Pennsylvania-based PENN Entertainment will not be adopting DraftKings‘ strategy of imposing a surcharge on winning bettors anytime soon. Company CEO, Jay Snowden (above), said on the company’s second-quarter earnings call on Thursday morning:
“I would say when you’re talking about a potential tax surcharge in early 2025, that’s not even on our radar.”
DraftKings sent the gambling world into a frenzy when it announced the surcharge in states where tax rates are at 20% or higher. Pennsylvania rate is 36%.
So far, DraftKings is the only operator to implement a surcharge plan. Now that PENN Entertainment’s ESPN BET PA can be crossed off the list, that leaves FanDuel as the only major operator that has not addressed the topic. It is expected the address the topic next week during the earnings call for its parent company Flutter.
Snowden also addressed other important topics pertinent to Pennsylvania, including sale rumors and skill games.
PENN Entertainment to be observers on surcharge idea
PENN has a lot of work to do with ESPN BET PA, which has lost market share in every month in 2024. Snowden readily admitted that the company is focused on improving the product, rather than following DraftKings’ lead on a surcharge on winning bets.
However, Snowden is going to keep a close eye on the situation.
“I hesitate to never say never, but it just means that we’re really focused on continuing to improve the products, continuing to drive top of funnel and loyalty and retention. And so, we would not be a first mover on something like that,” Snowden said.
“We’re going to stay very close to it. We’ll observe, we’ll see what the reaction is assuming that it does launch in early ‘25. And then we’ll probably have more to share with all of you on our quarterly earnings calls throughout 2025.”
Snowden has his hands full with turning around ESPN BET. In Pennsylvania, the operator has lost the following market share results in 2024:
- January: 8.9%
- February: 7.9%
- March: 6.8%
- April: 6.4%
- May: 5.5%
- June: 5.2%
As for PENN being sold, ‘Don’t believe everything you read’
Snowden also addressed sale rumors on the call. As expected, he started out the comment with a no comment, but put emphasis on the need to cater to shareholders.
“We haven’t commented and won’t comment on market rumors and speculation,” Snowden said. “What I will say is that as a company and as a board, we always have and always will evaluate opportunities to enhance value and will continue to take actions that we believe are in the best interest of the company and our shareholders.”
Donerail Group, a top investor, got the sale rumors started when it sent a letter in May, detailing the frustration of PENN’s direction, and asked the company to sell.
That has led to several reports, with the latest being a potential joint acquisition involving Boyd Gaming and Flutter. So, while Snowden initially declined to comment, he did offer this statement:
“And I would say don’t believe everything you read. And… just remember that our assets, our land-based assets are all part of different leases. So, it’s not as simple and easy as you just sell off an asset.”
It sounds like a sale of PENN’s land-based properties would be a difficult task, as Snowden alluded to.
Snowden: PA skill games ‘smell like a slot machine’
PENN has loudly opposed Pennsylvania skill games. That opposition had largely been led by VP of Public Affairs and Government Relations, Jeff Morris, in a policy hearing last year.
The Supreme Court of Pennsylvania has agreed to determine the legality of games. That could be a win for the regulated industry.
Snowden said that PENN, along with other PA casinos, are going to fight.
“We have been very vocal in our position that those skill-based games sound, look and smell like a slot machine and there’s a lot of concern around that,” Snowden said.
“Obviously, we continue to fight against what has been a rapid expansion of skill-based games in Pennsylvania through the court system. We think that we have a very strong position there. Our industry is very much aligned on fighting against the expansion of skill-based games, not just in Pennsylvania but around the country.”
PENN’s four Hollywood Casinos in Pennsylvania are involved in a complaint asking the state’s highest court. They want to remove the 54% tax properties must pay, or tax skill games at the same rate.
Snowden also did not have a timeline for the Supreme Court’s ruling on the legality matter.
PENN Entertainment certainly offered a ton of information relevant to Pennsylvania’s gambling market.
