PENN Entertainment Q2 2021 & Acquisition Earnings Call Transcript

Quartr
Provided by Quartr
August 5, 2021

Key Takeaways

  • Penn reported record Q2 results that exceeded guidance as regional gaming rebounded, driving margin expansion and higher spend per visit among core and younger patrons, while Penn Interactive delivered near-breakeven EBITDA.
  • The Barstool Sportsbook app will roll out in 4–5 additional states by the NFL season and in at least 10 states by year-end, adding features like same-game parlays and shareable Betflip to deepen engagement with younger bettors.
  • Penn agreed to acquire theScore for approximately $2 billion in cash and stock, merging Canada’s #1 sports app and media brand with Barstool’s audience and Penn’s retail footprint to create an integrated North American sports media, gaming and technology platform.
  • TheScore’s modern tech stack and in-house player account management, risk, and trading systems are expected to unlock >500 bps of Penn Interactive margin improvement and deliver $200 million of EBITDA accretion by year 2, growing to $500 million long term.
  • Both Barstool and theScore will operate as standalone brands—headquartered in Philadelphia and Toronto respectively—leveraging Canada’s engineering talent and cross-promoting content to boost user acquisition, retention and loyalty.
AI Generated. May Contain Errors.
Earnings Conference Call
PENN Entertainment Q2 2021 & Acquisition
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Operator

Greetings, and welcome to the PENN Entertainment second quarter earnings and acquisition of the Score Media and Gaming conference call. I would now like to turn the conference over to Joseph N. Jaffoni, investor relations. Please go ahead.

Joseph N. Jaffoni
Investor Relations at JCIR

Thank you, Rita. Good morning, everyone, and thank you for joining PENN Entertainment's conference call to review the company's 2021 second quarter results and today's announcement that PENN Entertainment has agreed to acquire Score Media and Gaming. There are investor presentations on the PENN Entertainment website for both the quarterly results and the transaction news. We'll get to management's presentation and comments momentarily, as well as your question and answer, but first I'll review the safe harbor disclosure. In addition to historical facts or statements of current conditions, today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties.

Joseph N. Jaffoni
Investor Relations at JCIR

These statements can be identified by the use of forward-looking terminology such as "expects," "believes," "estimates," "projects," "intends," "plans," "seeks," "may," "will," "should," or "anticipates," or the negative or other variations of these or similar words, or by discussion of future events, strategies, or risks and uncertainties, including future plans, strategies, performance, developments, acquisitions, capital expenditures, and operating results. Such forward-looking statements reflect the company's current expectations and beliefs but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risks and uncertainties associated with the forward-looking statements are described in today's news announcements and in the company's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K and Form 10-Q. Penn National Gaming assumes no obligation to publicly update or revise any forward-looking statements.

Joseph N. Jaffoni
Investor Relations at JCIR

Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G, and when required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company's website. Thank you for your patience with that. Now it's my pleasure to turn the call over to PENN CEO, Jay Snowden. Jay, please go ahead.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, Joe. Good morning, everyone. Thanks for joining us for our second quarter earnings call, and I would say more importantly, the exciting announcement of the acquisition of Score Media and Gaming. I have with me here in Wyomissing our CFO, Felicia Hendrix; our Head of Operations, Todd George; as well as other members of my executive team. Later on, John Levy, Founder and CEO of theScore, will join me to discuss our exciting new partnership that we announced this morning. We'll also be joined in a bit by Barstool founder Dave Portnoy and Barstool Sports CEO Erika Nardini to get their perspective on the deal as well. First, I'll begin today's call with the highlights of our record financial results this quarter, which exceeded our pre-announced ranges.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

This is a reflection of the ongoing recovery in regional gaming, and it speaks more specifically to the outstanding job that Todd and his operating teams, both here at corporate and at the property levels, are doing to help drive our continued margin improvement and boost higher spend per visit from our existing 55-plus age group while finding new ways to attract younger patrons looking for alternative entertainment options. We also saw impressive revenue growth and near break-even EBITDA results across our Penn Interactive segment. We're preparing to launch the Barstool Sportsbook app in four or five more states by the start of NFL season next month. By the end of this calendar year, we expect to be live in at least 10 states while also introducing several new features to the app, such as Same Game Parlay and Shareable Bet Slip, which we're really excited about.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

With greater operating scale and leverage, improved products, and unique value-creating marketing strategies, we believe we are extremely well-positioned for a strong fall as we roll into Barstool Sports' favorite time of the year, football season. Which provides a nice segue to our pending acquisition of theScore, which is the number one sports app and sports media name in Canada and the third most popular sports app and sports media name in North America. When we add theScore's unique integrated media and betting platform and modern state-of-the-art technology to the massive audience of Barstool Sports and its wildly popular personalities and content: we'll be creating North America's leading digital sports content, gaming, and technology company. Under the terms of the agreement, which have been unanimously approved by the boards of the directors of both companies, we'll be acquiring theScore for approximately $2 billion in cash and stock.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

TheScore shareholders will receive $17 in cash and 0.2398 shares of PENN National common stock for each theScore share, which implies a total purchase consideration of $34 per theScore share based on PENN National's five-day volume-weighted average trading price as of July 30, 2021. We are uniquely positioned to seamlessly serve our customers with the most powerful ecosystem of sports, gaming, and media in North America, ultimately creating a community that does not exist today. This transaction will allow us to provide state-of-the-art mobile sports betting and iCasino with highly customized bets and enhanced in-game wagering opportunities, along with highly engaging personalized sports and media content and real-time theScore stats and videos. We believe this powerful new flywheel will result in best-in-class engagement, retention, and loyalty. This larger cross-promotion ecosystem will provide us with multiple growth channels that transcend our current business verticals.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

In the near term, we'll just be scratching the surface of where we can ultimately take this company. The transaction also provides us with a path to full control of our own tech stack with a deep pool of engineering talent. TheScore has developed a modern player account management system and is currently in the process of finishing up the development of an in-house managed risk and trading service platform built specifically for the North American market that should lead to significant savings in third-party platform costs. More importantly, allow us to broaden our product offerings, providing the missing piece for operating at what we believe will be industry-leading margins. In fact, we expect to realize margin improvement of 500 basis points or more over time for Penn Interactive.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

