes, And get share last, market slides remarks scale, laid with that check we're we watched which on have really to that's boxes ready a consolidate course in the crystal level. one my an prepared become think the think opportunity it, that the players. online X and we're to to

Operator

with Santarelli Carlo Our Deutsche Bank. next comes question from

Carlo Santarelli

the It about kind not as leverage initiative. any you're basis? sometime imply you kind the sense And But maybe that the maybe in would XXXX, if about are significant promotions clearly, as the of addition going topping Xx. spend on to November, acquisition? going us do I don't this could made well at give that to thinking just have of of Jay, about and the committed kind that into we out what year you customer that of, spend, you very And is move know, that thinking would you XXXX be give comment launching back we're better in a case. guys about on a guidance could perhaps how

Jay Snowden

too to 'XX want detail yet, get on into much don't I Carlo. Yes.

We that. will the detail give year you on before a Investor the lot and an Day of hold more end

hold I we think visibility probably how to to have after Day getting are us, things important flawlessly and Investor want to launched launch is really some we that trending. and and we as to launch more

whatever this as of ESPN the lion's in to that like. where firm of don't -- date the the Obviously, terms is that's about going expense people with share going would really the on promotional you're yet. date app going working of first-time of way, have, the your and into this a launch, reskinning think that be it, you're you is I deposit Bet. to there's sort it let's is. say call, We the to ecosystem the to bringing promotional lot think new be What spend But match of about as the a November is team have hard

to And usually earn through takes deposit so that that match. months X approximately

November would so promo I think, and And December, the on side be pretty high.

into a And getting really after in Madness big March. lot then you've of the got sporting events Super playoffs, obviously, February March NFL in Bowl then that, and

in think QX promo to the time I at going a QX frame. perspective, share you're lion's from So be that looking is and

all ESPN. ESPN, sort As earlier, off-channel, with And it's relates of, to scientific mentioned spend, those spending it an the outside even and about should I marketing we're us you us get the we're as -- of you not Xx peak comfortable matching general that's think in still but being of assumptions spend. much meaning as exact we're how laid out out for number, that at around way things that's level modeling I

and not are down, pretty going And that into we're that will forward. Xs able free into that not generate going cheap obviously, as don't and back but approach We're head organically, certainly flow XXXX, you be -- come our the on quickly. the delever be to we we'll around feel cash to to with about be we're we we when But in down deeper to focused lot going comfortable that And for be brand, products consumer. want how we're a that on great and that. ESPN way to that's launch have very a and live have launch know the people live. going of we regrets I saying how alignment we the the doing

Carlo Santarelli

of Got there. answered it. follow-up And Jay, just kind -- you within my

promotions the separate correct? to cetera. And million other a ESPN million imply et vendors, So will be an through $XXX channels, $XXX that, acquisition marking then committed incremental customer other through will bucket

Jay Snowden

the not say million correct, Carlo. And but roughly, perfect all number, is That's just yes. a to $XXX

Carlo Santarelli

on business. Okay. I follow-up core one could, then of if kind the just And

held say sustainable this that climate you're in earlier, clearly, kind -- of as but hover right some kind the pressures. well. seasonality -- [indiscernible] now continued heard half retail Your guidance of brick-and-mortar balance broadly Obviously, kind of fairly around How year, little see this aside? you the XX is fairly margin level level. margins do line has top for you et to of up the cetera, I the bit. there's there, And you of some think seen seasonality back a Is in of we year, this It's guys kind move about through the unchanged.

Jay Snowden

let why generally, in by able the margins jump the just there Todd, really seeing yes is we've what of that of you the me and saying, I'll in business sort answer been Well, several your keep last let quarters. of over we're terms level answer. question course in the in to XX% those

Todd George

sustainable. thanks, listen, were it's day. a I continue ourselves -- And And growth we've Thanks, Carlo. Jay, this to it's think compare our I from the and that seen really, think Yes, where in new XXXX. them we -- with to we

-- looking not it's us are at just So the but from at competitive kind labor for of marketing fallen where standpoint, for we where we entitlement a looking from away. a programs more standpoint, are rational. have It's set,

with very So good comfortable those expense move place. the as that a being in drivers forward X we're we we're

our that with will continue margin to And to we think our add then technology enhancements, profile.

