This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk08: 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. And National Gaming assumes no obligation to publicly update or revise any forward-looking statements. Today's call-in 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 at today's press release as well as on the company's website. Thank you for your patience with that. And now it's my pleasure to turn the call over to Penn CEO, Jay Snowden. Jay, please go ahead.
spk16: My fellow citizens, tonight it is with great urgency that I ask you to download the State of Payroll e-book from Bamboo HR. This dossier outlines the challenges we face and what our business community is doing to address them and get our employees paid. Thank you. Week after week, fortnight after fortnight, month after month, payroll professionals put their careers on the line, protecting their employees from late paychecks, incorrect deductions, and ultimately, financial ruin. They are the true unsung heroes of every great workplace. In spite of the essential work payroll does for us, they often face great injustice dealing with antiquated time clocks, slow communication, and missing demographic information. We can and must do better for these professionals. As a famous leader once said, the only thing to fear is bad payroll practices. But with the right support, your payroll... I know it's not a real quote, okay? I'm trying to show how complicated payroll is. With the... Twitter's saying what now? Download the State of Payroll e-book from Bamboo HR today. Somebody get my social media team on the phone. And somebody tell my mom I can't even come to Bunko tonight.
spk19: U.S.
spk14: inflation increased 7.9% before this war began setting a 40-year high.
spk12: If you're not worried about inflation, you should be. Higher prices for gas, food, everything. It sucks and it's not getting better anytime soon. But what's the best way to fight back? The answer? By having additional side income in your life that comes in no matter what is going on in the world. And right now, the best, most proven way I know of doing that is with a certain semi-passive business model that is backed by one of the world's richest companies, Amazon. What I'm talking about is Audible by Amazon. Starting an Audible business is about as inflation proof as it gets because instead of selling physical products and all the rising costs associated with them, this taps into the incredibly fast growing industry of digital audio. And so far, this new better way to do Amazon that my twin brother Rasmus and I are pioneering has been so insanely successful for the people we've shared it with that big business publications like Forbes, Entrepreneur and others are already writing about it. But more importantly, because this simple and repeatable business model is backed by Amazon, it's allowing thousands of people to supplement and even replace their full-time income by simply taking their piece of the pie of this fast emerging industry. Like Trevor here, who we taught our simple four-step audible process to, was soon after getting started able to quit his nine-to-five job and fulfill his dreams of moving to Bali to live life on his own terms. No boss to report to, just living life the way he's always wanted. People from all backgrounds are having huge success with this, largely because, unlike other business models, this is a very new and uncompetitive space, and you don't need any special skills, business experience, or a big startup budget to get started. Thank you so much for having me. And as a special bonus for clicking and watching, you're also going to get our best-selling book, The Freedom Shortcut, for free, just for checking out the free video training. Now, what's great about this new Audible by Amazon platform is that it provides equal opportunity for everyone. So it doesn't matter where you live, what you do, or how old you are. Don't you owe it to yourself to at least check this out and see what it's all about? Click the link below to watch the free video and see if this is something for you. See you inside.
spk19: Thanks, Joe. Good morning, everyone.
spk07: 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 and while missing our CFO, Felicia Hendricks, our head of operations, Todd George, as well as other members of my executive team. And later on, John Levy, founder and CEO of the SCORE will join me to discuss our exciting new partnership that we announced this morning. We'll also be joined a bit by Barstool founder Dave Portnoy and Barstool Sports CEO Erica Nardini to get their perspective on the deal as well. But first, I'll begin today's call with the highlights of our record financial results this quarter, which exceeded our pre-announced ranges. 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. And 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. 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 the score. 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 the SCORES unique integrated media embedding 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 the score for approximately $2 billion in cash and stock. The score shareholders will receive $17 in cash and 0.2398 shares of Penn National common stock for each the score share, which implies a total purchase consideration of US $34 per the score share based on Penn National's five-day volume-weighted average trading price as of July 30, 2021.