More important than cost synergies, we believe the transaction will provide us with significant incremental revenues, not just in Canada, but also in the U.S. The financial benefits of this transaction are very compelling. Despite significant planned investments in technology and new launches, we anticipate that the acquisition of theScore will provide adjusted EBITDA accretion by year two and an incremental $200 million medium-term adjusted EBITDA opportunity with a $500 million incremental long-term adjusted EBITDA upside. Our perspective is that operators that have achieved early online market share have done so primarily through first-mover advantage, leveraging existing customer databases, and significant paid media spends. We believe the long-term winners will be defined by best-in-class products, bespoke content, efficient customer acquisition, multi-platform reach, and broad market access, all of which we have in spades.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Before turning it over to John, I want to speak for a minute about our excitement to be entering the Canadian gaming market, which represents a compelling revenue growth and talent acquisition opportunity. Canada, and particularly Toronto, is known for its deep pool of world-class engineering and technology expertise, and we and theScore intend to tap into that pool to expand theScore's tech team there as the business continues to scale. I also want to reinforce that we intend to operate theScore as a standalone business, much like we have with Barstool, which will remain headquartered in Toronto. Finally, it goes without saying that this transaction reflects the deep respect we have had for theScore brand over the years and what John and his family have created.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We have known the Levy family for years, and like our Barstool acquisition, we don't want to come in and change who they are, which is what has made them so successful. A large part of what we love about both Barstool and theScore is their authentic voice, their scrappy nature, and entrepreneurial spirit. We want theScore to keep on doing what it does best and are proud to have John and his entire team and family bring their unique perspective to our PENN Entertainment family. This is going to be a long-term partnership. With that, I'd like to turn it over to John Levy.

John Levy
John Levy
Founder and CEO at theScore

Thanks very much, Jay. As Jay mentioned, we've been strategic partners with PENN in the U.S. since 2019. Over that time, it's been great getting to know Jay and his team, who really do share the same culture and, like us, are proud to be disruptors. We quickly realized that we shared a common vision and approach related to its rapidly growing opportunity in media gaming all across North America. We've admired how PENN has strategically built their business, and when this opportunity arose, it was clear that there was a natural alignment. This deal brings together two companies who've developed large and loyal customer bases. We can't wait to join forces with PENN and leverage our respective strengths to create the most powerful sports media, gaming, and content company in the market.

John Levy
John Levy
Founder and CEO at theScore

We will combine to create a first-of-its-kind company which brings together world-class technology, highly engaging sports content, and unparalleled reach, enabling us to uniquely serve users like no one else can. PENN obviously has a massive retail footprint across the U.S., but their approach to online gaming is also equally appealing. Like us, PENN has made a strategic decision to build their gaming operation around a strategy that originally integrates media and betting. Through Barstool, leveraging their hugely influential content machine, it's been apparent how powerful the strategy can be. Our product-led approach to integrating media and betting with technology accomplishes the same objective through an entirely complementary way. We look forward to collaborating with Jay, Erika, and Barstool team as we leverage our unique brands, large audience, and respective approaches to serving sports fans.

John Levy
John Levy
Founder and CEO at theScore

I'd also like to thank our team at theScore for helping us build this truly incredible organization. For years, the team maintained a dedicated focus and attention to understanding how to empower the fan experience. That effort has driven the innovation and ultimate success across all of our verticals: sports media, esports, and gaming. This concentrated, unified mission took us headfirst into the regulated gaming industry, going the path less traveled for media companies and actually becoming the sportsbook. We knew there was a better way to serve sportsbook bettors. In a few years, we've built an innovative, technology-led, integrated media and gaming operation that has poised us for success across North America, including the highly anticipated upcoming rollout of commercial sports betting right here in our home turf.

John Levy
John Levy
Founder and CEO at theScore

It's this enormous potential and demonstrated ability to execute that has excited our partners at PENN and their shared vision of where we can take it that has excited us. That very much includes the opportunity here in Canada. With PENN's support, we will continue to invest in building our Canadian operations, growing our footprint, and expanding our workforce, including our technical capabilities. Mobile technology has always been the foundation of our organization since we began with apps on our flip phones. We have built it into a world-class technology platform and will continue to pioneer on that front, setting the standards for digital sports media and gaming.

John Levy
John Levy
Founder and CEO at theScore

Now, with PENN, we have the opportunity to leverage it on a much larger scale. This combined entity truly creates a unique market leadership position across media, gaming, and technology, and we could not be more excited with the opportunity ahead. On a personal note, I'd like to thank PENN for being a great partner these past few years and express how much Benjie and I look forward to continuing to work with them, and now obviously in a much closer capacity as we continue to head up theScore as part of this new combined company. With that, now I will turn it back to Jay.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, John. Now I'd like to turn it over to Dave Portnoy and Erika Nardini to say a few words as well. Dave, it's all yours.

Dave Portnoy
Founder at Barstool Sports

Thanks, Jay. I'm super excited. Things come full circle. I've told this a little bit, but even before we were involved with Jay and PENN, when the Chernin guys invested, that's the first company, really the only company, when they said, "Is there anybody else that you guys think you're synergistic with that could really grow exponentially what you're doing?" My answer was theScore. Erika and I met with John way back when we had a meeting. We didn't have the resources at the time to pull it off. I think what makes Barstool successful and what has made the Barstool and PENN relationship work is we really know the market. We know the gambling space. We know sports gambling. I've been a user of theScore for I don't even know how long.

Dave Portnoy
Founder at Barstool Sports

I was trying to check when I installed the app on my phone. It's got to be 10, 15 years. We're super excited. I think it's so synergistic with what they do and what we do and continues the belief that I know Jay and I have, and John and I have, which is controlling the media and having the entire ecosystem where people get scores, they get info, and they can also place the wager. It just fits so perfectly, and I've said all along, the company, as everyone's spending, that I would want to work with is theScore. It's been a long time coming, but we just see the world the same way and continue on the belief of the convergence of media, sports gambling, and the next steps. I couldn't be more excited.

Dave Portnoy
Founder at Barstool Sports

It's a company that I know well and have believed in and really just fits the vision of where we want to go. Super excited.

Erika Nardini
CEO at Barstool Sports

This is Erika, just jumping on top of that. We have so much respect for John, his entire family, and what theScore has become and the business they've created. Dave's exactly right. The first company we met with after PASPA was repealed was theScore. We have such a profound respect for what they've created in Canada. I'm so blown away by how they think about community, the type of tech that they're creating, the way they're innovating around information and betting. We believe that those things, coupled with PENN's strength and footprint and our brand, can create a company that will have an incredible amount of synergy. We also couldn't be more excited to be partnering with a Canadian company, and we're ready to go to the moon.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Awesome. Thanks, Erika. Thanks, Dave. Before we open it up to questions, let me just close it out by reiterating a few things, and I think you heard it loud and clear from John Levy, from Dave, and from Erika, that to all of us, there is really a shared vision of where we are headed, and it is not really where everyone is today. We look at this transaction and this partnership, as it is not just about sports betting; it is not just about media; it is not just about tech or gaming. It really does transcend any one of those individual verticals from our perspective. To really become best-in-class and have a really successful flywheel, you have to have the best and widest variety of content, a modern tech platform, omni-channel assets, smart engineers, best-in-class marketers.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We believe strongly theScore, Barstool Sports, and PENN National combined check every box. We're here today to announce that we're doubling down on the belief that we have the best strategy. Today with this partnership, we'll be making the moat that we've built wider and deeper. That's what we're here to talk about. Excited to answer your questions. With that, Rita, we'll hand it over to you.

