Earnings Call: Q2 2020

Aug 6, 2020

Greetings, and welcome to the Penn National Gaming Second Quarter 2020 Conference Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this conference is being recorded Thursday, August 6, 2020. I would now like to turn the conference over to Joe Jaffoni, Investor Relations. Please go ahead. Thank you, Kelly. Good morning, everyone, and thank you for joining Penn National Gaming's 20 22nd quarter conference call. We'll get to management's presentation and comments momentarily as well as your questions and answers, 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. These statements can be identified by the use of forward looking terminology such as expects, believes, estimates, projects, intends, plans, seeks, nay, will, should or anticipates or the negative or other variations of these or similar words or by discussions 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 announcement and in the company's filings with Securities and Exchange Commission, including the company's reports on Form 10 ks and Form 10 Q. And National Gaming assumes no obligation to publicly update or revise any forward looking statements. Today's call and webcast will include non GAAP financial measures within the meaning of SEC Regulation G. 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. With that, it's my pleasure to now turn the call over to the company's CEO, Jay Snowden. Jay, please go ahead. Thanks, Joe. Good morning, everyone, and thanks for joining us for our Q2 earnings call. We hope you and your families are remaining healthy and safe. As you'll see from the strong results we released this morning, we've definitely come a long way since our last earnings call when all of our properties are shut down. But these continue to be uncertain times for all of us and our heartfelt thanks go out to all the health coworkers, first responders who are still out there on the front line battling this pandemic every day. Here to present with me this morning is our Chief Financial Officer, Dave Williams, who as you know joined us on March 3 from Apple and has been on this roller coaster ride with us ever since. I'm also joined this morning by other members of our senior executive team who are here and available to help answer your questions. To begin with, I want to emphasize how proud I am of the way our corporate and property leadership teams and all of our team members have responded to the unprecedented challenges presented to us over the last several months. Since our last call, we've managed to resume operations at more than 95% of our properties. And with yesterday's opening of Greektown in Detroit, all the Zia Park in New Mexico and Tropicana Resort in Las Vegas are operational today. And everyone has worked tirelessly alongside our state regulators and public health officials to implement comprehensive health and sanitation protocols that put the safety of our team members and valued guests first. Our team members are truly the lifeblood of our company and while some remain furloughed given the ongoing capacity restrictions and limited amenities at our properties, we recently announced that we've extended their medical and pharmacy benefits through August 31. In addition, our COVID-nineteen emergency relief fund for which we've raised more than $1,700,000 has provided financial assistance to more than 1,000 team members and remains available to help others in need. I would like to thank all of our team members and valued stakeholders for their continued support, dedication and patience during this difficult time. And before I hand it over to Dave for a summary of our Q2 results and a quick review of our financials, I wanted to highlight our company's commitment to inclusion and diversity, which we referenced in our press release. This is a topic that's very personal to me and I know my executive team here shares my same level of commitment. We have always been proud to operate in diverse communities throughout the country and we strive to ensure that our properties are reflective of those communities. We also support numerous local nonprofits and social welfare organizations who are helping to assist disadvantaged and underrepresented individuals in the areas in which we do business. We believe that actions speak louder than words and this year in celebration of Juneteenth, we committed to spend $1,000,000 annually on a host of new diversity and inclusion initiatives, including a scholarship program for underrepresented team members and increased recruitment efforts and support of Historically Black Colleges and Universities, among others, which you can read about on our website. We've also formed a new diversity committee chaired by Justin Carter, our General Manager and a real dynamic leader at our Hollywood Casino in Toledo to help implement our initiatives and to ensure we have a mechanism in place to listen to team members about ongoing social justice issues. We plan to provide updates on our progress going forward. With that, I will turn it over to Dave. Dave? Thanks, Jay, and good morning, everyone. While our properties were closed in April and the beginning of May, we took decisive actions to solidify our liquidity position, materially reduce costs and reimagine how our properties could operate. When we began reopening our properties in May, we opened with a more efficient and profitable operating model both at our properties and at corporate. While May June results may have benefited in part from pent up demand, we continue to be highly encouraged by revenue and EBITDAR trends in July August despite the continuation of safety protocols, including capacity restrictions and social distancing mandates. During their respective reopening periods through June 30, our property saw a cumulative 1300 basis points EBITDAR margin expansion and a 33% growth in adjusted EBITDAR compared to the prior year. These results were driven by stronger than expected revenues coupled with an aggressive reduction in operating expenses across the company. I'm extremely impressed by our highly talented operating teams who are delivering exceptional performance during these challenging times. Although all but 2 of our casinos are now open, we will continue to be disciplined in our capital expenditures. We spent $14,500,000 on maintenance CapEx in Q2 and approximately $16,000,000 on project CapEx related to Morgantown and York. We anticipate resuming construction at both Morgantown and York later this year with a projected opening date for both in the second half of twenty twenty one. This quarter, we issued $330,500,000 of convertible debt and an additional $345,000,000 in an equity raise, which significantly improved our balance sheet and provided additional liquidity. Since reopening, I am pleased to report that each of our properties has generated positive EBITDAR and as of early June, the company as a whole began generating positive free cash flow and continues to grow cash balances as a result of our operations. Our ending Q2 cash balance was approximately $1,200,000,000 with a net debt balance of $2,000,000,000 This improved liquidity provides well over 12 months of operating cash in the very unlikely event of another full company closure and 0 revenue environment. We are also confident that our improved balance sheet provides ample liquidity to support the launch of our interactive products over the coming months. With that, I turn it back over to Jay. Thanks, Dave. The outstanding results to date at our reopened properties highlight our unique strategic position as a best in class operator of market leading regional properties, which have rebounded more quickly than casinos and destination markets. Although visitation has yet to return to pre COVID levels in large part due to state mandated capacity restrictions and limited amenities, Spend per visit has been notably strong, up 45%, resulting in better than expected revenues. And importantly, we've seen a significant increase in unrated play and growth from a younger demographic. This coincides well with our efforts to implement cashless and contactless initiatives and other technology enhancements at our properties as soon as possible. Dave mentioned the strength of our margins driven by our operating efficiencies. Importantly, we believe a meaningful portion of these margin improvements will be recurring as we continue to make fundamental changes to improve our offerings and efficiencies across our organization. On our last call, we stated that we needed to achieve approximately 95% of 2019 revenue to achieve approximately 100% of 2019 EBITDAR. Given the continuing cost mitigation efforts and our reimagine operating model, we now believe that we can achieve 2019 EBITDAR level with just around 90% of 2019 revenues. And while we are very pleased with our property operating performance, we are most excited about the potential for significant long term growth and value creation through our highly differentiated omni channel strategy. To that end, we look forward to the launch of our Barstool Sportsbook mobile in September here in Pennsylvania. We think Barstool's loyal followers and our existing casino guests will agree it's unlike anything in the market today. Meanwhile, our Hollywood branded real money iCasino product in Pennsylvania continues to grow nicely even after the reopening of our casinos the last couple of months, with a meaningful portion of our revenues coming from our inactive database. Our proven ability to convert our casino database together with our partnership with Barstool Sports will provide significant organic customer acquisition and cross sell opportunities. In sum, we believe we are extremely well positioned to capture an outsized share of the growing U. S. Sports betting and iCasino market. In closing, let me say that despite the ongoing uncertainties with this pandemic, we're extremely excited for the future and believe all the seeds we planted throughout 2020 will provide a strong foundation for new growth and opportunity ahead. So with that, I'd like to open up the call to questions. Thank Our first question comes from Joe Greff with JPMorgan. You may proceed with your question. Good morning, everybody, and nice results to you all. Jay, you mentioned in the press release earlier that so far in July August, results were encouraging. I was hoping maybe you can break that out in 2 pieces for us and maybe in relation to how you described the reopened properties in June performance. So the properties that reopened in June, let's call them the Phase 1 properties, So the revenues were down 6%, EBITDA up 33% in that period in June. How did they perform relative to those metrics in July? And then for those properties that opened up in July for their respective periods, let's call them the Phase 2 properties, how did they perform relative to that EBITDA and revenue performance that you referenced in June? Sure, Joe. And the numbers that we quoted in the release are really those are May June combined. So there are some properties Mississippi, Louisiana that opened in May. So that's the period of time they were open, whether it was May, June or just June year over year for that quarter. Here's what I would say to answer your question is that we continue to be encouraged. I've been really blown away at just how stable the ongoing operating performance has been across the portfolio with very few exceptions. 4th July weekend was a little light, and I think that probably was just due to a fear of being in big crowds. And so when you look at 4th July is typically a busy, busy weekend for us. And this year, it was not it did not match up well to last year. But as soon as 4th July weekend was over, we were right back for the rest of July and so far in August, looking very much like what we saw in the month of May June. The numbers aren't going to match up perfectly because you have properties that opened in June and then that opened in July and the gaming tax rates are different and competitive set is different. And so it's not going to be exactly what you saw for May June, but it's a lot closer to what you saw in May June and we put in our release than maybe what others had in mind that there was going to be this significant drop off after the 1st week or the 1st 2 weeks. Our properties, honestly, that have been opened the longest, which is Mississippi and Louisiana, are still producing some of the strongest results in the portfolio on a year over year basis. Helpful. And do you actually open or reopen the Tropicana? And I was maybe, Dave, you can help us with the monthly cash burn at the Trop and Dea Park as well as at corporate and that'll do it for me. Thanks. Yes. So