move So we be look these are and seasonality very Obviously, there'll as can to margins future. the some in what that we comfortable there. forward here

Operator

Needham with McTernan & question next from Company. Bernie Our comes

Bernard McTernan

is and that the market very pushback of reaction online just just hearing market share worked the but positive having the thought that the this other to and betters announcement, mean, some a Maybe between clearly, operators media to partnerships is I'm historically. sports hasn't I start,

-- what really that those pole you to about achieve able be What gives position driving and that confidence you'll So gives expectations? market you will be you share able of talked you scale. some driving market confidence the Jay, share,

Jay Snowden

it's a ESPN fair world. question. to addressing look, No, because no love Yes. comparison it in the I really there's

number So that's one.

about some morning, in about that in I reasons the it's spent work. the here's I think as I last talking why to it relationship know this materials this time think we've going night

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is So ESPN market more you for how helping valuable. more PENN -- get much of own is warrants they about think XX%, market to many they this valuable over you achieve more share. levels The time going higher and levels the be And us make share valuable. become higher warrants over of that of much

of So think warrants having there's ESPN long we're the the that's around levels. those very effect XX%, if -- day to a dilutive for everybody. And on getting over what's great conversations we're with I term focused

look like market, look I X to going at It's it's So the in you to market oftentimes not years share around. it's what did shift versus years U.K. last interesting. the look and done. back middle versus the just the first X X years,

of different for morning wasn't going saying consideration is going around. to new that the and I'm not morning to And announced this up it this a think from It's that's It's what U.S., and night flow. move and that going today. be about day But -- market or this this to anybody in be last probably to to it's the I to in that ebb it's me, something wildly different narrative going think set permanent crazy -- is the we ago. share talk. that's fluid. that's what here sort or notion is established

it's And like. going what to on we're to market we an so player. impact think that going a And overall major have share looks be

Bernard McTernan

potential just partnership of then in potential share different X. one prior to inbounds those calls this expectations just operating the -- about in required X we're margins investors -- teens. in year market keep -- business. terms love sides. high should how And Great. the market of the think the the what margin then are Would think And for going follow-up for how terms the that market to shares, this Slide from termination, for getting thoughts just some out -- plan It is a to get both in terms share illustrative the you of your EBITDA

Jay Snowden

Let the online space. question me importantly, drive betting. need scale to margins We be to going you this hit margins at sports that. know all drive impossible XX% X% to most is And share in market Trying in first. margins

this, footnote, if to that's that number you're revenue. on we all they important. And I NGR, comparing there this of So to case is confusion have we're on showing they said you're assumptions that others we showing most what most on think in GGR, that also on a have on of X -- in net any if there's okay? what you one, gaming based think, the that in term Slide long keep So referencing, get analysis what margin here is mind -- the can margin not basis, the they're

below and NGR if be level -- So And here some assumptions other margin to on at a would extrapolate probably but a conservative. that's on just basis just we're what saying. we an of little no bit basis, others because look mean reason for conservatism that GGR are in you what putting it have the

now. every on I can probably the we which we're that they we we to every get at that most think others then can take said if get or to a to in scale an conservative path basis, state, podium margins on be, but state we're have NGR we'll for the plan and think close

relates repeat part as of well, tackle sure make I'll to assumptions the correctly, Bernie. market I share that think one question. -- it I that

Bernard McTernan

termination XX-year aren't it's -- market thresholds year share There's a if after X certain partnership, a rights potential but met. year

market those And asking so we've been are. investors getting share to what thresholds some inbound

Jay Snowden

Got it.

Sorry.

the But to. with X I end get safe to just assume Slide ESPN. of that that That's to to both would probably disclosed is it and bottom starting range and going below on we're say ESPN PENN. not really haven't a And that exciting. our about, in is level going there be agreement the we're We not excited

So about of that it think just way. sort

Operator

Beynon from question comes next Macquarie. Our with Chad

Chad Beynon

XX-year I Congrats with What wanted content to ask that the some ESPN about rights on and you companies ESPN. rights sporting been continue deal other different a buying there's announcement. the to And will that a with gave the leader the be Jay, It's to portfolio. events contracts. different confidence up they currently offer?

