Penn National Gaming, a buttoned-down family-run gambling company under the founding Carlino family’s tenure, made tentative changes under second CEO Tim Wilmott when the company also underwent huge expansion through acquisitions.
Sweeping changes in new directions – the current mantra sums up as a “seamless omnichannel experience with one shared wallet” – have marked the new age of Penn under Jay Snowden, CEO for just more than a year.
Shared Harrah’s connection for Penn leaders
Wilmott and Snowden are Ivy-educated — Wilmott, at the University of Pennsylvania’s Wharton School, Snowden at Harvard, where he played quarterback. Both also hold MBAs. And both came up through Harrah’s when that company was at its peak.
By contrast, PNG founder’s son Peter M. Carlino, the company’s leader for decades before Wilmott and Snowden, always worked for his own or his family’s businesses. He holds an undergraduate degree from Penn State University.
Wilmott had trained as an industrial engineer at Lehigh University, where he went for both his undergrad and master’s degrees before changing his course to casinos.
While at Penn National, he was also engineering — not things but rather the people, money, knowledge, information, and systems necessary to run a gaming company — evidently with the core of an analytical and cautious engineer informing him.
Snowden came up in Vegas, son and grandson of poker dealers
On the other hand, Snowden (pictured right) came up quite literally inside Las Vegas casinos.
His mother, Terry Vanderlip, a single mom, dealt poker and raised three boys working as a poker dealer. Her father had played poker professionally before also becoming a poker dealer.
Snowden learned the game at the age of five he has said, and he credits poker with helping him develop critical thinking, social skills, and an ability to read people.
Football and Harvard meant opportunity for future Penn leader
But what made him was football, with enough athletic skills and smarts to earn a ride to Harvard University, playing a backup quarterback before starting a Crimson game in his junior year.
That is perhaps something of a metaphor for his grooming time at Penn as COO under Wilmott.
After finishing a government degree at Harvard, Snowden returned to Las Vegas, working first as a slot performance manager at Harrah’s. He supervised two dozen slot mechanics and analyzed the machines’ performances.
Snowden a Cosmo Fellow
But before moving on and taking a higher post at Harrah’s and earning his MBA in St. Louis, Snowden became a Cosmo Guy.
According to the Las Vegas Sun, Snowden was featured in a 1999 issue of the iconic women’s fashion magazine, Cosmopolitan. He got picked after being nominated by Harrah’s and chosen by the magazine. The piece invited women to write him.
And write him they evidently did.
He didn’t give up much info for the Sun’s interview about the Cosmo experience. But he smartly paid respects to his mother.
“The weird part is, my mom gave me all the freedom in the world. No curfews. She never told me what kind of grades to get, never made me play sports. I enjoy seeing her happy. That’s my motivation for doing what I do.”
And he explained the sort of female partner he wanted:
“Someone you can have a conversation with and not have to wonder what’s going on in there.”
He evidently found what he was looking for: He’s married, and the couple shares a stately 1830s home just off the water in the Greater Boston area, meaning he commutes by air for work.
Before leaving for Penn, Snowden worked at a California Harrah’s, then was a general manager of Harrah’s St. Louis.
He came to Atlantic City in 2005 as Showboat Casino‘s general manager, a facility then operated by Harrah’s. The company bought Caesars Entertainment that same year, eventually rebranding as Caesars. He eventually was senior vice president and general manager of Caesars and Harrah’s in Atlantic City.
Snowden joined Penn in 2011. He reported directly to Wilmott.
Planned succession at Penn
Wilmott made way for Snowden, whom he had first met through Harrah’s more than 20 years before.
Snowden became COO in 2017. He was publicly anointed to follow Wilmott in April of 2019 and took over in January 2020.
Wilmott has said he left Penn knowing the company was in good hands while also acknowledging Snowden might have left Penn if he’d had to wait much longer to become CEO.
“It was as seamless a transition for a company this size, and that rarely happens,” Snowden told the Reading Eagle soon after the transition, and just after the Barstool Sports buy-in.
But the upbeat interview with the hometown paper came just before the pandemic induced a stock freefall as facilities closed across the country, layoffs mounted, and the cash-starved business teetered.
2020: A wild year for Penn and Snowden, frightening and exhilarating
Within Snowden’s first month as CEO, Penn made a game-changing announcement. On January 29: the company bought 36% Barstool Sports, a bro-culture sports and lifestyle media company founded by Dave Portnoy, who grew up near Boston.
While Penn had a conservative rep, Barstool was often perceived as toxically crass, misogynistic, and even at times, abusive.
But that also meant Barstool’s massive audience was largely young male sports fans interested in sports betting — incidentally rather opposite of Penn’s female and 50-years-plus retail slot customers.
This is why Penn paid $163 million in cash and stock, which came with an option to up their ownership stake in Barstool to 50% in three years and eventually be able to take full ownership. The transaction valued Barstool at $450 million and gave Penn exclusive rights to the brand for 40 years.
Barstool all about online and a new demographic for Penn
The Barstool brand, familiar to 66 million fans known as “Stoolies,” would be used to position Penn’s online casino table games and its planned online sportsbook.
Snowden explained in a corporate press release:
“With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database.
“In addition, with 66 million monthly unique visitors, we believe the significant reach of Barstool Sports and loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs for our sports betting and online products, significantly enhancing profitability and driving value for our shareholders.”
The release also spoke to planned changes away from emphasizing brick-and-mortar regional casinos to becoming “a best-in-class omni-channel provider of retail and online gaming and sports betting entertainment.”