we plan, Joe, right now to open the Tropicana property in September. There's a lot of moving parts. Every day, we're learning, and our team on the ground there is continuing to do competitive assessments in terms of ADR and RevPAR occupancy. And so we're going to be really thoughtful around when and how we reopen. As of right now, September feels right, but we have several more weeks to nail down an exact date. And if it's not right, then we'll wait a little bit longer to reopen until it is right. It's just these are fluid times. Everything is yes, Jay, and thanks, Joe. Well, we don't really give specific property answers. So, what I will tell you is that even with those Our next question comes from Felicia Hendrix with Barclays. You may proceed with your question. Hi, thank you so much and good morning. Dave, we'll start with you. If you just look at the OpEx per day in your various segments, is there any significant difference? Is there any way we should look at it differently? Or can we just use a similar metric across the board? And if you could just talk about that now that you're up and running. I know you gave us the 1300 basis point improvement, so we can kind of back into it, but if you can add anything to that, would be great. Thanks. Felicia, I'm going to grab that one because I figured this question would come up and it has on previous calls of our competitors. And I think we've given you guys everything you need when we say that, one, we've given you the results for May, June, which I think is helpful. And then I think more importantly, as you're looking at how to model this as you move forward, I said in my prepared remarks that we believe we can get to 100% of pre COVID level or call it 2019 level EBITDAR on 90% or approximately 90% of pre COVID level or 2019 revenue. So I think that's going to give you everything that you need to back into an OpEx per day or whatever you need for modeling purposes. Okay. Thanks. And then Jay, on a lot of these calls, everyone has been asking if the performance you're seeing is sustainable. And I think you talked about that and everybody's talked about that. So I just have a bit of a different question and that is, as you mentioned, May June were what they were and other than July 4, things are kind of continuing. But what does it take to see an increase in this environment or should we just kind of expect this stability for now? And I know it's August 6, but have you seen any change at all since the unemployment insurance benefits have essentially ended until Congress can pass a new program? It's a great question. And I don't know that any of us truly know the answer, Felicia, in terms of what needs to happen for this to get better or what needs to happen for the trends to change to the downside and what happens if the stimulus checks stop or reduced from where they've been over the last several months. And we don't know the answer either. I think there's a lot of factors in play here. There's no doubt that the unemployment benefits are a tailwind. I think we're also obviously benefiting because one of the things that we're seeing, Felicia, is that our unrated business is up almost 15% year over year on a large base of business. So there's a lot of new customers coming in. And when you look at the rated database we have, you look between 21 45 years old, that's also where we're seeing very strong growth of 25% year over year. So there's a lot of new people coming into our facilities. We're obviously very active in getting a card in their hands. And we feel like, there's an opportunity for us as we move forward to convert those guests into long term loyal customers. And we're taking advantage of this time where there really are more limited entertainment options. Movie theaters aren't open and sporting events are with no crowd and there's no concerts. And so you're looking people are looking for things to do, and I think that's part of why spend per visit and time per visit has been so strong as when people get out of the house and they're in a safe environment and they can do something fun, they're spending more time and more money doing that. We've actually seen our oldest segments of the database over 55 years old are the softest in our database. And so I think to the extent and I figure a question like this will come up where what happens the time that there is a vaccine? What happens when there's effective treatments? And do those and when sporting events start allowing fans again and concerts get going, do you lose those customers that today are showing up as unrated or this growth in your younger segments? And I think we keep a lot of them. I think what we're hearing solicited, unsolicited is that many of these folks have never been to a casino or when they went to casinos, it was always jump on an airplane, go to Vegas, now they're staying closer to home. And they realize these are really high quality experiences. Even in this current environment, it's a really fun experience and they're spending time with us. And even if we lose some of that business down the road, I think you also look at you have to look at that's probably around the same time that people who are older and that we're seeing declines in today are probably going to feel more comfortable coming back to casinos and leaving their home and spending more time with us. So there's a lot of variables there. I don't know which one to point to and extrapolate what that means if this one gets better or that one gets worse. I would just reiterate what I said earlier that I've been really pleasantly surprised that we've seen such stability. It's not just the 1st day or the 1st week, it's month 2 and now it's into month 3 for some of our properties, like I said, Mississippi, Louisiana. And we don't have any reason to believe that that's going to fall off anytime in the near future because it's been sustained now even through early August. And Jay, with these younger visitors that you're converting to My Choice, major print cars in their hands, how does that tie into your expectations that you put out in that omnichannel presentation in May, when you were talking about the Barstool app and your goal to convert 5,000,000 of the or I guess 5% of the Barstool audience and then 5,000,000 of your active My Choice members, which that amounts to about 25%. So