Jay Snowden

not speak Yes. I they've here and to to going long how the behalf What term. value the with sports rights for rights. Look, are say I'm success would sit sports in important much and their been on publicly brand regard ESPN think long clear ESPN's term owning I how is they crystal

pretty about have if NHL, in at we place feel goes today, good great And looks far. MLB, look and agreements major they out really leagues that. And with you so the it it the NBA, the NFL,

there's a high research you But of can met they own on ESPN of change. do everybody sports at conviction a I and your are we've is they who rights and do, that won't most that. are big so part what level And think importantly that from

Chad Beynon

mentioned in leader Ontario, the double-digit up you're on betting in then tech sports a And iGaming. and market side, you share

also the tech. So that speaks but to brand the clearly

tech the an and down equation. adjusted You recently of the important this part is certainly here,

tech of your that kind America? how recently and in the launch November, offerings leaders against market Bet of menu So else of other when you've today, share the you stands stands launched the anything North talk in ESPN can just you about some tech

Jay Snowden

our Yes, And have happy gone we've now. to. year Ontario been live stack own great. things tech for on And over in a

parlay do soon can see the -- lot theScore populate for media same fantastic. to is top-tier games We you currently place your And sports of as betting to head November North Obviously, the you're we've ready the it able betting and other Bet, going your the And odds ESPN theScore with path iterate. have slips. can to of go into bet options have really the feels with The and that's it of the We excuse we're that the to going to up, online that thing. The of on be this ground was media competitive we the We takes and it's same here me, UI/UX a American also we what the be in-game. actually here and feel is It menu you from continue ESPN as full platform you when obviously, to markets. like the proven with say And think integration Bet. to very Canada, all iterate. app, built we side. we've be on built we'll And wage, in live to the Bet And it's and we in full got out of able and here as offerings. slip sports in beauty seamlessly continue app. capability like same the make in U.S. down wagers. well Ontario, and ESPN, -- we've we're

but great and launch, months a product X where we've and road a about we prioritizing that at already. It's But and going it will upgrades. take months of so XX of the the done about are feel later we time, of little a later. And to lot some feel just be matter bit map really great we where of we're

Operator

JPMorgan. Joe comes Our with next question Greff from

Joseph Greff

your minimum million from competitors? have advertising for ESPN is year? across there guys from OSB its per And you platforms on advertising Do investments precludes anything taking that ESPN beyond $XXX

Jay Snowden

obligation. year. million if and $XXX the is than competitors, dollars other than not There's may commercial about how from breaks worried that. if they if of do We that on during I'm it We call but have more ability, They that. and do to take want no of to, do. they to that we're advertising really that's ESPN's the much choose can course, obligations results, a the seeing great they

going into think be if clear ESPN Bet. ESPN tuned I they it's you're to that very programming fully behind are

Joseph Greff

assuming a give Great. the it don't and where exactly, threshold, certain And maybe actually both agreement, market can you provision to. want did the if you specific threshold? you share not parties a sure I'm But answered terminate

Jay Snowden

not, we're X% We acceptable I be X% not this doing to, Joe. for to but earlier we're be or to going It's going acceptable That's mentioned not that share to for be players. market going not ESPN. not did deal us.

can are to we should we term. that's term. And in within on investor Slide work those here go going not going we think range long assume certainly and X we're so think ranges to our we that you long But the presentation, the you're in, out beyond provided be if there

Operator

comes Craig-Hallum question with Ryan Capital. from Sigdahl next Our

Ryan Sigdahl

will Bet ESPN so where with? had offer that cross-sell states to that Curious, much leverage legal have iGaming success in peers OSB/iGaming