spk00: With Datadog, you can monitor your infrastructure, apps, and security posture in one place. Instantly visualize your ever-changing infrastructure. Follow request traces through distributed environments and get code-level visibility with always-on production profiling. cut through the noise with automatic anomaly detection, and discover bottlenecks by mapping service dependencies. Datadog ingests all of your logs from any source, helps you optimize front-end performance, and secures your production environment with real-time threat detection. See inside any stack, any app, at any scale, anywhere. Join thousands of customers who rely on Datadog for full stack visibility. Start a free trial today.
spk14: With Fundrise, you can invest here, from there, or there, from here. Our platform gives you access to premium real estate that was previously only available to institutions. So you can take your portfolio from here to there. You'll get updates on this and that from wherever you are. Join the community of over 150,000 investors that have gone from there to here with Fundrise.
spk07: 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 score stats and videos. We believe this powerful new flywheel will result in best in class engagement, retention, and loyalty. And this larger cross promotion ecosystem will provide us with multiple growth channels that transcend our current business verticals. 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. The SCORE 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, and 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. But 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 the score 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 spend. 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. 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 in the SCORE intend to tap into that pool to expand the SCORE's tech team there as the business continues to scale. I also want to reinforce that we intend to operate the SCORE 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 the SCORE brand over the years and what John and his family have created. 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 The Score is their authentic voice, their scrappy nature and entrepreneurial spirit. We want The Score 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 National family. This is going to be a long-term partnership. So with that, I'd like to turn it over to John Levy.
spk11: So thanks very much, Jay. And as Jay mentioned, we've been strategic partners with Penn in the US since 2019. And 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 when 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. 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 huge It's a 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 Dave, Erica, and Barstool team as we leverage our unique brands, large audience, and respective approaches to serving sports fans. Now, I'd also like to thank our team at The Score 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. It's this enormously 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 flipped homes. We have built it into a world-class technology platform and we'll continue to pioneer on that front, setting the standards for digital sports, media, and gaming. 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 I had. On a personal note, I'd like to thank Ken for being a great partner these past few years and express how much Benji and I look forward to continuing to work with them and now, obviously, in a much closer capacity as we continue to head up the score as part of this new combined company. With that, now I will turn it back to Jay.
spk03: After saving with customized car insurance from Liberty Mutual, I customize everything, like Marco's backpack.
spk07: Thanks, John. Now I'd like to turn it over to Dave Portnoy and Eric and our Dean to say a few words as well. Dave, it's all yours.
spk04: Yeah, thanks Jay. So I'm super excited. Um, and you know, things come full circle. I've told this a little bit, but even before we were involved, uh, with Jay and Penn, when the churning guys, uh, invested us 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 the score. So Erica and I met with John way back when, had a meeting. We didn't have the resources at the time to pull it off. But, you know, 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. And I've been a user of the score for I don't even know how long. I was trying to check when I installed the app on my phone. It's got to be 10, 15 years. So we're super excited. I think it's so synergistic with what they do and what we do. It 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 the score. So it's been a long time coming. Um, but we just see the world the same way and continues on the belief of, you know, the convergence of media sports gambling and the next step. So I couldn't be more excited. And it's a company that I know well, and I believed in and really just fits the vision of where we want to go. So super excited.
spk17: And then this is Erica, just jumping on top of that, you know, we have so much respect for John, his entire family and what the SCORE has become and the business they've created. Dave's exactly right. The first company we met with after PASPA was repealed was the SCORE. 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 vetting. And we believe that those things coupled with Penn 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.
spk07: Awesome. Thanks, Erica. Thanks, Dave. Well, 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 Erica that to all of us, there's really a shared vision of where we're headed. And it's not really where everyone is today. We look at this transaction and this partnership as it's not just about sports betting, it's not just about media, it's not just about tech or gaming. It really does transcend any one of those individual verticals from our perspective. And 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, and we believe strongly the SCORE, Barstool Sports, and Penn National combined check every box. So we're here today to announce that we're doubling down on the belief that we have the best strategy. And today with this partnership, we'll be making the moat that we've built wider and deeper. So that's what we're here to talk about. Excited to answer your questions. And with that, Rita, we'll hand it over to you.