that seems a little kind of not optimistic, but maybe not super easy, right? So now that you have kind of the younger folks coming in, does that make you feel better about those objectives? Well, I always felt good. So I guess it just reinforces how I felt. And here's what I would say about that Felicia. The My Choice program and Todd George on our team, Jennifer Weitzman, our Chief Marketing Officer, Eric and Ardeni at Barstool, we're talking regularly about the evolution of My Choice. And My Choice, we believe, is going to be it's close now, but we believe it's going to be the strongest loyalty program in the space because it's going to be the only program that is wholly owned by the operator and we deploy on wholly owned channels of business. It's going to be deployed in all of our brick and mortar casinos. Greektown, we're going to go live in October, so then we'll be 41 out of 41. My Choice is already connected to our social gaming products. It's already connected to our online casino real money wagering in Pennsylvania. And by the end of this calendar year, we're going to have it also part of our Barstool Sportsbook app. It won't be at launch, but it will be before the end of this calendar year. So as you think about how that program evolves, it's not going to be maybe as most loyalty programs in the casino space had been for many, many decades where it gets you freebies. It's a free buffet or it's cash back at the machine. And I think you're going to see the offerings and the experience is that we're allowing people to use their earned points to redeem are going to be tied in very well. We love the name My Choice because it really is whatever you want, you can get. And there's going to be Barstool merchandise and opportunities to go to special events with Barstool personalities. And so this younger demographic that we're seeing sign up for cards and we're seeing growth in their rated play right now and that's really without the barstool connection in place as it relates to the My Choice program. So we're very bullish on omnichannel. We're very bullish on our loyalty program and how Barstool fits into that overall strategy. And there's one last point that I would make that I think is very compelling with regard to why we're such big believers in omnichannel. And this is with regard to what we're seeing in Pennsylvania over the last several months. So during the time that our properties were closed in Pennsylvania, as you know, we have a real money icasinoproductalhollywoodcasino.com or you can download the app, of course. And there were approximately 20,000 customers during the time that our properties were closed between late March and late June, early July, 20,000 customers that engaged with us on Hollywood Casino products, real money in Pennsylvania. And if you look at what's happened to our database in Pennsylvania post reopening of the properties about a month ago, what you'll see is that the customers that have only ever gone to the casinos, they've never engaged with us online, They're just pure brick and mortar casino goers. Their place since we've reopened is down about 20%, which as I understand from what the regulators said yesterday, that sounds like about what it's going to be for the whole state. I think slots were down 20% approximately. If you look at the customer, the 20,000 that were engaged with us online, their combined play between going back to the brick and mortar casinos and their continued play on hollywoodcasino.com and on our app is up over 40% year over year, right? So you just think about the power of omni channel. We've been talking about this for a long time. We finally get to start proving this out. We're highly encouraged by what we're seeing so far. And all of that is without Barstool in the mix yet, which we're planning to launch that app next month, and we think those trends are only going to prove out to be better. Thank you so much. That was great color. Appreciate it. Thanks, Alicia. Our next question comes from Thomas Allen with Morgan Stanley. You may proceed with your question. Thank you and congrats on the strong Just a few questions on the Barstool Sportsbook app. As you get closer to launch, can you just talk about some of the things you're most excited about? Also, what's holding it back from launching? I think there was some hope it was going to launch in August and obviously the NFL season opener is September 10 hopefully. What's stopping it from coming out earlier? Thanks. Well, let me start with the second part first, Thomas. We want what's important to us is getting this right. I would tell you that the beta of the app is in my hands and my executive team's hands and the execs at Barstool's hands right now. I was on it way too late last night enjoying myself. It's a fantastic product. So look, we want to make sure that we launch this and that you get one chance to make a first impression. So what's more important, rushing it to get to some MLB and NBA games in August or doing this right launching it in September when we know it's going to deliver a great experience, UI, UX for the end user. That's when we're in this for the long game. So the difference between August September, would it be nice to be open now or be live now because there's some pent up demand? Sure. And by the way, we're seeing great pent up demand in our retail sports books last week, and I think our sports betting handle was up 60% year over year for the 2 days over the weekend. So that demand is going to be there. And if we miss a few games in August, but we're ready for football season in September, while MLB is still going, knocking on wood, of course, NBA playoffs, this is a heck of a time to be launching your apps because we're launching, others have had theirs launched and we're very bullish about how our app is going to compare to the top apps in the marketplace. And what are we most excited about? Look, we're excited that we've taken our time to launch because we're going to launch a very competitive product with things like Traveling Wallet. I think our BetSlip experience is second to none, the intuitiveness of how to use the app. And importantly, the exclusive betting options is really with the differentiation that we're going to, I think, be able to deliver. It's only going to get better over time, but even day 1, and I'm not going to get