Operator

Our first question comes from the line of Joe Greff with JPMorgan. Please proceed with your question.

Joe Greff
Joe Greff
Analyst at JPMorgan

Good morning, everybody. My questions have changed going into today. Obviously it's all related to today's theScore acquisition news. First question related to this, Jay. You referenced in the slide deck in the press release cross-marketing, or rather cross-promotions, between theScore and Barstool Sports. Are you planning to lead with one over the other, depending on if you're looking at the U.S. markets versus the Canadian market? How integrated will the brands be on the front end for consumers?

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

No, great question, Joe. As you can imagine, we've spent quite a bit of time talking about this as a group. We actually had really good, productive discussions with the Levy family and Dave and Erika Nardini and Dan Katz a couple of weeks ago in New York. There's really strong consensus that leading with theScore brand in Canada, of course, makes tremendous sense, and we're all excited to do that. We think that much of the Barstool audience is already familiar with theScore. I know Dave and Dan; they were super excited, and you heard Dave talk about it. They've been following theScore, and they've known the Levy family and have been using their app over ESPN or any of the alternatives forever. Leading with theScore brand in Canada makes a lot of sense.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Of course, there'll be a lot of cross-promotion and really get an opportunity to market to that Barstool audience that we are also theScore leading in Canada. I think, in the U.S., Barstool, of course, is a super strong brand. It's going to be our lead brand in the U.S. We do have nice optionality. We have a number of states where theScore has already launched, and they're continuing to build out their market share. I think they live in four or five states already in the U.S., and so we've got a lot of options. I think that what's most exciting, Joe, from my perspective, and I think that John and Erika and Dave would all echo this, that we feel like we have two of the premier sports media brands in North America.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Our business model is a bit different than everyone else. I sort of look at what the competitors are doing in this space, and it feels to me like a rental model. We're planning to buy and to build and to do something that's really differentiated, but it's built for the long term. We have built-in structural advantages that we've talked about before, whether it's access, and now it's totally vertical tech stack, integrated media and betting capabilities and engagement. We've got two amazing brands, so we'll see how this plays out. For sure, the lead brand in Canada will be theScore, and the lead brand in the U.S. will be Barstool.

Joe Greff
Joe Greff
Analyst at JPMorgan

Great. Thank you. On slide 17, you have some illustrative scenarios for market share and revenues and margins. That's for North America as a whole. Within that, what are your underlying assumptions for the Canadian market and market share, which I would imagine, given theScore's presence, the fact that it's the hometown team, and its historical presence there, would give you higher market share than sort of that 10% top three that you've been targeting in North America?

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

If you actually flip to slides 18 and 19, you'll see that we estimated a North American TAM of $30 billion, which is sort of down the middle. The TAMs are all over the place as there's still a number of pending states and province opportunities between the U.S. and Canada. When we say $30 billion, that's combined sports betting and iCasino. We've laid out a number of scenarios there of what, in terms of what your margin improvement opportunities would be at 500 basis points if your market share were anywhere between that 8 and 19% range. We've always been sort of targeting that midpoint of 13%. We think that that's something that is very achievable for us, and we think that's achievable for us in the U.S. and in Canada. I think that's a good baseline, Joe. Is there an upside to that?

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We would feel good about what that potential is down the road, especially once we have full control of the product roadmap and we are 100% on our own tech stack, both in Canada and in the U.S. I think those two slides are the ones to really reference there. Of course, not just from a market share perspective and a margin improvement perspective, but I think overall TAM and where we expect to be market share-wise, it's laid out quite well. The nice thing about this transaction, you've got natural, sort of easy-to-calculate cost synergies. I think it's a lot of fun when you start focusing on the revenue potential, because in all the assumptions that we've made here on these two slides, which are, I think, quite exciting, there's nothing in there around opportunities in media.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

There's nothing in there about opportunities in other verticals where we think this company, meaning Penn National, is going to be focused down the road. What we're building here, again, really transcends any of the verticals that we're currently in. It's much bigger than that.

Joe Greff
Joe Greff
Analyst at JPMorgan

Great. Two final quick ones here. There's a reference to EBITDA accretive in year two after a period of investments. What level of investment are you thinking about right now once the deal closes in that first year or two? You reference in the medium term $200 million of incremental EBITDA. How much of that comes from increased share in Canada versus the margin benefit just from bringing the tech stack in? I know you have it broken out between 90 and 110. I think that 90 includes other things beyond just the benefits of controlling the tech stack.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

From a synergy standpoint, and that's laid out pretty well, I think on slide 17, you can see the breakdown of where we see cost synergies versus revenue synergies. It's sort of like 40% are cost synergies and 60% are revenue synergies; I think is the best way to look at it. Then can you remind me of your first question, Joe?

Joe Greff
Joe Greff
Analyst at JPMorgan

Of just in terms of how much of that $200 million or of the $110 million, of the $200 million comes from what you think the opportunity is in Canada with enhanced share, with theScore in the fold.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Got it. Yep. You had also asked, I believe, about what are the investments over the course of the next year since we said EBITDA accretive for year two. We're going to be, I guess, taking a step back. There's a couple of things coming up for football season this year, and then soon thereafter, that are really exciting for us. One, we're going to have real scale for the first time. Last year, football season, week one, we were live in zero states. We squeezed in week two in Pennsylvania, and we got into Michigan at the very end of last football season. Football is all of our favorite sport at PENN and at Barstool, and I won't speak for theScore because it's probably somewhere between football and hockey. I would say that for us to have scale this year is a big difference.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We're going to be investing, I think, more nationally from a marketing standpoint, and you've been reading about some of those sponsorships, and actually, announced last week, Dave and Erika spoke about not just being the title sponsor but also having distribution rights and broadcast rights as it relates to the Arizona Bowl. There are some things that we're able to do when you have scale that you can't really do when you're only live in one state. Dave has a golf match coming up with Brooks Koepka in September. We also are going to be the lead sponsor for the Jake Paul fight that's coming up at the end of August. What's nice about each one of these opportunities, and the ones that we certainly look for, is that it's not just going to be Barstool logo here or theScore logo there.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

These are deeply integrated. We're able to use our content creators, able to use Dave and Dan Katz and others at Barstool to not just put the name on it, but also to really make it an entertaining experience when people are tuned in to watch or listen to these events. I think you're going to see that there's a lot of investment going into our marketing capabilities to widen the funnel going into football season so we can continue to grow our market share. Admittedly, the last several months, our focus has really been on just getting ready to go live in four or five more states by football season. Kind of a slow sports calendar, but we're ramped up and ready to go for football season at Barstool. I know theScore is ramped up and ready to go.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We think Ontario is going to be ready to go live in December, January, February timeframe. There's going to be clearly significant investments in Ontario for theScore as they get ready to launch. Then we're going to continue to invest in improving the products and capabilities that we have here in the U.S. as well as in Canada. There's a lot of investment going in. Even with all that said, because of our built-in structural advantages, we think we'll be probably break even from the Penn Interactive and theScore combination in 2022. Then you'll see that EBITDA ramp really start to hockey-stick in 2023 and beyond.