spk18: Thank you. If you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. One moment please for the first question. Our first question comes from the line of Joe Griff with JP Morgan. Please proceed with your question.
spk05: Good morning, everybody. Questions of change going into today, so obviously it's all related to today's score 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 the score and Barstool Sports. Are you planning to lead with one over the other, depending 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?
spk07: Great question, Joe. And 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 Erica and Big Cat a couple weeks ago in New York and there's really strong consensus that leading with the SCORE 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 the SCORE. I know Dave and Dan they were super excited and you heard Dave talk about it. They've been following the score and they've known the Levy family and have been using their app over ESPN or any of the alternatives forever. And so leading with the score brands in Canada makes a lot of sense. And of course there'll be a lot of, you know, cross promotion and, um, uh, really get an opportunity to, you know, market to that Barstool audience that we are also the score leading in Canada. And I think, you know, in the U.S., Barstool, of course, is a super strong brand. It's going to be our lead brand in the U.S. But we do have nice optionality. We have a number of states where the score has already launched and they're continuing to build out their market share. I think they're 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, you know, John and Erica and Dave would all echo this, that We feel like we have two of the premier sports media brands in North America, and 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, and 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 embedding capabilities and engagement. And we've got two amazing brands, so we'll see how this plays out. But for sure, the lead brand in Canada will be the score and the lead brand in the U.S. will be Barstool.
spk05: Great, thank you. And then on slide 17, you have some illustrative scenarios for market share and revenues and margins. And 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 the scores, 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?
spk07: Yeah, so 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. Their TAMs are all over the place as there's still a number of pending states and province opportunities between the U.S. and Canada. And when we say $30 billion, that's combined sports betting and iCasino. And so we've laid out a number of scenarios there of what, you know, in terms of what you're Margin improvement opportunities would be at 500 basis points. If your market share were anywhere between that eight 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 US and in Canada. So I think that's a good baseline Joe is there upside to that 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 staff both in Canada and in the US. So I think those two slides are the ones to really reference there and of course not just from a market share perspective and a margin improvement perspective but I think overall and where we expect to be market share wise, it's laid out quite well. So you've got the nice thing about this transaction, you've got natural sort of easy to calculate cost synergies. And then I think, you know, it's a lot of fun when you start focusing on the revenue potential because in all of the assumptions that we've made here on these two slides, which are I think, you know, quite exciting, there's nothing in there around opportunities in media There's nothing in there about opportunities and 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.
spk05: Great. And then 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. And then you referenced 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 down between 90 and 110. I think that 90 includes other things beyond just the benefits of controlling the tech stack.
spk15: Google Pixel, the only phone made by Google with the camera that sees in the dark, sees all skin tones accurately, and fixes your photos like magic. Literally. Google Pixel. For all you are.
spk07: Yep. So 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. So it's sort of like a you know, 40% are cost synergies and 60% are revenue synergies, I think is the best way to look at it. And then can you remind me of your first question, Joe?
spk05: Of just in terms of how much of that $200 million or of that $110 million of the $200 million, you know, comes from what you think the opportunity is in Canada with enhanced share, you know, with the score and the fold?
