Penn National Gaming had been the leading regional gaming company for at least the past decade, but in the last few years, it has embraced an omnichannel approach to the business. Jay Snowden, the president and CEO, has taken an aggressive stance in positioning the company for growth in the digital field without taking his eyes off the land-based casinos. He spoke with GGB Publisher Roger Gros at G2E in Las Vegas in October. (For complete podcast listen to the audio above or view the video at the bottom of this article).
GGB: A lot of things have changed since we’ve seen each other. The first is the name of the company. Why did you do that?
Jay Snowden: We changed it for several reasons. We’ve evolved so much as a company over the course of the last three or four years. We were predominantly a regional gaming company, and we spun off all of our real estate in 2013 and 2014. So what we’ve been really focused on is evolution into more of an entertainment company.
We are now owner of two of the best sports media brands in North America, with Barstool Sports and theScore. We also now are operating in 14 states as an online sports betting operator, and a handful from an online casino perspective. So we felt like National Gaming Inc., didn’t really describe who we are anymore, and we felt “entertainment” was broadly more appropriate for us. And so the name change made a lot of sense, and it really speaks to not just the company we’ve become, but I think importantly where we’re going as a company.
Tell us why buying Barstool and theScore made sense for the company.
That’s something that we knew we needed to do as a company, because regional gaming in and of itself isn’t high growth. And we consider ourselves a growth company. We felt like once PASPA was overturned in May 2018, that opened the door for us to really think differently about the company going digital, and to really focus on an omnichannel strategy because we have structural advantages.
We own the brands that you mentioned. Those aren’t joint ventures. We’re not just investors. And we also own our brick-and-mortar assets and those licenses. So we can get customers, whether it’s through online sports betting or a casino visit or online gaming, or really loyal followers of our sports media assets and brands and the content behind those brands, bring them into the ecosystem and then introduce them to all of the other offerings that we have and do cross sale. That’s why I feel strongly that any business sector you look at, if you don’t have a very compelling digital and/or omnichannel strategy, you’re facing extinction in the relatively near future. So we needed to pivot, we’ve pivoted, we’ve embraced it, and here we go!
You recently announced expansions of some of your properties on the land-based side. What was that all about?
It’s another part of our strategy for growth. And you have to remember that even though a lot of the focus for the industry over the last couple of years has been on digital and online sports betting, at the core of our omnichannel strategy are our brick-and-mortar casinos. They generate most of the revenue and a tremendous amount of cash flow for the company. We’ve got best-in-class assets in most of the markets where we operate, but there are a few that aren’t best in class, and we’ve been wanting to address that. Two of the ones that are best in class just needed more hotel capacity. In the case of M Resort here in Las Vegas, we have 390 rooms today. We’ve been busting out of our seams for the last several years. So we announced that we’re going to build another hotel about the same size—375 rooms.
We’re also adding a hotel in Columbus—200 rooms and about a $100 million investment. We’ve been needing a hotel there since day one. We’ll break ground at the end of 2023. That one’s probably a 12 month-to-15-month build.
In Illinois, two of our assets aren’t best in class and really have become less competitive over time. They’re just dated riverboat barges, one in Aurora and the other in Joliet. In Joliet, we’re going to actually move our license about five or six miles away to a new development, a mixed-use development, since we no longer have to be on the water. It’s right off of two major interstates.
And then the last one, which is the largest investment, is a $360 million relocation of our Aurora riverboats. And similarly, we’re moving that one seven miles away right off of Interstate 88. The beauty of that project is that one, it’s right off the interstate, but two, it’s right next to a Simon Premium Outlet Mall that already attracts 7 million or 8 million people a year.
Are you making these changes in Illinois because of the casinos that have been approved in the northern part of the state?
We consider the moves to be both offensive and defensive. You can sit back and do nothing. You can sit on your hands and you can continue to lose market share and revenue. And that’s not a compelling business strategy from my perspective. This is not just, “Hey, the riverboat barges are old, we need to build something new, but build ’em at the same location.” This is a brand-new build at more favorable locations. And so, even though there’s new supply coming into Illinois, we believe this will make us a lot more competitive in Joliet and in Aurora.