Joe Greff
Joe Greff
Analyst at JPMorgan

Great. Thank you very much. Good luck.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, Joe.

Operator

Thank you. Our next question comes from Bernie McTernan from Needham & Company. Please proceed with your question.

Bernie McTernan
Bernie McTernan
Analyst at Needham & Company

Great, good morning, everyone. John and Jay, congrats on the deal. Just big picture question from me. There's a lot of moving pieces with Barstool and PENN's media assets. It's early days, but as you mentioned, media rights to the Arizona Bowl, partnerships with influencers and athletes like Logan Paul, all the content that Dave and team are putting out with Barstool, sports betting apps, leading media app now in sports. I'm sure there's going to be more added to the mix, but could you just take some time and just show where your focus and what your vision is for what Barstool and PENN will look like as sports betting and sports media continue to converge?

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Well, look, what I would tell you is that it's going to be an absolute evolution. The things that we announced last week weren't even on the table two months ago. It's a great question, Bernie. I think the opportunities for us as a company with the great companies and brands of Barstool and theScore really are endless. Look, from my perspective, there is no better top-of-funnel brand in the U.S. from a sports media entertainment perspective than Barstool. Nobody knows how to engage an audience, acquire customers, attract eyeballs the way that Barstool does. They're brilliant at it. The brilliance is really on this phone with Dave and Erika and, of course, Dan Katz and the team at Barstool. I look at theScore and say they're also very strong on the acquisition side.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Where they're even stronger is on the engagement and on the retention side, because there really isn't anyone better at sort of delivering personalized content. Again, I've been on theScore app for years myself, and I'm a Yankee fan, and everything that they do is so real-time. It's customized, it's personalized, and when you're in their app, you're attracted in there from maybe a headline or a highlight or some stats or scores. Once you're in there, it's seamless. You also want to bet on the game. You can do it right there, and it takes you to theScore Bet. This integration between media and betting, I think we're going to do it better than anybody else because we own that entire ecosystem and that entire experience.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

When you combine the power of Barstool from an acquisition standpoint, the strong brand, it's just getting bigger and bigger every day, both as it relates to sports and media and entertainment. You look at what theScore does best. We think we're building something that's best in class and something that can't be duplicated.

Bernie McTernan
Bernie McTernan
Analyst at Needham & Company

Got it. At the time of the Barstool acquisition, you went over a lot of details on the Barstool demographics of the core users or the Stoolies. Is any sense in terms of the overlap is between the core users of theScore and Barstool?

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

I'm happy, John, to have you talk a little bit more about the demographics of theScore and.

John Levy
John Levy
Founder and CEO at theScore

Sure

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

I would tell you from my perspective, we know that there is some overlap, but we also know this is largely incremental, especially when you're talking about their user base in Canada. Go ahead, John.

John Levy
John Levy
Founder and CEO at theScore

Absolutely. I think Jay sort of hit the nail on the head. We've been building the brand in Canada, but actually throughout North America for a whole bunch of years. Two-thirds of all of our users come from the States, probably the most highly engaged audience of any digital sports media company. The key factor that Jay did mention is with respect to the retention and the engagement that we get from the users that are on our app. We can tell it's very personalized. We can tell what's going on almost on a minute-by-minute basis. On Sundays, people are banging the app left, right, and center. You know why they're doing that? It's because predominantly they're betting on sports. Really the experience in Canada is exactly the same. Our presence in Canada, the leading digital mobile sports company in Canada.

John Levy
John Levy
Founder and CEO at theScore

We're second or third throughout North America. The footprint we have both there on our social platforms is quite frankly, enormous. Jay's right, there is going to be some overlap, but the opportunity here to collaborate with PENN, sitting sort of as the core, to collaborate with Barstool is enormous. Just in terms of the type of efforts that we're going to do. It's pretty traditional stuff that you're seeing from the other media companies like Jay suggested. It's logos on billboards, and I joke about sponsoring hot dog eating contests and all that sort of stuff. Our whole approach to sports, and I believe Barstool's is as well, is just this authentic approach to connecting with the end user, with the sports fan. We do connect. I think we connect in somewhat different ways, obviously, and I think that's what makes it so complementary.

John Levy
John Levy
Founder and CEO at theScore

We're kind of like two sisters now or brothers in this family; there's going to be all sorts of ways that we can collaborate and dig deeper and extend this relationship. One of the reasons that PENN was so excited and interested in theScore was because with the technology that we built over the years, it gives them the absolute control to be able to do whatever your mind can think of. When we come up with different promotions that the other guys can't think of, or marketing campaigns, or some of the wild and crazy stuff that Dave and Barstool are going to come up with, you don't have to wait around to be able to implement this stuff.

John Levy
John Levy
Founder and CEO at theScore

The guys at Barstool will tell you that one of the biggest opportunities is everything has to be immediate. You come up with an idea, and you got to present it to the sports fan right off the top, and you have to be able to deal with it instantaneously. One of the last things I'll comment upon on why the technology works so good and why it opens up so many opportunities, specifically in terms of revenue generation, is as probably most of you are aware, 40% to almost 50% of all wagering now is in-game.

John Levy
John Levy
Founder and CEO at theScore

Well, if you don't have the technology that allows you to avoid that spinning wheel of death while people are trying to consume this content and have the indication that they want to make a bet instantly or place a wager instantly, you lose the momentum and you lose the ability to do that. I think when you put all this together, I think Jay mentioned earlier, if you look at PENN and what they've got now, it ticks all the boxes. This is something that we saw in talking to Jay years ago. The first deal we did with Jay was our access deal, I guess, over two years ago now, which gave us a footprint of 11 states in the U.S. Even back then, we could see that there was a real tight, shared vision, and there was the same culture.

