Penn National Gaming Reports Third Quarter Revenues of $1.13 Billion, Net Income of $141.2 Million, Adjusted EBITDAR of $452.6 Million, and Adjusted EBITDA of $343.6 Million

– Highly Successful Launch of Barstool Sportsbook App Creates New Growth Channel –

WYOMISSING, Pa.–(BUSINESS WIRE)–Penn National Gaming, Inc. (NASDAQ: PENN) (“Penn National” or the “Company”) today reported financial results for the three and nine months ended September 30, 2020.

Jay Snowden, President and Chief Executive Officer, commented: “I am pleased to report that our property, interactive, and corporate management teams generated strong third quarter revenues, as well as all time quarterly record Adjusted EBITDAR and Adjusted EBITDAR margins, despite the continuation of social distancing and capacity constraints at all of our reopened properties.

“The current operating environment has demonstrated the resilience of our teams and operations as we’ve made significant modifications to our business model to respond to the new volumes, offerings, and ongoing restrictions. In addition to the record results of our brick and mortar operations, one of the highlights of the quarter was the launch of our much-anticipated Barstool Sportsbook app in Pennsylvania, which has been well received. As we look ahead, we continue to see solid results across the portfolio in October, which is being driven not only by our margin improvement, but also our sustained revenue performance as we have continued to manage the ongoing COVID-19 restrictions. In sum, we believe we can close out the year with positive momentum.”

A link to a presentation that summarizes third-quarter highlights and accomplishments can be found here.

Q3 Financial Results Summary

For the third quarter ended September 30, 2020, Penn National generated revenues of $1,129.7 million and Adjusted EBITDAR of $452.6 million. These results were achieved despite the impact of Hurricane Laura on L’Auberge Lake Charles, the late-quarter reopening of Tropicana Las Vegas, and the ongoing temporary closure of Zia Park in New Mexico. Our Ohio and Indiana properties led the way for the Northeast segment and each property in the South region, save L’Auberge Lake Charles, delivered double-digit Adjusted EBITDAR growth in the period. Several properties in the Midwest segment have been operating under significant capacity restrictions and despite this, the region still achieved year-over-year Adjusted EBITDAR growth. These results are a testament to the ability of our property teams to challenge and re-set operational norms. The property performance, combined with gross proceeds of $982 million from our September capital raise, increased our cash balance to $1.9 billion at quarter end, even after paying down our $670 million revolver balance in full. In turn, our net traditional debt declined to approximately $693 million at September 30, bringing our lease-adjusted net leverage to approximately 4.9x based on 2019 Adjusted EBITDAR.

Record Breaking Launch of the Barstool Sportsbook

“On September 18th, we officially launched the Barstool Sportsbook app in Pennsylvania, which broke records for the most downloads ever for the launch of a new mobile sportsbook,” commented Mr. Snowden. “This app launch was a significant milestone for the Company, and I would like to acknowledge and thank our Penn Interactive team and our partners at Barstool Sports for their hard work and dedication over the last several months. As of October 24th, nearly 48,000 people have registered through the app in Pennsylvania alone and, over the course of the first 37 days of operation, the app generated total handle of $78 million across 30,000 first-time depositors. These results were achieved with very limited external marketing spend, highlighting the ability of Barstool Sports to convert its growing audience to our sports betting product. In addition, we have seen high user engagement on the app, with over 39% of our customers placing wagers on bets promoted by the Barstool personalities. Our early experience in Pennsylvania has reinforced our view that we are well-positioned to achieve meaningful and profitable market share in the high-growth sports betting and iCasino space.”

Acceleration of Our Omni-Channel Strategy

Mr. Snowden continued, “Our September equity offering fortified and de-risked our balance sheet, while providing us with additional flexibility to invest in high growth opportunities. Over the coming months, we look forward to introducing the Barstool Sportsbook app to additional states, including Michigan, which is expected to launch later this year. We are very pleased with initial customer feedback on the app, which has received a 4.8 average rating in the Apple app store, and we will continue to introduce new and innovative features to the app over the coming months, including a brand-new iCasino product.

“On the land-based side of our business, we believe there is real momentum in moving towards cashless technology that should not only improve efficiency and customer service, but also result in incremental revenue as we appeal to a younger demographic that expects a cashless transaction experience in their daily life. We intend to introduce this offering at the outset in our new Category 4 casino development projects in Pennsylvania, which we now anticipate will open in the second half of 2021. In addition, we are excited about introducing Barstool branded retail sportsbooks at our casinos, with anticipated openings later this year at Greektown, Ameristar East Chicago, and Ameristar Black Hawk as well as Hollywood Lawrenceburg in early 2021.