too much detail here because we'll let you see it when we launch it. You're going to see a lot of opportunities to engage with Dave Portnoy and Big Cat and Brandon Walker and Marty Mush and many others at Barstool. If you want bet with them or you want to bet against them, if you want to fade their bets, these are things we're going to be able to do day 1. And I think you should imagine that the content and the branding integration into our app with Barstool is just going to get better and better and better every time we do a version release. And we think that we'll be able to do a new version release probably every 6 weeks after we launch. And so I mean, I'm excited about everything. There's really we're not launching and holding our breath like, wow, we wish we would have done this by the time we launch. We could have launched this app in Q1 or Q2, but it wouldn't have been a competitive product. We're confident it's going to be very competitive when we launch next month. Thanks. I think we're all excited. And if you need some more testers for the beta, I'll hand it over. Just some follow-up. Just on the iCasino customers you are seeing, can you just talk a little bit about what they're playing? And any other thoughts or recent thoughts on kind of the cross sell opportunity between Icasino and sportsbook customers? Yes. Well, it's a great question. And we've been surprised, honestly, because the iCasino customer skews younger than our brick and mortar customer. Our brick and mortar customer is more that 55 average age range, and we're seeing for online casinos closer to 45. We've been surprised that the percentage of play on slots versus tables has been pretty similar to our brick and mortar casinos. We thought it would skew a lot more table game centric, and we haven't seen that yet. So, we're encouraged by that because I think there's some newer slot product that obviously is not just targeting customers over 55, but there's Gen Xers that are engaging with these slot products as well. And look, this is something the second part of your is this is our strategy, right? And we think that if you're excited about the SPAC IPOs of DraftKings, for example, which is a pure sports betting online play. We bring omni channel to the table, which we feel really good about for the reasons I mentioned Penn's strategy and our partnership and ownership The beauty of Penn strategy and our partnership and ownership structure with Barstool is that you really get the best of all of that. We have a very compelling sports brands to lead with. We have a database and access to 66,000,000 sports enthusiasts, over 60% of which we know bet on sports and over 40% are avid sports bettors, those that are at significant barstool loyalists today. And so you think about our ability, like I think DraftKings and FanDuel have successfully done in New Jersey to convert those sports betters to online casino products, it works. And we've seen it work in New Jersey. We're seeing it work in Pennsylvania. We only today in Pennsylvania have online casino, and we are running north of 10% market share just because of our marketing approach with our database of getting inactives to engage with us and some of our active customers, new customers only, what does that look like when you think about the launch of Barstool sports betting app and our ability to convert those customers, in that case, more table game customers, to our online casino products. And that's why we decided to launch in Pennsylvania first because it's Sports and I Casino, and we're very focused on Michigan because that's Sports and I Casino. When Michigan is ready, we think that will be probably sometime in Q4. And New Jersey Sports and I Casino is going to be very high on our list because we think that we really have the ability to do a great job of converting not just brick and mortar to online and online to brick and mortar, but online sports to online casino and in some case, online casino to online sports and we have great products that again, I'll say this a 1000000 times, are wholly owned by Penn. That's a real differentiator when you're talking about Penn strategy with Barcel. Okay. Thank you. Thanks, Thomas. Our next question comes from Steve Wieczynski with Stifel. You may proceed with your question. Yes. Hey, good morning, guys. Jay, you talked about how that revenue base now needs to be at 90% of 2019 levels. Obviously, that's down from 95%. So I guess the question is, where could that number go? And what levers do you still have to pull to drive that number lower if you can get it lower? And I understand it's not going to get, let's say, into the 60s given the rental payments, but is that a number that could eventually get into the mid-80s as time goes on? Well, let's see, Steve. Let's see how this plays out. Todd and I talk about this daily. And we wouldn't put 90 out there if we weren't comfortable with 90. So let's sort of leave it at that. And there are a lot of it there's a lot of variables, right? It depends on what how great can margins be? Well, it depends what are your sustained revenue levels look like. We have a good sense as to what our cost structure is going to be as we move forward. And I look at our major competitors in regional gaming, and I think that listening to their earnings calls and what they're saying publicly, there's a big focus on margin improvement and really taking this opportunity to create It's open every day for 3 meals and promotional It's open every day for 3 meals and promotional credits. You have to do this and you have to reinvest at these percentages. I think we've white boarded everything. I think our competitors are doing going through a similar exercise. And so it's not to say that in a particular market where we compete against a privately owned operator, if they do something different, we may have to think about what we do there. But as you think about broadly across our portfolio of properties, most of these changes that we've made, with very few exceptions, we believe we can carry forward into the future and not look back. And we're encouraged by that. That's obviously how we think about vendor relationships and what we've learned when our properties were shut down and how we can enhance those vendor relationships, how we think about marketing and acquisition costs, how we think about