John Levy
John Levy
Founder and CEO at theScore

Now with the resources and scale to accelerate what we're doing throughout North America and predominantly in Canada, where we tap into that big resource pool, it really is a very, very unique offering.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, John.

Bernie McTernan
Bernie McTernan
Analyst at Needham & Company

Great. Appreciate that. Yeah, thank you.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, Bernie.

Operator

Thank you. Our next question comes from the line of Ryan Sigdahl with Craig-Hallum Group. Please proceed with your question.

Ryan Sigdahl
Ryan Sigdahl
Analyst at Craig-Hallum

Good morning, guys. Congrats on the results and the transaction announced.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, Ryan.

Ryan Sigdahl
Ryan Sigdahl
Analyst at Craig-Hallum

Curious, you've talked a lot about kind of the integration of tech. How do you feel about the development of the in-house managed risk and trading service platform specifically? Secondly, also on content. Thinking, does this close all the loops from a tech standpoint, or is there more work to be done?

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

No, this closes it out. It's really exciting, and I would encourage people that are in New Jersey or any of the states where theScore is live, you can really go in and get a feel for what their player account management platform is all about. They're actually going to be converting over, and John, maybe you can elaborate in terms of timing when additional conversions are going to be happening over the coming months, particularly as it relates to managed trading services. Before I hand it to John, I would just say, again, we've known the Levys for years, and one of the things that I've always been really impressed by is that this is a company that was built on technology. They've always been digital first. They've always been technology first. Their home office and hub is in Toronto, which is the tech capital of Canada.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

It's such a huge opportunity for us as we think about the future. It's so hard to compete for tech talent these days in the U.S., not that it isn't in Canada, but the nice thing about Toronto and the nice thing about theScore is that theScore is the premier company, the premier brand, especially as it relates to all things sports media and soon to come, sports betting. Our ability to continue to augment our current team in Philadelphia with the team in Toronto and build out in both cities—there's a huge opportunity there. John, maybe I'll turn it over to you to talk specifically about the timing around managed trading services and some of the new features that you're going to be rolling out from a PENN perspective.

John Levy
John Levy
Founder and CEO at theScore

For sure. It's interesting. I often think about people can't believe it's this app, and everybody uses it, and it's simple, and it just works. We couldn't become the most popular sports app in Canada and the second or third in the U.S. without all the effort and work that's gone into it. It looks pretty simple. You use the comparison of this duck floating across the water, and its legs are furiously pedaling underneath, and that's kind of what's driven this.

John Levy
John Levy
Founder and CEO at theScore

When the betting opportunity came up and PASPA fell in the U.S. and we made the big decision to become the only digital sports media company to actually become the operator and not just lease out our huge engaged user base, but actually take the bull by the horns, that was a pretty ballsy and pretty gutsy decision for us because, from a revenue standpoint, it wasn't easy just to suck up all the dollars that everybody would've been throwing at us to get access to our user base. We said, "That just doesn't fit." What really fits is when you focus on one thing first, which is the end user and the consumer, and how to make it easy for them. We've decided we have to build our own technology, and that's what we did.

John Levy
John Levy
Founder and CEO at theScore

We could process, and we did it over the course of the last 12, 24 months, because you can't do this thing overnight. The approach is absolutely right. During that period, we assume more and more responsibility, and as Jay just mentioned, we just announced in our last quarter, we've taken basically full charge of the whole stack. The last element is the risk and trading team, and providing risk and trading services, which we're already mirroring inside of our company because risk and trading is still being handled by the company that we did a deal with originally to enter into the gaming space, which was Bet.Works out of the U.S. We're saying within the next nine months, 12 months, basically sometime and hopefully sooner in that timeline, we will have all of that in-house.

John Levy
John Levy
Founder and CEO at theScore

In the meantime, it's about 90% of it is now inside of our own capabilities. That allows us, for example, full player account management system. We just launched our new promotion engine, and I know someone like Mr. Portnoy's going to go crazy with stuff like that because you're going to come up with different ideas and different types of promotions, and if you typically have to wait on a third party who's handling all this stuff for you get to the bottom of the list, or it takes too long, or the event has come and gone. In our case, it gives us the maximum flexibility to be very creative but then to be able to execute almost instantaneously.

John Levy
John Levy
Founder and CEO at theScore

I know this is one of the reasons, Jay, in addition to loving everything else that we're doing, they love the brand, they love the users that we have, what we've built. I think a lot of it is just thinking differently than what the traditional sports media and sports gaming companies, how they think. This really is a transformational deal. If it wasn't, it wouldn't be something that me or my family would've been interested in. We're banking on having this amazing relationship with PENN Entertainment and utilizing their resources and scale to really blow it up here in Canada and also to blow it up all across North America. I don't think anybody, and I don't care who we're talking about, has the same capabilities of what we now have with this triumvirate, with this triactor.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

The one thing I would add to John's comments is that technology's a really interesting thing because what is the latest and greatest today is extremely outdated two or three years from now. As you look at the different tech stack options that are in the market today, there are a lot of really good ones, but we're going to be on one that was built for the North American market and is going to be the most state-of-the-art, the freshest, the newest, the greatest, the most features out there. We think that's going to allow us to leapfrog the competition as we go live in Canada very soon and then bring it back to the U.S., which we anticipate happening in 2023.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

I guess the very last thing I would say about the tech stack is we have been partnered up with two really great companies in White Hat Gaming and Kambi. This is not a knock against White Hat Gaming or Kambi. They've been great partners. They've been there for us, very responsive. They're great B2B companies. At the end of the day, we ultimately, given how important this is for the company's future and how important it's for us strategically as we think about where and how we create value for our shareholders and stakeholders over the long term, we just have to be in control of our tech stack. You've heard me say that on calls before.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We went out looking for the right tech stack, and what we ended up with is not only best-in-class tech stack, but an amazing brand, an amazing company, and gateway to what is a huge opportunity in Canada with one of the strongest sports brands in all of Canada. We think we got the best of all worlds here.

Dave Portnoy
Founder at Barstool Sports

Jay, it is Dave, just to give people kind of how it could potentially work. Barstool, we've never had the opportunity, as John is saying, to create things that would be specific for us because we're working with companies that serve multiple end users. We talked about the Arizona Bowl, which we'll be controlling soup to nuts, for example, which we have the broadcast, we have to have everything you can name is up to us. A scenario where we're able to create bets and things specific for them, put the content, and highlight it on theScore, which serves all these people interested in gambling as well as us, and be able to have things that nobody else can offer and coverage of the game that nobody else can offer.

