Looks like a week of mixed messages for Penn National Gaming.
On one hand, on Friday, Penn reopens its mothership Hollywood Casino and Penn National Race Course in Grantville, Pennsylvania, where its executive offices are also located.
It’s the first time they’ll be open since COVID-19 mitigation forced their closure in mid-March.
More than 1,900 jobs appear to be gone for good
But on the other hand, not all of the regional gaming company’s 26,000 furloughed employees are getting welcomed back.
Not in PA and Nevada executive offices, where 233 employees are likely gone for good.
Not in St. Louis, where 744 jobs at two casinos were just announced as having been eliminated.
Not in Detroit, where another 621 jobs are getting axed.
And there are possibly more job losses. Penn National has more than 40 casinos, off-track wagering facilities and racetracks, and there’s no definitive accounting yet for all the employees who may lose their jobs permanently.
A pivot toward sports wagering for Penn National
All of the public announcements have pointed to the economic consequences of the virus. But the unexpressed motivator could simply be to trim land-based casino employee headcounts.
Penn National is on a hiring tear for its belated entry into the sports betting market, with dozens of ads on LinkedIn and Indeed.
The company in late January bought a 36% share of Barstool Sports, the often raunchy and rambunctious assemblage of sports and lifestyle blogs and podcasts overseen by Dave Portnoy.
Penn’s holding of Barstool is a first step toward remaking Barstool into the gaming company’s sports betting brand for online and retail. Portnoy got $163 million in cash and stock, and Penn would have the option to buy more of Barstool.
The pairing of the straight-laced gaming company and the often-controversial Barstool seemed odd. But it also promised a springboard for Penn National to attract younger gamblers who were not part of its fanbase.
Timing is everything
Looking to catch a wave, PENN stock was clobbered by a tsunami.
At first, Penn’s stock skyrocketed to nearly $40 a share in the weeks after the Barstool deal. Then the virus struck and it dropped in the dumpster to $4.52 a share by March 18. Shares this week are around $32.
The company used $430 million in credit as a lifeline, drawn from its $700 million in revolving credit. It sold property to raise rental credits.
Work on Penn mini-casinos in York and Morgantown was halted to preserve cash, with no ETA on when construction might resume.
The company also sold additional shares of Penn to raise cash as its ill-timed acquisition of Barstool left it strapped.
And then there is Portnoy
And while the company seems to have stabilized, its sports betting partner, Portnoy, has attracted media attention for his transformation into a stock trader.
As part of that, Portnoy has talked about his Penn stock. But he also repeatedly mentions GAN and DraftKings, two stocks he owns and that do business with Penn National.
At least one trader, Adam Mesh, sees that as pushing the ethical envelope.