advertising spend, promotional spend, and of course, how we staff our businesses. And we're really excited. We're actually having, for the first time ever, great conversations with regulators in a number of states about cardless, contactless and cashless technology that we've been looking at for years. It's been deployed in pretty much every other industry but gaming. And it's now it's a customer expectation, particularly with the younger customers that we're seeing come in as unrated and are already rated and helping us see that great growth between 21 45 years old. There's an expectation that you don't have to go to an ATM, punch a bunch of numbers that you might not want to be touching to get cash out, pay a fee to get your own cash out, go to a table and transact with cash. It's just not how Gen Xers, millennials, Gen Z, it's very foreign. And I think regulators get that. And the conversations we've had to date have been really productive. And I was just reading yesterday that the new casino in Downtown Las Vegas is already launching or circa, they're going to be launching with cashless table games. Fantastic. I think that's where you're going to see this industry head. And I think it will be market by market and jurisdiction by jurisdiction. We obviously and I've mentioned this before also, we still spend almost $20,000,000 a year in direct mail. I don't think anybody, especially the last 3 months, is waiting for the mailman to show up, no disrespect, before they decide what to do today. And that was the case 10 years ago 15 years ago. And that the idea that we can get offers to our consumer or to the end user faster, more efficiently and in a way that they want it packaged up and delivered, And that's the way to incentivize going forward. Well, there's a lot of efficiencies there and there's an enhanced consumer experience as well. And so is there more? Of course, there's more. If I were to articulate today, which I won't, what where we're at in terms of revenue generation and EBITDAR generation as of yesterday from the time the properties reopened, obviously 90% still looks conservative. But there's a lot of moving parts. And so 90% is the number we feel comfortable with today and that's something that we'll continue to update all of you as we move forward. Got you. Thanks. And specifically with marketing and advertising, obviously, those remained very depressed right now in terms of your spend levels. But I wonder how you guys think about turning that back on? When do you actually make that decision to start getting more aggressive on those fronts? And then that brings the next question of do you fear that all of a sudden certain markets start to get overly promotional? I just Steve, again, as we sit here today, based on how we're thinking about the business I don't. And I don't. And I think that even in terms of advertising promotional spend, a lot of that was done in paid media, TV and radio and I just there's more efficient ways to do business. And we're much more focused on sort of surgical digital opportunities. That's where eyeballs are. That's where we want to be. And honestly, Barstool has really helped us think differently about this. And they're a sports and digital media company. They know they understand digital advertising as well as any company on the planet. And so we're thinking about things differently, not just for our brick and mortar, but of course, the launch of our sports betting app and our online casino apps and products. So, yes, I think this is it really is a true reimagining. I think this is a once in a career opportunity for companies to really challenge and question everything they've historically done and figure out what's the best model going forward and we're certainly doing that at Penn. Got you. Thanks, Jay. Appreciate it. Thanks, Steve. Our next question comes from Shaun Kelley with Bank of America. You may proceed with your question. Thanks everyone. And Jay, I totally am going to beat the dead horse here. So please keep this answer maybe shorter. But just I'm going to ask the same question that I think Steve just asked, but slightly differently. So if we look at the 90% number that you gave, I think the way we back into it that sort of implies 300 basis points, 350 basis points of sort of margin improvement on those 2019 levels. So the question I want to ask you is like, if we're seeing 1300 basis points at granted some just a select number of properties that are reopened today, yet we're sort of thinking that 300 or 400 might be sustainable. What's the difference? Is it primarily marketing dollars because we haven't re layered in any of those promotions and some of those will naturally come back? Or is it operating expenses because visitation levels are lower and we're just getting this much, much higher productivity that you don't think is sustainable? Or is it something else? Just kind of specifically what's the difference in the because that still seems like it's a pretty wide margin of differential if we think about it the way we laid it out. Yes. It is Sean and I think your math is right. I would say there's really there's 2 things that I think about for why we're going to stick with 90 today and we'll update you as we move forward is that, one, it's early. It's been, in some cases, 1 month, in some cases, 2 months, and in the best case, it's been 3 months, in the case of Mississippi and Louisiana. So that it's just it's early. I don't want us to get over our skis and make promises that we can't keep. So we felt like we could make a commitment today to 90%, and we'll see where it goes. And then number 2, 2, you're seeing spend per visit up 45%. Do I think that's going to last forever? I don't. I think you're probably going to see a higher spend per visit as we move forward for a lot of the reasons that we've talked about today. But is it going to be 45%? I don't know. That would be great if it is. And you're going to eventually see more volumes of customers come back. I think you're going to see visitation levels at some point, whether it's when there's a vaccine or effective treatments or whatever those variables are, you're going to see visitation continue to grow. And when there's more bodies in the building, naturally your structure is going to creep up a little bit. So those are the primary reasons. I wouldn't get hung