Jay Snowden

we the will all Well, where the iCasino legal. and sports that obviously, Bet We've online is online in a a Hollywood-branded the sports ESPN we have states offering best brand about betting world thought in within lot lead platform with. sports to -- casino the is -- ESPN we betting offering have betting, answer believe

we're multiple casino think by term. way, the online On long you the of really that I side, need the opinion, as most brands are,

player, more more table a to cater slot some and a appeal might player. game cater might to Some more

of we're on for lot the pivot Hollywood of a So it a Hollywood, And Hollywood is creates to really think live from got portfolio, really to markets we're thought proud also opportunity, in but us the think going that's properties. and just a -- grow online across a nice casinos, we X time. side on good brand. The and linkage markets not land-based the on focusing feel casino. brand thought us X/X brand, Casino we that the We that it side. a it We've digitally, cross-sell lot very was we in Hollywood today, brick-and-mortar time Hollywood where roughly brick-and-mortar to and capital digital really creates that about we've The that. for nice invested of our branded we over

Ryan Sigdahl

Jay, I do just a a separate clarification. follow-up. have

is a You they something. it experience? Is said within will apps? guess, Or the separate be it within -- app, the -- it within will cohesive I be

Jay Snowden

will at I integrated. it stand-alone not no. app. No, some Casino point mean have We're yet. there will But a we be Hollywood

able be on Casino same ESPN iCasino. within betting clicking Casino and to to Pennsylvania, So Barstool you if Barstool example, you'll app go that within and platform state you're can on between and in by the Sportsbook the seamlessly way wager the icon your of Hollywood in for Bet the today -- sports,

Operator

comes Shaun Our of with America. next question Kelley from Bank

Shaun Kelley

quarter of about bit. back financial budgets sort we Jay, start here if little up already with that and you're just go initial given, to Maybe were contemplated a and here could of amount if build we the of plan think how some marketing there some maybe Barstool, the like was So we for parameters your $XXX initial some on to your where you fourth the it, building to just this the going of in were spending sense total a certainly of, knew to let's much contemplated. million -- I'm platform? this XXXX, you really of moving or kind already back trying is was I'm get big call tech as with how of

into So you before? how And of expecting is built incremental? much much already how was were sort what

Jay Snowden

for a launch although solid Yes. pretty I hadn't would marketing is line did season, finish plan we say if with a to portion ESPN it gotten football the this ESPN good for Bets. of have we incremental,

in like X/X already some know, additional don't maybe that. and investment when incremental marketing X/X something it now was investments, it you consider of ESPN off-channel I and the built So the of of

Shaun Kelley

helpful. That's beyond. we out a maybe behind of to then 'XX question that And as strategic think and sort

the and here. big You kind haul, pretty you're in certainly you're mentioned long of going this for

us just the you -- can about So the duration. maybe and help depth think

Xx that, mean, talked about XX- historically, long to you let's kind I of of to parameter, maybe mind to it, is if that debt, lease-adjusted need do you sort hold payback. we seen start we've think leverage in So how about, this? XX-month cost see I throughout which own does your net assume if call this in XXXX? And

have accelerated when promotions turn of states. really you for think think do those be? the show how a more on little this I you bit in actually do to it? And recent you start think corner to about want what business or here cohorts But you

Jay Snowden

through how us, months. on there think what to think where side. what depends that season journey of what want of real Investor year, in Shaun, a see over quarter going customer be that, the profit this to in football money to least settle retention profitable. in great that a continuing the year. And of on beyond certainly of course And based there But not launching other and year and players and was some sort think level you're start XXXX come in football season fourth the acquisition We'll on level, in be we're to people, as where and point. today the sure we're into for of I really before going months of focused profitable to the it we I starting the handle out lot soon going inflection getting to as standpoint. P&L. fourth like in quarter year-ish good our the I the podium we're of to profitable. I this Others next a lot it's you operators, think Day we acquisition a really we the football given make going are announcement anything Yes, on the season year. And a beyond a We're think things are they couple going I at I on feel into that out we'll look XX to this on end of at ton the where show are think but of aggressive high going maybe to year. like, will think probably a question. and look we've cross-sell for and terms will returns of we're cover from But the the we second We a to but profitability obviously 'XX behind see about this things miss be sort are scale first have to, But committed with certainly the will product start next will be the left not quarter. And versus they've of top of year. But is

Operator

next Our question comes from Steve Wieczynski with Stifel.