spk07: Got it. Yep. And then I Yep. And you had also asked, I believe about sort of what costs are we in? What are the investments over the course of the next year since we said EBITDA accretive for year two, and, you know, 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, very end of last football season. Football is all of our favorite sport at Penn and at Barstool, and I won't speak for the score because it's probably somewhere between football and hockey, but I would say that for us to have scale this year is a big difference. We're going to be investing, I think more nationally from a marketing standpoint. And, um, you've been reading about some of those sponsorships and, um, actually announced last week, uh, Dave and Erica spoke about, um, not just being a key, the title sponsor, but also having distributed distribution rights and broadcast rights, uh, as it relates to the Arizona bowl. So 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 and 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 you know Barstool logo here or the score logo there these are you know deeply integrated and We're able to use our content creators, able to use Dave and Big Cat 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. So 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 the score is ramped up and ready to go. And we think Ontario is going to be ready to go live in sort of December, January, February timeframe. So there's going to be clearly significant investments in Ontario for the score as they get ready to launch. And then we're going to continue to invest in improving the products and capabilities that we have here in the US as well as in Canada. So there's a lot of investment going in. And 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 the score combination in 2022. And then you'll see that EBITDA ramp really starts a hockey stick in 23 and beyond.
spk05: Great. Thank you very much.
spk07: Good luck. Thanks, Joe.
spk18: Thank you. Our next question comes from Bernie McTernan from Needham and Company. Please proceed with your question.
spk13: Great. Good morning, everyone. John and Jay, congrats on the deal. Just a big picture question for 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, you know, I'm sure there's gonna 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 kind of what Barstool and Penn will look like as sports betting and sports media continue to converge?
spk07: Well, I mean, look at what I would tell you is that it's going to be an absolute evolution and the things that we announced last week weren't even on the table two months ago. So, It's a great question, Bernie. I think the opportunities for us as a company with the great companies and brands of Barstool and the score really are endless. And I don't look from my perspective, there is no better top of funnel, um, brands in the U S from a sports media entertainment perspective than Barstool. Uh, nobody knows how to engage an audience, acquire customers, attract eyeballs the way that Barstool does. They're brilliant at it and the brilliance is really on this phone with Dave and Erica and of course Big Cat and the team at Barstool. And I look at the score and say they're also very, very strong on the acquisition side and where they're even stronger is on the engagement and on the retention side because there really isn't anyone better at delivering personalized content. Again, I've been on the Score app for years myself, and I'm a Yankee fan. 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. And then 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 the score bet so this integration between media and betting i think is we're going to do it better than anybody else because we own that entire ecosystem and that entire experience so 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 And then you look at what the score does best. We think we're building something that's best in class and something that can't be duplicated.
spk22: Only two things are forever, love and Liberty Mutual, customizing your car insurance so you only pay for what you need.
spk13: Got it. And then 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 the score and Barstool?
spk07: Yeah, I'm happy, John, to have you talk a little bit more about the demographics of the score. And I would tell you from my perspective, we know that there is, there's some overlap, but we also know this is largely incremental, especially when you're talking about their user base in Canada, but go ahead, John.
spk11: Absolutely. And, and, you know, I think Jay sort of hit the nail on the head. You know, we've been, building the brand, you know, in Canada, but actually throughout North America for, for a whole bunch of years. And, and you know, two thirds of all of our users come from the state, probably most highly engaged audience of any sports, digital sports media company. And, and the key factor that Jay did mention is with respect to, you know, the retention and the engagement that we get from the users, they're on our app. We can tell on, you know, it's very personalized. We can tell what's going on on a, almost on a minute by minute basis, you know, Sundays people are banging the app left, right, and center. And you know why they're doing that is because predominantly they're betting on sports and really the experience in Canada is exactly, is exactly the same. You know, our, our presence in Canada, you know, the leading digital mobile sports company in Canada, we're like second or third throughout North America. And the footprint we have both there on our social platforms is, is quite frankly, enormous. And, uh, And, you know, there is, Jay's right, there is going to be some overlap, but the opportunity here to collaborate, you know, with Penn sitting sort of at the core, you know, to collaborate with Barstool is enormous. And just in terms of the type of efforts that we're going to do, you know, it's pretty traditional stuff that you're seeing from the other media companies, like Jay suggested, you know, and it's, you know, 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. And, you know, we do connect. I think we connect in somewhat different ways, obviously, and I think that's what makes it so complimentary. We're kind of like, you know, two sisters now or brothers in this family, and there's going to be all sorts of ways that we can you know, collaborate and dig deeper and extend this relationship. And, and then when you, when you put the power of, you know, one of the reasons that Penn was so excited and interested in the score 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. So when we come up with different promotions that the other guys can't think of marketing campaigns or some of the wild and crazy stuff that, that Dave and Barstool are going to come up with. You don't have to wait around to be able to implement this stuff. And 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've got to present it to the sports fans right off the top, and you have to be able to deal with it instantaneously. One of the last things I'll comment upon is why the technology works so good and why it opens up so many opportunities, specifically in terms of revenue generation. probably most of you are aware, 40 to almost 50% of all wagering now is in-game. 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. So 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 the 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 and And 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.