up on why only this and could it be that. Let's see how things play out. You know where we were for May June. We've said July August have looked a lot like May June with the exception of the 4th July weekend. And we'll keep you posted as we move forward. Great. That's perfect. And then the follow-up question I have is, obviously, you've talked a lot as we think about Barstool, you've talked a lot about the 66,000,000 uniques. There was some commentary about continued, I think, strong engagement, some of the podcasting efforts in the press release. I know that or I think that that $66,000,000 number is fairly dated. Any chance we could get an update on what that looks like today or any other color, soft color you can provide if we can't get the hard data? Well, it's a great question. That's the number we've been using daily. It depends on what they have going on a particular day or a particular month. So, daily. It depends on what they have going on a particular day or a particular month. So I wouldn't change that number as we sit here today. What I can share, and I think these stats are pretty amazing, as you look at the social platforms for Barstool, this is for the month of June of this year. Instagram followers up 49% year over year to 46,000,000 followers Twitter, up 49% to 23,000,000 followers TikTok, they didn't even they weren't engaged with last year because TikTok was just launching, 16,000,000 followers on TikTok in the month of June for Barstool. Podcasts up 40% to 9,000,000. Dollars Snapchat up 37%. So look, this is a brand that we knew was great from a partnership standpoint, from a loyalty, a fan standpoint. And who would have known Dave Portnoy would be interviewing the President of the United States and Davey Day Trader. And the brand has just gotten bigger and big cats playing video games with 100 of thousands of people watching during COVID quarantine. They're so creative and they're just maniacal about entertainment and trying to make sure that they bring some level of levity. Not everyone loves it, but they do bring levity and it's irreverent and it's satirical oftentimes, but they are really talented and I think they have done an amazing job during a time when there were no sports of growing their brand in significant ways. So I would just tell you and sort of where your question was leading, the number is obviously bigger than when it was when we first started using that number. I just don't have anything official in front of me to share with you on what it is today. Great. Thank you very much. Thanks, Sean. Our next question comes from Barry Jonas with Tuohy Securities. You may proceed with your question. Great, thanks. Just to start with a follow-up on margins, really strong margin expansion. Just curious what the range is by property? Is it wide? Are there any call outs whether it's geography, property type? Any other characteristics that vary as we think about that margin expansion? Yes. Barry, I would say there's some outliers to the good and to the bad, but what we're sharing with you is within a very tight range for the vast majority of our properties. And there's competitive reasons why some might be higher and some might be lower. But if you were to look across the portfolio, I think you would see that 50% to 65% of them are within a very tight range within very close to what we shared today on the revenues down 6% and EBITDAR up 33% and margins up 1300%. That's not being driven by 1 or 2 properties. It's really being driven by the bulk of the portfolio. Fantastic. And then just on the cashless, contactless initiatives, what are your expectations longer term about or maybe medium and then longer term about adoption by players? Do you think this is really additive or more a substitute for cash? Well, I think it's, well, there's a lot of ways to answer that. There are very few places that you go to today in your life, grocery stores, forms of entertainment, bars, restaurants, where people are transacting in cash. And when I say people, that's not 21 year olds, that's not 44 year olds, that's not 58 year olds, that's not 72 year olds, it's everybody. Everybody has debit cards and credit cards. And I think it's just an expectation. So this is something that we have to do as an industry or else it's going to hurt our opportunity to engage with younger customers and to keep our existing customers. The days of going to ATMs and getting cash out to buy in a blackjack table, I love playing blackjack, been doing it for my adult life, I'll say over 21. No one enjoys going to an ATM and doing that. So I think that this is something customers are asking for. It's something that regulators are very open to and I think certainly seeing the light now more than ever because they're hearing it from customers too. I don't want to deal with cash. And we spend 1,000,000 and 1,000,000 and 1,000,000 and 1,000,000 of dollars across the company moving cash, tracking cash, sending cash, collecting cash, storing cash every day. And you can imagine the sort of efficiencies that it creates, while at the same time making it a better guest experience. We can't move fast enough on this as an industry. Great. Thank you. Thanks, Barry. And our next question comes from Chad Beynon with Macquarie. You may proceed with your question. Hi, good morning. Thanks for taking my question. Wanted to go back to sports and iGaming. Jay, I know in the past you've talked about potential goals about more vertical integration around the tech stack. And I know it's early in your resources with Canby and WhiteHat on the onboarding side. I think I've been pretty successful, but I know you're building out your staff in house with engineers. Are there places in the tech stack where you might find more vertically integrated opportunities, whether it's on the casino content side with slots or blackjack or anything else on the sports side to come? Thanks. Yes. Great question, Chad. And look, our focus right now, as you can imagine, is let's launch this app in Pennsylvania next month as successfully as possible. And we feel like we have the right technology partners in Canby and WhiteHat. We feel like we have a fantastic team of engineers and product developers and operators, customer service folks that are going to support the launch and the further development of that app. And so that's really the