Steven Wieczynski

kind to touched you until don't is, to one call the hours meaning are something be going time, questions just so of Jay, the much to the of maybe guys is late will XX middle for got So over NFL this but we've we've first tied difficult launch customers the question, platforms? gain given already you last, into on market investors if or how year, XX potential it guys not my you other it, a share season, game, and be lot -- from of over but you the of

Jay Snowden

launched a back came sustained we was over of we I share Yes. lot don't Look, for, year. before Sportsbook. question with XXXX the gate that Barstool in October we that to received then out strong know, close at a market of And pretty XX%

don't -- been was the ago. betting X we've It's It's a the of been PASPA decades. years so sort X X years, online been I overturned or X. And in We've or sports of been year space lot markets. a not at for

like to is on it's I a think going to lost is good at plays because acquisition trying to be of side. noisy. funnel football how crazy, opportunity really think spending drive I the actually of in and an major season. November here timing we get so the top not launch this player. the season out. launch have get And football Everybody in like I a Being of our is

it going a to match kind with deposit on something going being mid-season competitors. product-led there it's ESPN with be at for other out November. launch of a we customers in Bet that probably to strategically, everyone isn't been burned already are time But it's new time others first to promotional offered else, or we're dollar decision be the Now through maybe with offering us utilized by have because and where I like launching those

this going those show-me But thoughts. case. actually fine our this to we'll and a on good We'll real-time line we're the -- to really have And December, it. share is be like and you're we heading story. share we into see more launch being with a lot XXXX, results, November, so time happy feel in to And overall like

Steven Wieczynski

think you if Okay. that here call, I you Got some Barstool. going -- if I invested think it you. originally X was great ago, I partnership And Barstool then, did years correctly, into about a to claims couple a we be. sat of was you how made remember Jay, when And

And probably this so of as trying And understand restricted wrong did I you did whole different asking animal. how assume back I with nicely what Barstool? that. guess much can I that ESPN maybe But And as ask versus Barstool? Or so get on terms overestimate of you're way trying I'm as different answer maybe you somewhat you deal can that is, Barstool. Look, a I look different is I understand is in get I'm why you just deal. what with to a to that that.

Jay Snowden

I this it I Barstool. And we most, is conference not were at felt great we thought were Barstool partners Portnoy would publicly licensed of last term held emergency natural there's highly Well, time I gaming we that Sports, if being only at and our Dave's we've with Barstool he I'm guess summed of the way you, press And parties run that's it probably and that just owner sure a it up clear on part both answer owner. really Sports. And became great with company, a unnatural long Barstool. well. X.X-year watched to Dave one obvious all became launching night. an It partnering that and that regulated, of the had

headed. for And great Everyone's talking -- a focused think great a where great the past. focused we're It's so feeling time It's the stay Barstool great where PENNs, great much and day. today to We're about great spend too we're I on not for and for going about Sports. is stoolies. for it's It's really to Dave we're or ESPN. going future headed. And really

Operator

next question Joe Susquehanna. comes Our from Stauff with

Joseph Stauff

a Jay, things. I maybe touch was few wondering could just if on you

largely stack going kind about how just new tech are York? into some pricing? and of take Or higher your is. Can time things ready you you you it signal or question for of it? Or getting ESPN's will do within kind And were of the have how streaming terms about New like how if something in that is you and prime In maybe to app, the terms Parlay far of the product that into of talk maybe product capacity and outsource that? football integrate your of product? Is stress-tested levels season offering, of the plans you long able certain that maybe pieces

