Penn CEO Open to Acquisitions, Sees Limited Las Vegas Opportunities
Posted on: February 16, 2024, 10:18h.
Last updated on: February 16, 2024, 10:54h.
Penn Entertainment (NASDAQ: PENN) is open to dealmaking to add to its portfolio of land-based casinos. But CEO Jay Snowden doesn’t currently see much supply to consider on the Las Vegas Strip.
While casino operators are always amenable to making a deal if the price is right, there are no confirmed reports of Strip properties currently being on the auction block. Behind-the-scenes chatter is a different matter. But the current lay of the land in terms of Strip casino operating rights and ownership may be in place for some time.
Our position is we’ll continue to be looking at opportunities, whether those are acquisitional opportunities or Greenfield as those opportunities present themselves,” said Snowden in response to a question from Truist Securities analyst Barry Jonas on Penn’s earnings conference call on Thursday. “And that hasn’t changed. That won’t change. If there’s a great opportunity and we think we can generate value in an investment and that’s something we’re going to strongly consider sometimes that’s easier said than done. Las Vegas Strip, there’s very limited opportunities and nothing really hot at the moment.”
Penn’s Las Vegas exposure currently consists of the M Resort Spa Casino in Henderson, Nev. The operator’s only other Nevada gaming venue is Cactus Petes Resort Casino in Jackpot.
Why Las Vegas Could Matter
Penn previously operated the Tropicana on the Strip and is rumored to have made a run at the Cosmopolitan, losing that battle to MGM Resorts International (NYSE: MGM).
There are compelling reasons why casino acquisitions, in Las Vegas and otherwise, could be meaningful to Penn and its investors. On Thursday, the stock plunged as fourth-quarter results were hampered by heavy promotional spending tied to the ESPN Bet mobile sports wagering application. In other words, ESPN Bet overshadowed Penn’s regional casino business, so much so that in a note to clients, Stifel analyst Steven Wieczynski wondered aloud “Does anybody know PENN owns casinos?”
The analyst deemed Penn’s brick-and-mortar results “really solid,” but added that in the operator’s investor deck, just one of 18 pages was devoted to that side of the business. It can be inferred, therefore, that market participants, and perhaps the company itself, are overemphasizing ESPN Bet.
Still, sports betting is important to the Penn investment thesis, and it currently doesn’t offer ESPN Bet in Nevada. Last year, Snowden said it’s possible that will change. But due to the state’s in-person registration requirement for internet sports betting accounts, there’s not an easy fix because M Resort isn’t conveniently located for all residents of Las Vegas. The in-person mandate is also the reason why DraftKings and FanDuel aren’t doing business in Nevada.
Penn Nevada Expansion
Barring an unexpected announcement — not an impossibility — regarding an asset sale by a rival, it could be a while before Penn adds to its Las Vegas footprint.
As for expanding into states where it currently doesn’t have casinos, Penn could be open to that idea, too.
“If there’s a new state, then that’s something that we would be taking and have been taking a hard look at. Obviously, nothing is imminent at the moment. But we’re continuing to kick the tires. That won’t change,” added Snowden.
Source: casino.org