Stock market bump from Barstool news
By early February last year, it was clear the market liked the mash-up, with a share price for $PENN topping $30 and more than $35 toward the end of the month. $PENN had been in the low to mid-$20s prior to the announcement.
Then came COVID
COVID-19 crashed the Penn party in March 2020, just as the virus did across America, but it hit especially deeply at land-based gaming properties.
Penn’s March press releases were a succession of devastating closing announcements. On March 18, shares traded as low as $3.75 and closed at just $4.52.
By April 1, 26,000 employees across 41 locations were on furlough, including PA properties Hollywood Casino at Penn National Racing and Meadows Racetrack & Casino, as well as the corporate office.
With no cash coming in, the company sold real estate to its spin-off company GLPI, or Gaming and Leisure Properties Inc., which the son of Penn’s founder runs. Next, Penn’s Tropicana property in Las Vegas was subject to a lease-back with GLPI.
And while the company continued seeking employees for the eventual Barstool launch, the focus for a time was on surviving the tsunami more than setting a new course.
Penn’s casinos began reopening – slowly – by early May.
Penn National was already in on online gambling in PA with their Hollywood online casino (launched July, 2019). But that was just the beginning of a big shift to mobile gambling.
Barstool launch in September 2020
The Barstool online sportsbook app launch missed the earliest NFL games in 2020 and the openers for the two PA teams, the Steelers and the Eagles.
But the test period rollout starting on Sept. 15 went smoothly, making it the tenth online sportsbook in Pennsylvania.
And while the launch came with typical Portnoy trash talk about world domination, the world saw a slightly different Portnoy when he temporarily bedded down in PA crash pads.
He actually courted locals with his version of a charm offensive: chomping on cheesesteaks, taking a bite out of neighborhood pizzas, interacting with college students, funneling cash to the iconic but struggling Reading Terminal Market.
The stock market liked what it saw, hitting a new high of $76.62 during the first week the app appeared.
Beyond the hype, the numbers showed Penn’s Barstool-branded sports app proved it could run with the big dogs or at least approach the market share of FanDuel and DraftKings. Barstool attracted $11 million in handle in just four days of operation.
In November, the company resumed work on one of its mini-casino sites at a mall near York. And work is now continuing at the other mini in Morgantown, which is going up in a section of Caernarvon Township, Berks County.
Barstool rolling out elsewhere, Snowden bullish
Pushing ahead, the company opened its first retail Barstool book in November in Colorado and then in Detroit and Illinois in December. The Barstool app launched with sports betting in Michigan in late January and ranked a distant fourth in market share in the Wolverine State’s first full month with online betting.
With seed money from Portnoy, the Barstool Fund was born in December, bailing out small businesses struggling with COVID issues and garnering a ton of goodwill and publicity, plus a $1 million donation from Penn that came with a sportsbook promo tie-in.
As a result, Snowden saw retail and online growing due to Barstool:
“With Barstool actively promoting our retail and online sports betting offerings to their massive and growing audience, we believe we can retain and cross-sell these customers to visit our land-based casinos and play our iCasino products.”
Barstool had a great December with its sportsbook handle at $71.8 million and revenue of $13.9 million. In its fourth month, Barstool finished tops among all of PA’s online sportsbooks for revenue, accounting for 42% of the online revenue in PA.
Six months in, Barstool is still third in market share, taking 14% of PA sports handle in February. After handing out $5.8 million in promotional credits for the month though, taxable revenue was dead last for online operators at -$726K. Gross gaming revenue (GGR) of $5.1 million, however, put Barstool ahead of DraftKings and second only to FanDuel.
In mid-December, 2020 Penn added another online sportsbook to its portfolio, partnering with BetMGM to occupy its Hollywood Casino Morgantown license. The BetMGM sportsbook app ranked fourth in PA market share in Feb.
Penn National stock started strong in 2021
On January 11, 2021, $PENN shares topped $100, an amazing increase since March of 2020.
The company’s Q4 earnings call on Feb. 4 showed a drop in revenue and an earnings miss.
Still, analysts such as Zacks Equity Research appeared happy with the result and bullishly enthusiastic about Barstool’s ability to bolster Penn.
According to Zacks:
“Penn National Gaming, Inc. PENN reported fourth-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate. Notably, both the metrics missed the consensus mark after beating in the preceding two quarters.
“Despite reporting lower-than-expected results, shares of the company gained 8.5% in the after-hours trading session on Feb 4. Despite the pandemic, the company is confident about its long-term growth strategy and Barstool profit.”
Penn’s stock peaks with S&P 500 news
On March 1, Penn’s stock hit what was then a daytime high of $127.41 a share, closing at $126.26. That’s about a 380% increase in a year.
And on March 15, the stock was briefly at more than $142 a share. With the share price at a record, Snowden sold 71,540 shares at an average price of $140.61 a share. His total sale of Penn stock that day was $10.1 million. For the latest on Penn stock, visit our online gambling stocks page.
The Barstool app’s rollout continued with a launch in Illinois on March 10. Penn’s plan is to continue launching the app in additional states this year.
Underscoring Penn’s arrival, the company becomes part of the S&P 500 on March 22, joining America’s largest and most influential companies on the widely followed index.
That’s an amazing first year for Snowden and the company he leads. Whether Penn can keep up the astronomical pace remains to be seen, but the online focus, you can bet, will be in the cards.