spk13: Thanks, Josh.
spk11: Great.
spk13: I appreciate that. Yeah, thank you. Thanks, Bernie.
spk18: Thank you. Our next question comes from the line of Ryan Sigdal with Craig Hellum Group. Please proceed with your question.
spk06: Good morning, guys, and congrats on the results and the transaction announced. Thanks, Ryan. Curious, so 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? And then secondly, also on content. So thinking, does this close all the loops from a tech standpoint, or is there more work to be done?
spk07: 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 the score is live, you can really go in and get a feel for what their player account management platform is all about, and 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 Levy's 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, and 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 the SCORE is that the SCORE is the premier company, the premier brand, especially as it relates to all things sports media and soon-to-come sports betting. And so 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 PAM perspective.
spk13: For sure.
spk11: I mean, 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. And we couldn't become the most – 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. He uses the comparison of this duck floating across the water and its legs are furiously peddling underneath. And that kind of was what's driven this. So, you know, 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, you know, that was a pretty ballsy and pretty gutsy decision for us because, you know, from a revenue standpoint, it wasn't easy just to suck up all the dollars that everybody would have been throwing at us to get access to our user base. But, We said that just doesn't fit, and 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. It was a process, and we did it over the course of the last 12, 24 months because you can't do this thing overnight. But the approach is absolutely right. And 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. And 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 is that worked out of the US. So, you know, we're saying within the next nine months, 12 months, I mean, it's basically sometime and hopefully sooner in that timeline, we will have all of that in-house. But in the meantime, it's about 90% of it is now inside of our own capabilities. And that allows us, for example, full player account management system. We just launched our new promotion engine. And I know someone like, Mr. Portnoy is going to go crazy with stuff like that because, you know, 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, you know, you get to the bottom of the list or it takes too long or the event has come and gone. So in our case, it gives us the maximum flexibility to be very creative, but then to be able to execute almost instantaneously. And I know this is one of the reasons, Jake, in addition to loving everything else that we're doing, they love the brand, they love the users that we have, you know, what we've built. But I think a lot of it is just thinking differently than what the traditional sports media and sports gaming companies, how they think. And this really is a transformational deal. If it wasn't, it wouldn't be something that me or my family would have been interested in. And, you know, we're banking on, you know, having this amazing relationship with Penn and utilizing their resources and scale to really blow it up here in Canada and also to blow it up all across North America. And 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.
spk15: Google Pixel, the only phone made by Google with the camera that sees in the dark, sees all skin tones accurately, and fixes your photos like magic. Literally. Google Pixel. For all you are.
spk07: You know, the one thing I would add to John's comments is that, you know, technology is a really interesting thing because what is the latest and greatest today is extremely outdated two or three years from now. And so... 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 US, which we anticipate happening in 2023. 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 Canby. And this is not a knock against White Hat Gaming or Canby. They've been great partners. They've been there for us. Very responsive. They're great B2B companies. But at the end of the day, we ultimately, given how important this is for the company's future and how important it is 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. And you've heard me say that on calls before. And 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, um, you know, gateway to what is a huge opportunity in Canada with one of the strongest sports brands, uh, in, in all, in all of Canada. So, you know, we think we've got the best of all worlds here.