“We remain actively engaged across the country in advocating for the passage of sports betting in those states where it is not yet approved, such as Louisiana, which will feature a question on the November ballot that would authorize sports betting at our five casinos in the state. In addition, Maryland voters will also have an opportunity to decide whether to allow sports betting in their upcoming elections. We intend to exercise our option to acquire the operating assets of Hollywood Casino Perryville in Maryland later this year, which will provide us with market access to an industry-leading 20 states in 2021. Finally, we are supporting a statewide ballot question in Colorado that will allow local voters in the casino towns of Black Hawk, Cripple Creek and Central City to increase bet limits and add new games, such as baccarat.

Continued Momentum of Barstool Sports

“We remain very pleased with the growing financial performance of Barstool Sports,” noted Mr. Snowden. “Despite the temporary loss of live sports and a general slowdown in advertising spend, Barstool continues to have its strongest year in its history and has seen profitable revenue growth through a diversified revenue mix of advertising, brand licensing, and merchandising. More importantly, Barstool continues to grow its audience, particularly across social media, with more than 50 million followers on Instagram, 26 million followers on Twitter and 22 million followers on TikTok. In fact, despite only recently launching, the social media accounts for the Barstool Sportsbook have already reached more than 700,000 total followers across Twitter and Instagram. To capitalize on the excitement around Barstool Sports, we are working with Barstool to launch standalone Barstool-branded entertainment destinations in key markets. These locations will serve as virtual sportsbooks in large metropolitan areas in states with approved online sports betting, which we believe will further expand the reach of the Barstool brand and help us acquire new customers at attractive economics.

“With Barstool actively promoting our retail and online sports betting offerings to their massive and growing audience, we believe we can retain and cross sell these customers to visit our land-based casinos and play our iCasino products. We also have a database of over 20 million gaming customers in our mychoice loyalty program to cross promote our sports betting and iCasino products, an approach that has already proven successful in Pennsylvania. When combined, we believe these two channels will provide us with significant organic customer acquisition in our new business lines at a fraction of the cost of the traditional marketing efforts relied upon by many of our competitors, leading to enhanced profitability for the Company. In addition, our experience to-date has shown that customers who play with us through multiple channels (including land-based casinos, retail sportsbooks and iCasino) are over 12x more valuable than customers who play only at one of our casinos, which illustrates the power of our omni-channel strategy.

Hurricane Relief

“Our Company’s collective resolve was again apparent over the past few weeks, as Hurricanes Laura and Delta left the community of Lake Charles decimated, with many of our L’Auberge team members personally impacted. I am proud of the way our sister properties have come together to support their fellow team members in the wake of the storms. Volunteers from Boomtown Biloxi, Boomtown New Orleans, Hollywood Gulf Coast and L’Auberge Baton Rouge have been helping with the clean-up and recovery efforts and are providing temporary housing for displaced team members. To date, we have contributed more than $2.5 million to assist L’Auberge Lake Charles and the community in its time of need, which includes covering full wages and benefits for our Lake Charles team members during the property closure. In addition, our partners at Barstool Sports are generously donating all net proceeds from the sale of special ‘Lake Charles Strong’ merchandise to our Hurricane Laura Relief Fund.”

Looking Ahead to a Bright Future

Mr. Snowden concluded, “It certainly has been a challenging year and we have had to make very difficult business decisions over the last several months in response to the restrictions in place and the evolving customer visitation and volume trends. Nevertheless, we believe the operational improvements we have made, together with our unique omni-channel strategy powered by Barstool Sports and our diversified portfolio of properties, position us for significant growth over the coming years. We look forward to an exciting finish to the year as we introduce Barstool-branded retail sportsbooks across our portfolio and, subject to final regulatory approval, the launch of our Barstool Sportsbook app in Michigan.”

Summary of Third Quarter Results

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

Segment Information

The Company aggregates its properties into four reportable segments: Northeast, South, West and Midwest.

Kansas Entertainment Distributions

The Company’s definitions of Adjusted EBITDA and Adjusted EBITDAR add back our share of the impact of non-operating items (such as depreciation and amortization) at our Kansas Entertainment joint venture. Kansas Entertainment does not currently have, nor has it ever had, any indebtedness. The table below presents cash flow distributions we have received from our Kansas Entertainment investment.

Cash Flow Data

The table below summarizes certain cash expenditures incurred by the Company.

Contacts

David Williams

Chief Financial Officer

610-373-2400

Joseph N. Jaffoni, Richard Land

JCIR

212-835-8500 or penn@jcir.com

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