Dave Portnoy
Founder at Barstool Sports

Now the ability to create bets that we know we're going to focus on in the game, this, the Arizona Bowl, is just really the beginning. It's one of the things people look a lot of times, like, "Why is Barstool doing the Arizona Bowl?" Well, since then, we've been approached by other sports leagues, some of the major four, interested in giving us rights, but we are going to control the experience, the bets and be able to offer things that simply nobody else will even know is coming, and they won't be able to react quickly. It really gives us, again, the ecosystem from the beginning of the game, covering the game, in betting during the game, and then directing people a bet towards the game that'll be totally unique.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Well said. I agree, Dave.

Ryan Sigdahl
Ryan Sigdahl
Analyst at Craig-Hallum

Jay, John, Dave, appreciate all the detail. I'm sure others have a ton of questions here, as do I, so I'll turn it over. Thanks, guys. Good luck.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, Ryan.

Operator

Thank you. Our next question comes from the line of Shaun Kelley with Bank of America. Please proceed with your question.

Shaun Kelley
Shaun Kelley
Analyst at Bank of America

Hey, good morning, everyone. Congrats to John and Jay and the Levy family. I just wanted to start, Jay, maybe to clarify a point that I think you snuck in there. As we get into technology, and there's been a lot of questions about the importance of owning the vertical tech stack here, can you just talk about the timing of integrations here? I think you snuck in the 2023 number, but can you clarify that a little bit, when you might roll over off of existing platforms or technologies? Do you think that is disruptive at all and/or how important is it to get that done quickly or in the right way?

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Happy to, Shaun. Again, we're still finalizing the plan. Here's the way we're thinking about it currently, which I think is about as bulletproof as it gets. That theScore Bet is going to be going live in Ontario whenever Ontario's ready to go; call it December, January. Already on their own PAM. John had said on his last earnings call, with Benji, that they plan to be live on their own managed trading services platform sometime spring, summer of 2022, so call it in less than a year. It gives us an amazing opportunity to make sure all the technology is working as planned in a really, really important market, and what we believe will be under high stress, high volume because of how strong theScore brand is in Canada.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

At the time that we believe it's ready to bring back to the U.S. and convert our tech stack over, that's when we're going to do it. We think that'll probably happen in 2023. Is it the beginning of 2023 or middle of 2023? Not sure yet, but I would say we're highly confident it'll be before football season of 2023. We want to make sure that we get this all right first and we get it right in a market that is really important with high volume and high market share, and Canada, Ontario, is the perfect opportunity for us to do that. That's the way we're thinking about it today, Shaun, and we'll obviously continue to update everybody on the call as we have more information.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

I think we all have a pretty good idea given the DraftKings SBTech conversion, I think, took around 18 months; it feels like that's probably about the right timeframe for us as well, 18-24 months before we bring it back to the U.S. With all of that said, as Dave just mentioned and John mentioned earlier, there's so much we can do that's complementary between now and then, mainly as it relates to promotions and exclusive betting options and things of that nature. We don't have to wait to all be on the same tech stack to start executing on that now.

Shaun Kelley
Shaun Kelley
Analyst at Bank of America

Great. As my follow-up, between here and 2023 are two relatively important and likely competitive sport seasons. Just wanted to get your thoughts heading into the fall around just where we sit as it relates to both your technology offering and the national scale side of what you wanted to do on the marketing front. I know you have talked over the last six months of getting more aggressive on regional and more pan-regional promotions. Obviously there's some very large names coming with very, very big wallets into the fall that are also scaling really rapidly. Help us sort of outline both the competitive environment and how your competitive thinking is evolving.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Yeah, happy to. This is one of the things that I'm probably most proud of, is that we went from not having a sports betting app at all two and a half years ago to have launched our own in September of last year in Pennsylvania and have really scaled that across the four states that we're currently live in. We've done a great job of that. Our iOS app rating is a 4.7 on a scale of 0-5. Right up there with the top of the marketplace. We're competing with DK, FanDuel, and BetMGM as it relates to the overall experience. It's not like our product today is a poor experience. We've just been playing catch-up.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We launched, and you look at what we're going to have from a product perspective at the start of football season this year versus what we had last year, both as it relates to sports betting and iCasino, and it's not even comparable. We think we're going to continue to be competitive, and again, I complimented Kambi and White Hat Gaming. They've been working their tails off with us over the course of the last 12 months to make sure that we had new features and a great UI/UX heading into football season this year. We're going to have Same Game Parlay, which is a huge betting opportunity as it relates to NFL.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We're going to have Shareable Bet Slip, which is something that Dave and Dan have been asking for since the day we met years ago, and we finally can offer that, which makes it really easy for them to post what their bets are on social media. It's one click, and you're into the Barstool Sportsbook with a populated bet slip. There's a lot of things we're doing this year that we couldn't do last year. Then, as it relates to online casinos, we launched as quickly as we could, and we knew that we had to be live in Michigan at the same time everybody else was, so we rushed to do that. Admittedly, we didn't have the full complement of content at the time.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

As you look at what we're going to be able to offer in the fall this year as it relates to iCasino, it's going to be a much larger, wider library of content. We're also going to have blackjack Barstool-themed games both on the blackjack side as well as slot content that we've been developing at our HitPoint Studios. That's going to be happening this fall as well. We're actually going to have custom live dealer, Barstool-themed live dealer in New Jersey when we launch iCasino in New Jersey here in the next several weeks.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We've got a lot of really exciting things from a product perspective that are in the hopper, which is why, to the second part of your question, Shaun, we feel much more comfortable being more aggressive as it relates to not just getting the word out as it relates to Barstool but also spending some money to do things that we wouldn't have done last year because we didn't have the scale. You wouldn't sponsor a fight that has national appeal, or you wouldn't do what our partners at Barstool are doing for the Arizona Bowl. You wouldn't have done that last year. There's things that we can do this year, and I don't want to share more because we have more that we're working on, but stay tuned.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

That'll be, I think, broader and sort of really focused on widening the funnel even beyond what we did in 2020.

Shaun Kelley
Shaun Kelley
Analyst at Bank of America

Thank you very much. Congratulations.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, Shaun.

Operator

Thank you. Our next question comes from the line of Ben Chaiken with Credit Suisse. Please proceed with your question.

Benjamin Chaiken
Benjamin Chaiken
Analyst at Credit Suisse

Hey, how's it going? I think we've kind of touched on this, but I'll try differently. I guess theScore has very high-quality news analysis, social media, strong OSB app. Dave and Jay, you both talked about using it for years. I'm in a similar boat. Understanding it's still early, there seems to be a dichotomy in my mind between the quality of theScore product, which is very strong, and then the kind of market share generated thus far in the U.S. How do you think about leveraging the existing product in the U.S. to drive greater OSB iGaming share? Do you combine theScore product with Barstool to amplify the existing PENN Barstool product in the U.S., or is it about putting money and promotion behind theScore in the U.S. to get the name out there? The tech and vertical integration totally makes sense.