spk04: And Jay just Dave, just to give people kind of how it could potentially work. We Barstool, we've never had the opportunity as John was saying, to create things that would be specific for us, because we're working with companies that serve multiple end users, but we talked about the Arizona bowl, which will. be controlling soup to nuts, for example, which we have the broadcast. We have to have everything you can name is up to us. So a scenario where we're able to create bets and things specific for them, put the content and highlight it on the score, 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. And now the ability to create bets that we know we're going to focus on in the game. And 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 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. So it really gives us, again, the ecosystem from the beginning of the game, covering the game, embedding during the game, and then directing people to bet towards the game, that'll be totally unique.
spk07: Well said. I agree, Dave.
spk06: 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. But thanks, guys. Good luck. Thanks, Ryan.
spk18: Thank you. Our next question comes from the line of Sean Kelly with Bank of America. Please proceed with your question.
spk21: Hey, good morning, everyone. Congrats to John and Jay and the Levy family. I just wanted to start, Jay, maybe to clarify a point 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? And do you think that is disruptive at all and or how important is it to get that done quickly or in the right way?
spk07: Sure. Happy to, Sean. And again, we're still finalizing the plan. But here's the way we're thinking about it currently, which I think is about as bulletproof as it gets, which is that The score bet is going to be going live in Ontario whenever Ontario is 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. And 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 the SCORE brand is in Canada. And 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 23 or middle of 23? Not sure yet, but I would say we're highly confident it'll be before football season of 23. But 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. So that's the way we're thinking about it today, Sean. And we'll obviously continue to update everybody on the call as we have more information. I think we all have a pretty good idea given, you know, the DraftKings SB Tech conversion I think took around 18 months. feels like that's probably about the right timeframe for us as well, 18 to 24 months before we bring it back to the US. But 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 vetting 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.
spk21: Great. And then, you know, as my followup, um, you know, between here and 2023 or, you know, two relatively important and likely competitive, uh, you know, sports season. So just wanted to get your thoughts heading into the fall around, um, you know, the, just, 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, but obviously there's some very large names coming with very, very big wallets into the fall that are also scaling really rapidly. So help us sort of outline both the competitive environment and how your competitive thinking is evolving.
spk07: Yeah, happy to. And 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. And we've done a great job of that. Our iOS app rating is a 4.7 on a scale of 0 to 5. right up there with the top of the marketplace. So 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. So 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 online casino, and it's not even comparable. So we think... We're going to continue to be competitive. And again, I complimented Camby 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, huge betting opportunity as it relates to NFL. We're going to have shareable bet flip, 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 flip. So there's a lot of things we're doing this year that we couldn't do last year. And then as it relates to online casino, 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. But admittedly, we didn't have the full complement of content at the time. And as you look at what we're going to be able to offer in the fall this year as it relates to online casino, it's going to be a much larger, wider library of content. We're also going to have blackjack, sorry, excuse me, barstool-themed games both on the blackjack side as well as slot content. that we've been developing at our HitPoint studio. That's going to be happening this fall as well. And then 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. So 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, Sean, we feel much more comfortable being more aggressive as it relates to You know, 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. That'll be, I think, broader and sort of really focused on widening the funnel even beyond what we did in 2020. Thank you very much.
spk21: Congratulations.
spk07: Thanks, Sean.
spk18: Thank you. Our next question comes from the line of Ben Shakin with Credit Suisse. Please proceed with your question.
spk09: Hey, how's it going? I think we've kind of touched on this, but I'll try differently. You know, Score has a very high quality news analysis, social media, strong OSB app. I mean, Dave and Jay, you both talked about using it for years. I'm in a similar boat. Understanding it still early, there seems to be a dichotomy in my mind between the quality of the Score product, which is very strong, and then kind of the market share generated thus far in the U.S. How do you think about leveraging the product, the existing product in the U.S. to drive greater OSB iGaming share? Do you combine the SCORE product with Barstool to amplify the existing Penn Barstool product in the U.S., or is it about putting money and promotion behind SCORE in the U.S. to get the name out there? The tech and vertical integration totally makes sense. I'm coming at this more from a B2C product standpoint, if that makes sense.