Jay Snowden

to not I'll Yes, lot there's that there. if in. question specifically, address why we we a Part make we're time back November tackle like There's just is a that. things UI the is try your handle lot It to of reskinning don't jump Bet great of do ESPN have those. we also there, significantly want of because also I to has, just in And have sure but Joe, launching capacity forward. is appropriately the the as to make branded that we we the that to more want in UX. a way sure app and to course, a volume move then

to and those And handle regard Interactive volume so in team a unit. think November our more and products a when it's Penn to I to great November. With for stress-tested, we be risk by about in about we of of how why handling -- as more we'll We've services, best-in-class Ontario, have. launch. There's nothing we more year that's think through gotten problems ready a hardware in Bowl. good And of got, technology volume. going that's being hardware, driven I trading we're move significantly really full changes. already operating forward, be engineering Super lot part servers we think, but and But launch to ordering had we've feel are we including that And and

can your at parlays, do think that around and just risk about taking our risk we've proven. trading you even how as and you with and what not built here that's benefits seen We're as of a migration. post price the We've have but well team the in that own own bets already for out, We team lot in and been progress very what happy made trading Ontario U.S. having levels. VIP how

And so feel really good that. about

risk general overall a you're owning feeds decisions hold your your looks making percentage both really the some terms value of like in parlays. your parties. as I to is of can difference price some think and big course, little of extent. parlays, you trading your as Of But own what third make from that well game those team how that just taking in and does Everybody

press seeing So are as then but that progress getting with -- that really going good time whole and in pretty to trends. And other feel to of covered and it and much at the last I overall on this and we one, all free was to changed, to better sets relates Dave regard you ESPN certainly your hasn't -- anywhere. to better percentage some in I conference, get access jump address there states. emergency access Look, in his with up think think with I going Bet

But Now and in states, that's some that's things and limited get into something creative we're to ways there's a not high some licenses nature. of states and ESPN, there's a And that currently continue make think -- the to both priority. and of we'll way, a that us I in. priority there's there's high where there's for will, that a

Joseph Stauff

your is does I I plans within see. of I'm how integrate app, know, long but And -- ESPN's come, theory? 'XX? it's signal, again, in sure the a in sense. take the That something that like on in maybe makes that's eventually there don't Or particular, to that lot would

Jay Snowden

rather I'd Investor to answer about to those this forward-looking ESPN and wait feeds we're enhancements as and is, going of with as more The thinking we'll and of year. but focused season. Yes. those address I road and in We'll be of and happy real and our you to But product more later this through we between on course, how football or Joe. integrations share really ramping have. would Bet questions all say ESPN And question, those toward that's you have getting other of a map many a we're launch media things that we're of are end the lot the can year. Day prioritize, until

Operator

with Barclays. Our Brandt Montour next from question comes

Brandt Montour

out. is rolling in the those potentially you retail Bet that question those? brand ESPN Barstool And -- So brand retail been we the and do to ESPN rebranding -- of can lot. you've you sportsbook My sportsbook covered the access sort have Bet a first to What sportsbooks? happens

Jay Snowden

question. good Yes,

significant So capital. pretty have we invested

cooperatively ESPN a retail app they think get and which some across today, and time we've team Barstool have -- our and some to is or sportsbooks. that obviously we launched us We're time some of on Folks going what our take as like, working the to that a does Barstool-specific of issues. And issues to The well got up Dave not support period is transition of Bet visit we awesome. as with have as of I with a branding yet. through -- working looking ESPN. sportsbooks retail properties to need had have regard from number we're the together at have that's to need inside we're still But transition, being best-in-class we're portfolio chance that to arrangement end TBD. we the down

side, them. we're believe going so we to still be some to And there sports connected some plan. And potentially be we not, ESPN-branded what all retail best-in-class go and bars of if And through almost to destinations retail sports on a betting process. can sportsbooks on have -- the

John Levy

the Or a this extra Okay. is you a bit, put extra to Is $XXX-ish with mean, off-channel over as then that, this to This And commitment we I million addition million up but not a -- that's follow-up, little is $XXX-ish a through ESPN. have necessarily that in just completely discretionary? $XXX marketing, of is fee. million ESPN but one recognize this not part spend there level? you Is you agreement Where that's did up to this do could off-channel how assets going to that do come the the right just that utilize Disney -- just just number? marketing with where to a the you broader do why that product? that? be ESPN And you think connectivity it then -- you're support of with doing with you

Jay Snowden

mean we've we're into marketing trying accomplish, ESPN, put and the a and we in lot are support to what scaling from of we getting to I we're believe what thought Yes. service addition missing. that

that right about how do of to your of do too. on is good partners you much of the feel won't or else not of off-channel part your first we at to level spend and feel to in will want really believe spend like plan we if question, everything no all, it, most, Brandt, we as of do. There's or spend to our deal. that allows commitment, so And is this what part ESPN level This you

So ecosystem ESPN of excited we're marketing as as outside within spend well the about that. both both

Operator

question next CBRE. with John from Our comes DeCree

John DeCree

Maybe one.