Benjamin Chaiken
Benjamin Chaiken
Analyst at Credit Suisse

I'm coming at this more from a B2C product standpoint, if that makes sense.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

It makes total sense, Ben. John, I don't want to speak for you on this one, but I know that we are absolutely in the same boat as it relates to how we launched in the U.S., which is that both PENN with Barstool Sportsbook as well as theScore, we have spent virtually nothing on paid marketing. The reason why is that, one, we wanted to make sure from our perspective on the PENN side that we allowed Barstool to do their thing and really prove out the model, which we continue to do. I think to great results. Also because we needed to have the right product and capabilities. I know that John and the Levy family were very focused on making sure the product is right before you start spending to drive market share.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We're not concerned with where market share has been. It's more our focus is where it's going to be. I just know that the power of Barstool and the cross-promoting opportunities that they present, and Dave and Dan, it's of course nice that they love theScore technology and application. Being able to put theScore on even a bigger stage in the U.S. than it's been because of the fact that it's now part of the same family, I think, is a huge opportunity. I think it'll play out, Ben, in terms of what's the strategy in the U.S. Is it two brands from a sports betting standpoint or is it one?

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

We have plenty of time to figure that out, but I would expect to see improved market share results from both theScore Bet in the U.S. as well as Barstool Sportsbook as we head into football season this year. The product is better, and we have reasons to be marketing more aggressively than we did in 2020. John, anything you want to add to that?

John Levy
John Levy
Founder and CEO at theScore

Hi, Ben. How are you, first of all? I think Jay's got it right. Our approach and Jay's approach have been different than most in the context of buying your way to huge market shares and then just hoping that it's sustainable. We've said right from the get-go that you lead with the product and you build the product. For example, in the U.S., we've talked about mid-single-digit to low double-digit penetrations that we're going to build to, and we are on course building towards that over the history that we've had and where we are today. In Canada, obviously, it's going to be a bit of a different story, or probably a lot of a different story because of how extensive the brand resonates. We've been around forever.

John Levy
John Levy
Founder and CEO at theScore

Kids who were watching our TV network in Canada before we sold it to Rogers are now 20 and 30-year-olds and betting on sports, right? The infiltration in terms of the audience that we have on the app is, you add up the other media companies in Canada and put them together, they don't come close to us. Even with the big U.S. brands coming into Canada, because I'm sure they're going to come because, Ontario is the equivalent, in case you people aren't aware of it, of the fifth largest state in the U.S.

John Levy
John Levy
Founder and CEO at theScore

While all of us are jonesing to get into Texas, Florida, New York, et cetera, and we are looking at strategies to do that, we're sitting right here in our home turf with the equivalent of when it's operating towards the end of 2021, we'll be the largest jurisdiction in North America for sports betting. Very exciting for us. One of the reasons that I think, PENN and theScore hit it off so well is because of our approach to going after the market and doing it sensibly. Some of the stuff that Barstool's talking about now in terms of getting into different way to present sports events. I think the key, and what you should take away from that is, sort of toss away all the sort of traditional legacy ways that people are consuming sports content.

John Levy
John Levy
Founder and CEO at theScore

We've built our whole company on the basis of just following the consumer and how he or she consumes sports content. The same thing follows, and this is why all the teams and leagues are desperately looking at new alignments, and it's all about engagement because people just aren't consuming sports the same way they historically have. Start from a digital perspective, which I think is what Dave Portnoy is talking about in terms of doing this bowl game, and work it up from there. Start from the consumer, figure out how he's watching or participating or going to these games, what excites him, and then provide the product to be able to do that. I think one of the things that Jay referenced earlier is, if you look out, we know what we're doing today. We're building this amazing product. We know what sports betting looks like.

John Levy
John Levy
Founder and CEO at theScore

We're doing it differently than anybody else with this integration into the media space, and if you're on a box score, you want to make a bet, it's one click away. I mean, you have just amazing ability to make wagers in-game very quickly and efficiently. That's just the tip of the iceberg, really. We're going to look back a year or two or three from now and say, "We thought we were good then?" We were just doing nothing then, as compared to what it's going to look like. When you start to view it differently, you view it from a digital mobile perspective rather than just the legacy traditional way of looking at sports and how people are consuming it. That's where the big parlay is and that's where the big opportunity is.

John Levy
John Levy
Founder and CEO at theScore

I think that's why we're all so excited about what's come together here in, with PENN.

Dave Portnoy
Founder at Barstool Sports

And if I could-

John Levy
John Levy
Founder and CEO at theScore

Go ahead, Dave.

Dave Portnoy
Founder at Barstool Sports

Sorry, Jay. Just one thing to add to that original question in terms of theScore in the United States. I think something, and this is Dave again from Barstool, that we've learned, and Dan and I have learned, and all the people at Barstool, is our influence is really, really big. Through the years, we may be a little naive, but we would do deals with companies, and it could be any vertical. It could be seltzers with like High Noon. I'd argue that one of you could say sort of a competitor, but Action Network was built on our backs. We had the Chernin connection; nobody knew what it was, and we were promoting that actively, that app. All the user base was built on Barstool promotion. You could look at Robinhood. If you go look, where is the explosive user base from that?

Dave Portnoy
Founder at Barstool Sports

A lot of people point back at what we were doing with DDTG and the Everyday Trader and getting people involved. Even our podcast, like Call Her Daddy, things. We have the ability to sort of kingmake. We have gotten better as the years where we stopped mentioning companies purposely because, like, why are we building others? I think a huge opportunity and the synergistic nature of this is we know how good theScore is. I've used it forever. Dan has used it forever. We know it's best in breed. We are going to turn that faucet on, and if we think theScore is big now, relatively speaking, I think we're going to turn that 10x, 20x because all of a sudden, every time we talk sports, games, gambling, it's theScore. We haven't had that.

Dave Portnoy
Founder at Barstool Sports

When we talk about how is it going to grow in the United States, to me, that's one of the biggest parts of this. John just kind of talked about this. To me, this deal is never about, like, okay, what's the market share or anything like that? It's the perfect synergistic company we need to help each other and grow each other. That, in the United States, I expect theScore over the next year to—I don't even want to put a number on it, but we're going to make that a household. Everybody will know what it is. Everybody will use it for scores, news, all of that stuff. We purposely don't mention companies now because we know the effect we have when we basically bless it. We plan on doing that, obviously, how? Full boat.

