The Penn National Gaming stock continues to rise. And with regulated sports betting set to launch by football season, it should only spike more.
The company released it’s second-quarter earnings Thursday, indicating a net revenue of $826.9 million during that period and an operating income of $181.8 million that represents and increase of 34.6 percent.
Revenue and income continue to trend upward for Penn National, and it should only continue that direction with sports betting about to go live in several states.
Next vertical on deck
It’s amazing how much can change between earnings reports.
The last time Penn National held its call, the US Supreme Court was still deciding the fate of legalized sports betting. Ultimately, the high court ruled to strike down the Professional and Amateur Sports Protection Act (PASPA) to open the door for states to regulate the industry.
Now, the company is primed to get in on the action.
Penn National CEO Tim Wilmott from the recent earnings call:
“We anticipate accepting wagers on sporting events at our casinos in Mississippi, West Virginia, and potentially Pennsylvania prior to the start of the National Football League’s season opener in September.”
But where will Penn National sportsbooks be located?
Mississippi was expecting to launch its sports betting industry last week, though regulators are saying that there is still work to be done before doing so. That said, the state could roll out its operations within days.
Elsewhere, West Virginia has set a timeline of early September to go live with its industry.
Pennsylvania, however, has not found much traction. Because of an astronomic licensing fee of $10 million and a tax rate of 36 percent, no properties in the Keystone State have applied for sports betting licenses. Yet state lawmakers are optimistic that sports betting will still be ready to rock come football season.
According to Penn National’s earnings report, the company is “continuing to engage with state lawmakers in our other jurisdictions to advocate for passage of sports betting laws with reasonable tax rates and license fees, similar to legislation enacted in the West Virginia , Mississippi and Nevada models.”
Continuing to grow
Penn National has padded its portfolio of late, including an ongoing acquisition of Pinnacle Entertainment that, according to Wilmott, has been approved by seven states, including the three mention above as well as Illinois, Indiana, Ohio and Louisiana.
More from Wilmott:
“Over the last several months, we have worked diligently with Pinnacle’s leadership to better understand the company’s culture and processes and engaged with leaders and team members from all corporate functions. With that knowledge, we have developed a new corporate organizational structure that blends proven leaders from both Penn National and Pinnacle …”
Penn National is also in the process of acquiring Margaritaville Resort Casino in Louisiana, which is expected to close by the fourth quarter.
In Pennsylvania, the company owns Hollywood Casino and Meadows and has two other properties (mini-casinos in York County and in Lancaster) with up to 750 slot machines and 30 gaming tables. Both applications should be submitted by mid-September and are expected to open by next year.
Despite Penn National’s plans for those mini-casinos, the company continues to focus on the state’s jaw-dropping tax rate, which, at 54 percent for online slot revenue, is the highest in the country.
“Despite the state’s high tax rate,” Wilmott said, “we chose to proceed with the hope that we can continue to work to bring the tax rate in line with that of other gaming jurisdictions around the world …”