focus right now. Are there opportunities down the road to think about vertical more vertically integrating technology? Absolutely. We have those conversations, but it's not something that we're focused on imminently. We've been our approach on this, Chad, has been and again, why we took as long as we did to launch the app is that, 1, we didn't want an off the shelf product that wasn't going to be competitive. We want to take the time to make sure we have Barstool that differentiated our products. And we want to own any aspect of what touches the end user, and that's what we're doing today. Now does it make sense to go even more vertically on sort of back end and risk management trading services? Maybe, maybe not. Maybe that's an area that we say others can just do it better than we can. And so we'd rather not expend energy and resources on that. But we feel good about the strategy and the tech stack today. I think more to come in future quarters in terms of how that thinking evolves. Okay. Thank you. And then on the land based side, do you have a best estimate in terms of what percentage of units have been active since your properties have reopened? And do you believe you have the right amount of product, too much, too little? How does this kind of fold into how the casino floor on the land based side will look from a product standpoint post pandemic? Thanks. Well, I think I've said this a couple of times in past calls that this 50% of capacity limitation really only becomes an issue for us on the busiest of hours on weekends or a busy holiday weekend like 4th July, certainly it was a factor. But if you look at sort of day in, day out, it's a non issue on weekdays across the company. And it's really a non issue on most of the weekend other than those peak hours of 7 to 10 p. M. On Friday Saturday night. So the way we're thinking about it is, a lot of our properties, they were built decades ago, and they were built within a very different competitive environment. There was a lot less supply in state and neighboring states. So our casino floors are plenty big, to handle the busiest of days, the busiest of hours on New Year's Eve and then some. And so our ability to continue to take product off the floor, let's say, even if we have the ability to reopen 100% of our floors, I think you'd find that our focus is going to be on comfort and safety and maybe you don't end up reopening 100 percent of your games, you open up 100% of your floors, but you space everything out and social distancing or a more socially distanced approach and experience is what we create. Somewhat so far, there's a lot more somewhat so far. There's a lot more opportunity to enhance the experience for people, once we don't have those limitations or they've been today. Thank you very much. Appreciate it. Thanks, Chad. All right. Mr. Snowden, I'll turn the call back over to you for any final remarks. No final remarks here. I think why don't we take one more question. I think we're a few minutes before the hour and let's just do one more if we have someone queue Of course, no problem. Our next question comes from John DeCree with Union Gaming Group. You may proceed with your question. Good morning, everyone. And Jay, thanks for taking the final question. I think you covered pretty much on all the ground. So forgive me if it's a little bit more granular. But you had spoken earlier about the database engagement in Pennsylvania on the Hollywood Real Money product. I was wondering if you could give us a little context. I think you mentioned maybe 20,000 or so customers, have played online. Curious if that's half or a large portion of the customers you've seen come through the Hollywood Casino since launching. I know it's only been a short time, but I'm curious how that stacked out to your expectations and, the overall mix of either users or revenue coming from the database so far? Yes. No, it's a great question, John. It's still early innings, obviously, right? So we're learning and analyzing the data as we go. Here's the way to think about it. I might be a little bit off on these percentages, but roughly onethree of the guests of that 20,000 are database customers that were inactive or dormant, roughly 1 third were database customers that were active with us at our brick and mortar casinos and roughly onethree that engaged with us, that 20,000 over the quarantine period only online were new customers and we're obviously getting cards in their hands as we go. So we've been, I would say, pleasantly surprised given that our paid media behind Hollywood Casino Online and PA is virtually nothing. We've really focused on activating our database, activating at the properties to enhance the exposure of Hollywood Casino Online. And so the fact that 2 thirds of our engaged users were either dormant or are new to the company is really, I think, encouraging. And the 1 third of customers that were engaged with us actively at the casinos and are now engaged with us also online, we're seeing their total spend with Penn significantly higher than it was when it was only spent at the brick and mortar. So their year over year spend, much like I shared in the stats that I mentioned earlier, is a lot higher when you combine their online revenue as well as the brick and mortar revenue and spend. So yes, I would say we're encouraged. I mean, it's early. It's one state. It's just online casino. We haven't launched Barstool yet. And what does it look like when you start cross selling your sports betters to online casino. We'll learn a lot more. I think your question is a good one and have limited to share, but we'll share more on future calls. I appreciate all the additional color, Jay. I think you answered my follow-up on marketing. So I'll leave it at that. Thanks again and congratulations on all the work you've done so far. Great, John. Thank you for your company, figuring out how to navigate this as we go. I could not be more proud of how the company has stepped up from top to bottom. Everybody in the company, no complaints. What can I do to help us move forward and couldn't be more proud to be leading this company? So thank you for dialing in, and we look forward to speaking with you next quarter. That does conclude the conference call for today. We thank you for your participation and we ask that you please disconnect your lines.