John Levy
John Levy
Founder and CEO at theScore

The only thing I'd add to that, it's perfect evidence of that. When you look at the reach that we have in Canada, where people are perfectly familiar with theScore. As I said before, they grew up; everybody here is on theScore. Everybody. We've never shied away from competing, and these guys know that. We launched our TV network in the mid-'90s up against your version of ESPN up here called TSN and Rogers Sportsnet. We kicked their butt because we did things differently. Then when we moved into the digital space, people just came to expect that same level of authenticity, respect for the customer—just give them what they want. We joke about it in the States; we're the most used, least known brand in the sports business, and we're kind of like the New York Rangers in New York, right?

John Levy
John Levy
Founder and CEO at theScore

Everybody who loves the Rangers goes to the game, right? We joke about that with respect to theScore, right? Because people who are on our app in the U.S. and who are betting through theScore Bet into theScore media app love that as well. I think you're going to see an elevation. I've always said, when we get into betting, and this is even before the PENN deal and the sort of arrangement and this collaboration that we're going to have all the time with Barstool, is that sort of the rising tide will raise both. Betting will influence our ability to extend the brand in the U.S., and as we grow the brand in the U.S., betting will take off. Now we're supercharging this with everything that PENN brings to the table and Barstool. In Canada, we're already there.

John Levy
John Levy
Founder and CEO at theScore

In Canada, we just can't wait to unleash the power of our integrated betting operation, which will be, as Jay mentioned, under the same brand, because that's what makes sense. In the U.S., we're going to figure it out, then we have the luxury of being able to figure it out because we're up and operating in the four states currently with theScore Bet. Over the course of the next 12 months, I'm fully confident we're going to be able to decide what's the best path and really decide that, not from me, theScore, Barstool, PENN, but focusing on the consumer and saying, "How do we do that best?

Erika Nardini
CEO at Barstool Sports

This is Erika.

John Levy
John Levy
Founder and CEO at theScore

Go ahead, Erika.

Erika Nardini
CEO at Barstool Sports

The only thing I would add is if you look at, we have the number one podcast in Canada in Spittin' Chiclets. That's a brand we've built with two former NHLers. We've built it of our own momentum and their humor and our perspective on hockey. We are so excited to partner with theScore to really think about, we know how to grow brands and create brands. They know how to create media, serve technology, build community. Those two things put together under any number of brands in these two markets is incredibly powerful, and no one else is doing that.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Listen, you can understand why it's easy to get excited about this. This sounds like the conversations we were having in New York a couple weeks ago as a group. You leave the room and just full of ideas and energy, and it's a shared vision, which I think is super powerful. Look, there is no better amplifier than Barstool here in the U.S., and I would argue the same thing about theScore in Canada. The amplification of each other's brands and being able to cross-promote and cross-market between the two is super powerful, especially when both sides are believers in each other's brands.

John Levy
John Levy
Founder and CEO at theScore

The last thing, I know we're jumping all over each other, but they are distinct voices that work well together. I think that's really one of the key elements. That's why we're going to be able to continue to grow up here in Canada and grow exponentially as well in the States. I think that's the luxury that we have in the context of what these assets are and how significant it's going to be up here. We're just going to rock up here. That creates all sorts of opportunities in the context of building our team and building our presence at home.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Good stuff. Let's, Rita, go with one more question, please.

Operator

Thank you. Our last question will come from the line of Chad Beynon with Macquarie. Please proceed with your question.

Chad Beynon
Chad Beynon
Analyst at Macquarie

Hi, good morning. Jay, John, congrats on a great strategic deal and a cultural fit. Thanks for squeezing me in. One question. Just given your improved customer reach now and improved margin profile, does this position you to make a more compelling pitch in states or provinces like what we're seeing in New York, that maybe before didn't make as much sense, but given this different business model that you have, can you get into these markets or make a pitch versus some of the bigger companies that are spending a lot more money? Thanks.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

I think it's a good question, Chad Beynon. What I would say is obviously what we represented as a company yesterday versus what we represent today, it's just gotten stronger. Some of these states, it is a bit of an open competition. N.Y. is one of those. They're going to choose a couple of platforms and a number of operators. We think that what we bring to the table and how we're thinking about who we might partner with on a bid in N.Y., it's going to be very differentiated. We have opportunities to do things that no one else can do because of the power of the media integration, both with Barstool Sportsbook and, in the not-too-distant future, theScore as well. Yes is the answer. I don't want to talk a whole lot more about our approach in N.Y.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

I would just say that we think we have a great opportunity, and we also, because of the structural advantages. Look, nobody wants the tax rate as high as what's being proposed in New York, but if anybody can make money in that sort of environment, it's us.

Chad Beynon
Chad Beynon
Analyst at Macquarie

Great. Thanks. Maybe one follow-up. Jay, how are you thinking about the ever-changing lifetime value of customers, particularly now that you have a compelling iGaming product and studio with HitPoint Studios? I know that's changed over the past couple months. With Scores users, should we assume that maybe the lifetime value of their customers, given they're slightly older, slightly wealthier, and a little bit more engaged, could be higher than what we have been assuming for a typical customer? Thank you.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thank you for asking that, Chad. Here's the way we think about LTV. I think that there's a lot of different approaches to calculating LTV. Let's just talk about with regard to Barstool. That brand is the most relevant sports media and entertainment brand for anyone aged late teens, early 20s through mid-30s. When you think about the average age of who's on the Barstool Sportsbook today, the average age for us is late 20s. No one can touch that. I don't need to know what everyone else's database looks like; I just know they can't touch that. We also know that the loyalty to Barstool is very, very high. I think that LTV is too easily calculated today.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

If you win a customer over by spending on linear TV, and you get a customer on a rich promotion, and you're assuming you're going to keep that customer forever on an LTV basis, I think that's flawed. I think that our ability to calculate LTV is much stronger because of the retention value and the fact that the average age is so much younger. I think that theScore, not to overuse the term "amplify," but it really does amplify that because of how strong they are on engagement and retention that you heard all of us talk about so far: the live media, live betting experiences, the customized, personalized offerings and engagement.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

LTV, I think as wide as the funnel has been, now we're going to be able to do a much better job, I think Erika articulates this very well, of keeping people in the ecosystem once they're there. TheScore takes all of that to the next level. I think LTV for us is going to be a real number. We'll see how it plays out over time for everyone else.

Chad Beynon
Chad Beynon
Analyst at Macquarie

Thank you very much.

Jay Snowden
Jay Snowden
CEO and President at PENN Entertainment

Thanks, Chad. Rita, I think that's it for the call. Really appreciate everybody joining us today. Excited to share with you the news. Erika, Dave, John, thank you for joining, just great to hear everybody's perspective. We're obviously really excited about this, and we're just getting started. We look forward to speaking with you on the next earnings call.

Operator

Thank you. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

Executives
Analysts
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