ESPN marketing about spend could I think of you and using to, prior terms talked in year XQ, million kind kind brand. to you $XXX us -- off-channel this doing on uptick or what of total I what last the marketing Barstool in incremental the spend, was relative is you say, Joe's in if the question, an $XXX but the annual some million wondering of were of compares at much How dollars? roughly give X parameters you

Jay Snowden

for almost the last product months, this a prepared good as XX, we've John, talked Yes. were -- remarks. question. before. migration Well, it's my we in We I think And XX I going through about mentioned

partners And so were in not an of basis integration very careful that and spend marketing the we we organically to at outside on be aggressive our friends Barstool. were things with doing

We converted the was now done. We our great a markets amazing in an occurred. U.S. given that of feel all And so XX of matter how that's if XX about great in hours. and the feel products. It about migration that's eventful, seamless we

to and the again, Benji So team hats that. on Interactive off at

about a pivot good. whatever it but feel as today. generally do where basis, good things So we And we and we really feel on -- can are speaking, sits go-forward I think, to obviously want we

John DeCree

those Maybe on there maybe Are or information are second customer about, the restrictions market you then able ESPN customers, list. touched is Okay. I question one fantasy And the that? be that to that Bet those the e-mails of owned database I are ESPN Fair PENN think, directly or ESPN and enough. shared? e-mail, or of guess part you by some around subscriber earlier question would -- customers to

Jay Snowden

Bet ecosystem, anyone who the by in specifically ultimately, ESPN is owned Bet, the PENN. is Well, ESPN

licensed be to to regulated that customers. have fully on able gaming have information to You be and

so pretty that's cut. And clear

to relates I you that side. release make if I'm on certain the that have in specifics things this to read age think about very we're a it they a take around a time things of also you work responsible of has they've is of committee I map not at out on database we've feel would folks have typically robust just to scenes. on sure completed ton will And again, plan. gaming. we most at a alignment verification sure into marketing the responsible did, going putting committee that been the email-able gaming and behind read as -- got a our they on for on how are working those that one say It's ESPN database the the on together they're that, ESPN, with seriously way would and like comprehensive. the some that and PENN. tremendous the to It's within which you ESPN road we that got get if -- And the market we amount the And very we a forward put exciting. And of very a ESPN to ways, path yesterday, and all we're in that. think closely here

Operator

next Our Stanley. Grambling Stephen from question with Morgan comes

Stephen Grambling

in first your projections that what provided market related business? in with Many the And customers that a for assumptions measure partnerships, conversion beyond dwindle to follow-up, year compare acquired and/or do KPIs them kind ensure X. ultimately other to as the how How think, CAC or past of you acquiring of then digital embedded you're them I effectiveness ESPN media that share test? we lost you saw will the track the in

Jay Snowden

-- every of Good at questions, would of Again, sports in And getting think KPIs, questions of I more day, the day, best to now. investor with the we'll all it's go right regard stats, world. But other into don't eggplants. People around to on I really we're content we're ESPN apples say our deals. focused that they're launch I I I some lot stories. the Stephen. get to presentation. end And the year look, a I think just consume of to in the -- mean media scores,

and well. and the ecosystem reminded affinity an again be over and we're treat in going for the case clear in able ESPN world it. we brand. great there. assets going going media in still they be, going And retain an over to give love and them to a we're to have reason every to X stay cross-sell I going that such pretty can right capabilities retention to to the because best-in-class people run forgot because they amazingly best-in-class always regard good. them products, And now a back environment think so we have people great has We're to about we've that will I that They be are brand. And feel And our to what we're opportunities, that would been we expect relationships with media think customer costs, been that year acquisition be our CAC, of

we because it into didn't spent product. competitive haven't have a We

do. we Now

good. is And I think environment so the

$XXX those that And lower. You're costs $XXX levels. some I healthy in to seeing cases, in customer pretty think acquisition are range,

the assuming how I and great and a so thinking environment about costs. feel gives And good you're and think LTV it there spend opportunity acquisition on that about us those better, to is returns or customer