spk07: 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 the score, we have spent virtually nothing on paid marketing. And 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, and I think to great results. And also because we needed to have the right product and capabilities. And 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. And so we're not concerned with where market share has been. It's more our focus is where it's going to be. And 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 the SCORE technology and application. And, you know, being able to put the SCORE 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. And, you know, I think it will play out then in terms of, you know, what's the strategy in the U.S.? Is it, you know, two brands from a sports betting standpoint, or is it one – We have plenty of time to figure that out, but I would expect to see improved market share results from both the score bet in the U.S. as well as Barstool Sportsbook as we head into football season this year. And 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?
spk02: You know Liberty Mutual customizes your car insurance, so you only pay for what you need? Like how I customized this scarf? Check out this backpack I made for Marco. Only pay for what you need.
spk20: Hi, Ben.
spk11: How are you, first of all? Yeah, I think Jay's got it right. I mean, our approach and Jay's approach have been different than most in the context of sort of buying your way to huge market shares and then just hoping that it's sustainable. And 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, of 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. 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. 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 US brands coming into Canada because I'm sure they're going to come because you know, Ontario is the equivalent in case you people don't, aren't aware of it, of the fifth largest state in the US. So while all of us are jonesing to get into Texas, Florida, New York, et cetera, and we are all looking at strategies to do that, you know, we're sitting right here in our home turf with the equivalent of, you know, and when it's operating at the end of, towards the end of 2021, we'll be the largest jurisdiction in North America for sports betting. So, You know, very, very, very, very exciting for us. So one of the reasons that I think, you know, Penn and SCORE hit it off so well is because of our approach to going after the market and doing it sensibly. And, you know, some of the stuff that, you know, that Barstool is talking about now in terms of, you know, getting into, you know, 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. 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 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. And I think one of the things that Jay referenced earlier is, You know, if you look out, you know, we know what we're doing today. We're building this amazing product. We know what sports betting looks like. We're doing it differently than anybody else with this integration into the media space. And, you know, if you're on a box score, you want to make a bet, it's one click away. You know, I mean, you have amazing ability to make wagers in game very quickly and efficiently. But that's just the tip of the iceberg. Like 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. So 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. And I think that's why we're all so excited about what's come together here with Penn. And if I could...
spk04: Sorry, Jay, just one thing to add to that original question in terms of the score 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. And 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, you know, shelters 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. Like we had the churning 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, a lot of people point back at what we were doing with DDTG and the Everyday Trader and getting people involved. you know, even our podcast, like call her daddy things. We have the ability to sort of King make, we have gotten better as the years where we stopped mentioning companies purposely, because like, why are we building other? We, I think a huge opportunity and the synergistic nature of this is we know how good the scores 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 the score is big now, and like, relatively speaking, I think we're going to turn that 10, 20 X, because all of a sudden, every time we talk sports, games, gambling, it's the score. It's the score. It's the score. We haven't had that. So 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. It people and John just kind of let 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. So that in the United States, I expect the score over the next year to, I mean, 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. So, you know, we plan on doing that obviously now full boat.
spk11: The only thing I'd add to that, it's perfectly, it's perfect evidence of that. When you look at the reach that we have in Canada, where people are perfectly familiar with the score, as I said before, they grew up, everybody here is on the score. Everybody, you know, we compete, you know, we've never shied away from competing and these guys know that, you know, we launched our TV network in the mid nineties up against your version of ESPN up here called TSN and Rogers Sportsnet. And, And, you know, we kicked their butt because we did things differently. And then when we launched and moved into the digital space.