Stephen Grambling

leverage? On additional you above to Or be that share capital is there to market would is be you this the then, aggressively? is X get ROI turns a way to there would into infused of the more and to willing CAC willing go the pursue if -- lower,

Jay Snowden

wait I Yes. see, mean, Stephen. let's and look,

Day, call And of I think and December, some we'll assuming really really premature laid that the we've you in get good feel weeks Investor But to some topics given about for, on we're about for plan to in that by got been We everybody business. few would now, think share have out front the I how we're do information it plan in the about into thinking and you've raised. good a us. some parameters a how right of some have think it, I've thinking time that that we live I good now. be

Operator

David with Jefferies. Our from next question comes Katz

David Katz

to from you're to deal. a to differences a seen offerings product way, months differentiated ask over several but that on a may matter in think there this so which right? Congrats year We've not wanted are wanted perspective defining talked the themselves a the share you in on -- thinking some kinds and in thoughts about only of have I I your Jay, to how past capture I do you've yours any but and bit, the get about profitably. apps are defining

Jay Snowden

good it's question. Yes, a

do us around really integration, long media medium because can things able maybe won't lot that going is of a way. be do others I be to of in can same think is that integrations, here our video differentiation do that the things There's we the potentially streaming. partner for key term, and term, that we David, who live the to

I of and of think short offerings the is to up be emulate. commoditized But in there And been largely at attention, those they're me, all end period going going others to at time. should able just who parlays a that are do same very that to lot being ESPN to won't going that level and to because of those. betting be things a we're partnership are there to certain media be to because able best there's same-game who's as the have we're given been,

David Katz

about one With of here, may of talked around many cross-selling quickly. the customers opportunities follow the larger versa? concentric circles much people people how are and/or I have if in other. ESPN And to the sort than is PENN Understood. respect vice just one But the you Obviously, up other? database versus much, your

Jay Snowden

overlap this I'd ESPN. most think but I feel what a that to a incremental huge today, be yes, David. lot. We going have we don't opportunity today. And not to with a is that to be mean it good there's to imagine I some is for have going partner of

Operator

Jason Tilchen comes question next from with Genuity. Canaccord Our

Jason Tilchen

home obtaining you when you in it there, license process I your know in -- you I'm chances handicap third access that of stand? of given earlier, mentioned just that Rush market and to how terms that plans specifically Connecticut ESPN's exit where to would state, curious Street's comes currently given

Jay Snowden

hasn't That obviously made to be like and been yet, decision we would Connecticut. Yes. in

anybody in player that I So it's in don't could the to the we'll those operator access or New the if think made like said scale in before the and making database on tax And that I but to important to have on today, when -- -- there decision new rate creatively. be environment really It's I be talked the term things the a York the a to I and is that money there's short scenario loves we're don't term in one state -- about hopefully, states a New think really there. matter. And operators And is to are the from down behind operating York. to York medium see favorable work have no be where New New opportunities more to and a cultivation access we've to that earlier, York, fortunate we're working get win-win but opportunities scenes. a with road, state between Connecticut.

joining could So regard we're things have on going have with we scenes, about by some thinking the strategic time We our how access. what everyone excited. we'll with be bright. Thank are And the forward posted you to view future Very that to market looks we're those Look amazing alliance. on an to potentially to Investor continuing for morning. right. be everyone, updates Day. All we behind you, the connect this such to working this keep and

talk. questions, I time spending So for this to as look always. to We'll you with great having for Thanks soon. morning to analysts for us forward talk continuing the all and

Operator

everyone. today. day, for conclude a the disconnect your you line. That great your that call for conference ask please We and you thank does Have participation

PENN Entertainment (PENN) 9 Aug 232023 Q2 Earnings call transcript