spk01: You know that terrible feeling when you wake up and realize you forgot to charge your phone? Yeah, forget that feeling. Over 24 hours of battery life on Google Pixel.
spk11: You know, people just came to expect that same level of, authenticity, respect for the customer, just give them what they want. And, you know, we joke about in the States, we're the most used least known brand in the sports business. We're kind of like the New York Rangers in New York, right? You know, everybody who loves the Rangers goes to the game, right? And we joke about that with respect to the score, right? Because people who are on our app in the U.S. and who are betting through, you know, score bet into the score media app, you know, love that, love that as well. So, you know, 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, and, and, and, you know, the sort of arrangement that we did in this collaboration that we're going to have all the time with Barstool is that sort of the rising tide will raise both, you know, betting will influence our ability to extend the brand in the U S and as we grow the brand in the U S you know, betting will take off. And now we're supercharging this with, with everything that Penn brings to the table and Barstool. And in Canada, we're already there. I mean, in Canada, you know, we just can't wait to unleash the power of our, you know, integrated betting operation, which will be, you know, as Jay mentioned, under the same brand because that's what makes sense. And in the U.S., we're going to figure it out. And we have the luxury of being able to figure it out because we're up and operating in the four states currently with ScoreBet. And, you know, 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, school, or our school, Penn, but focusing on the consumer and saying, how do we do that best?
spk17: This is Erica. The only thing I would add is If you look at, you know, we have the number one podcast in Canada in spit and 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 the score 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.
spk07: Yep. 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. And look, there is no better amplifier than Barstool here in the U.S., and I would argue the same thing about the score in Canada. So 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.
spk11: And the last thing, I know we're upping all over each other, but they are distinct voices that work well together. I think that's really one of the key elements, and 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. And 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. And that creates all sorts of opportunities in the context of building our team and building our presence at home. Good stuff. Let's, Rita, go with one more question, please.
spk18: Thank you. Our last question will come from the line of Chad Beynon with Macquarie. Please proceed with your question.
spk10: 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, you know, states or provinces like, you know, 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.
spk07: Yeah, I think it's a good question, Chad. And what I would say is obviously what we represented as a company yesterday versus what we represent today, it's just gotten stronger. And Some of these states, it is a bit of an open competition. New York is one of those. They're going to choose a couple of platforms and a number of operators. And we think that what we bring to the table and how we're thinking about who we might partner with on a bid in New York, it's going to be very differentiated. And we have opportunities to do things that no one else can do because the power of the media integration, both with Barstool Sportsbook And in the not too distant future, the score as well. So yes is the answer. I don't want to talk a whole lot more about our approach in New York. I would just say that we think we have a great opportunity. And we also, because of the structural advantages, you know, 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.
spk10: Great. Thanks. And maybe one follow-up, Jay, how are you thinking about the ever-changing lifetime value of customers, particularly now that, you know, you have a compelling iGaming product in studio with HitPoint? I know that's changed over the past couple months. Also, with scores users, should we assume that maybe the lifetime value of their customers, given they're, you know, 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.
spk07: Thank you for asking that, Chad. Here's the way we think about LTV, and 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. And 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. And we also know that the loyalty to Barstool is very, very high. And I think that LTV is too easily calculated today. 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. And 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. And I think that the score, 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. you know, the live media, live betting experiences, the customized, personalized offerings and engagement. So LTV, we just, I think as wide as the funnel has been, now we're going to be able to do a much better job. I think Erica articulates this very well of keeping people in the ecosystem once they're there. And the score takes all of that to the next level. And I think LTV for us is going to be a real number and we'll see how it plays out over time for everyone else.
spk10: Thank you very much.
spk07: Thanks, Chad. And Rita, I think that's it for the call. Really appreciate everybody joining us today. Excited to share with you the news. Erica, Dave, John, thank you for joining and just great to hear everybody's perspective. We're obviously really excited about this and we're just getting started. So we look forward to speaking with you on the next earnings call.
spk18: Thank you. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.
Disclaimer