PENN Entertainment, Inc. Q2 FY2020 Earnings Call

Greetings, and welcome to the Penn National Gaming Second Quarter 2020 Conference Call. 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 2020 Second 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 terminologies such as expects, believes, estimates, projects, intends, plans, seeks, may, will, should or anticipate; 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 the Securities and Exchange Commission, including the company's reports on Form 10-K and Form 10-Q. Penn National Gaming assumes no obligation to publicly update or revise any forward-looking statements. 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 second quarter 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 were shut down. But these continue to be uncertain times for all of us, and our heartfelt thanks go out to all the healthcare workers and 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 rollercoaster 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 but Zia Park in New Mexico and Tropicana Resort in Las Vegas are operational today. 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-19 Emergency Relief Fund, for which we've raised more than $1.7 million, 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. Before I hand it over to Dave for a summary of our second quarter results and a quick review of our financials, I want 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 that are helping to assist disadvantaged and underrepresented individuals in the areas in which we do business. We believe that actions speak louder than words. This year, in celebration of Juneteenth, we committed to spend $1 million 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 and June results may have benefited in part from pent-up demand, we continue to be highly encouraged by revenue and EBITDAR trends in July and August despite the continuation of safety protocols, including capacity restrictions and social distancing mandates. During their respective reopening periods through June 30, our properties saw a cumulative 1,300 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 two of our casinos are now open, we will continue to be disciplined in our capital expenditures. We spent $14.5 million on maintenance CapEx in Q2 and approximately $16 million 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 2021. This quarter, we issued $330.5 million of convertible debt and an additional $345 million 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. 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 $1.2 billion, with a net debt balance of $2.0 billion. This improved liquidity provides well over 12 months of operating cash in the very unlikely event of another full company closure and zero-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 in destination markets. Although visitation has yet to return to pre-COVID levels, largely due to state-mandated capacity restrictions and limited amenities, spend per visit has been notably strong, up 45%, resulting in better-than-expected revenues. Importantly, we've seen a significant increase in unrated play and growth from a younger demographic. This aligns 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 in our reimagined operating model, we now believe that we can achieve 2019 EBITDAR levels 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 omnichannel strategy. To that end, we look forward to the launch of our Barstool Sportsbook mobile app next month 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 over 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.

Our first question comes from Joe Greff with JPMorgan.

Nice results to you all. Jay, you mentioned in the press release earlier that, so far in July and August, results were encouraging. I was hoping maybe you can break that out in two pieces for us, and maybe in relation to how you described the reopened properties and 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 for May and June, combined. So there are some properties, Mississippi and 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. Fourth of July weekend was a little light, and I think that probably was just due to a fear of being in big crowds. When you look at Fourth of July, it's typically a busy, busy weekend for us. This year, it did not match up well to last year. But as soon as Fourth of 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 months of May and June. The numbers aren't going to match up perfectly because you have properties that opened in June and then that opened in July. The gaming tax rates are different, and the competitive set is different. So it's not going to be exactly what you saw for May and June. But it's a lot closer to what you saw in May and June, and we put it in our release, than maybe what others had in mind that there was going to be this significant drop-off after the first week or the first two weeks. Our properties 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 opened or reopened the Tropicana? And I was -- maybe, Dave, you can help us with the monthly cash burn at the Trop and Zia Park as well as at corporate, and that will be it for me.

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. Our team on the ground there is continuing to do competitive assessments in terms of ADR and RevPAR, occupancy. 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. 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 dynamic. I'm not sure, Dave, if we have the exact cash burn for Trop and Zia Park, but feel free to jump in there.

Well, 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 properties closed, as a company, we're cash flow positive.

Our next question comes from Felicia Hendrix with Barclays.

Dave, I'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 1,300 basis point improvement, so we could kind of back into it. But if you can add anything to that would be great.

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. Here, I think we've given you guys everything you need when we say that, one, we've given you the results for May and June, which I think is helpful. Then I think, more importantly, as you're looking at how to model this moving 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. And then, Jay, on a lot of these calls, everyone has been asking if the performance you're seeing is sustainable. I think you've talked about that, and everybody has talked about that. So I just have a bit of a different question. And that is, as you mentioned, May and 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 are reduced from where they've been over the last several months. There are 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. When you look at the rated database we have, and you look between 21 and 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. We feel like there's an opportunity for us as we move forward to convert those guests into long-term loyal customers. We're taking advantage of this time where there really are more limited entertainment options. Movie theaters aren't open, sporting events are with no crowd, and there's no concerts. People are looking for things to do, and I think that's part of why the spend per visit and time per visit has been so strong when people get out of the house and they are in a safe environment. 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. To the extent -- and I figure a question like this will come up, where, what happens at the time that there is a vaccine? What happens when there are effective treatments? Do we lose those customers that demonstrate unrated play or growth in your younger segments? I think we keep a lot of them. What we're hearing, solicited and unsolicited, is that many of these folks have never been to a casino. 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. Even if we lose some of that business down the road, I think you also look at that; at the same time, people who are older and that we're seeing declines in today are going to feel more comfortable coming back to casinos and leaving their home and spending more time with us. There are a lot of variables there. I don't know which one to point to and extrapolate what that means if one gets better or another gets worse. I have been pleasantly surprised that we've seen such stability. It's not just the first day or the first week; it's month two, and now it's into month three for some of our properties, like I said, Mississippi and Louisiana. We don't have any reason to believe that is going to fall off any time 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 mychoice, think you're putting cards 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 million of the -- or I guess 5% of the Barstool audience and then 5 million of your active mychoice members, which amounts to about 25%? That seems a little kind of not optimistic but maybe not super easy, right? So now that you have the younger folks coming in, does that make you feel better about those objectives?

Well, I always felt good. I guess this just reinforces how I felt. The mychoice program, Todd George and our team, Jennifer Weissmann, our Chief Marketing Officer, Erika Nardini at Barstool, we're talking regularly about the evolution of mychoice. 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. We deploy on wholly owned channels of business. That'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. mychoice is already connected to our social gaming products. It's already connected to our online casino, real-money wagering in Pennsylvania. 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 as most loyalty programs in the casino space have been for many, many decades, where it gets you freebies, it's a free buffet, or it's cash back at the machine. I think you're going to see the offerings and experiences allowing people to use their earned points to redeem are going to be tied in very well. We love the name mychoice because it really is whatever you want, you can get. There's going to be Barstool merchandise and opportunities to go to special events with Barstool personalities. 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 mychoice program. 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 regards to what we're seeing in Pennsylvania over the last several months. During the time that our properties were closed in Pennsylvania, as you know, we have a real-money iCasino product called HollywoodCasino.com. 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. If you look at what's happened to our database in Pennsylvania, post reopening of the properties about a month ago, the customers that have only ever gone to the casinos, so they've never engaged with us online, they're just pure brick-and-mortar casino goers, their play since we've reopened is down about 20%, which, as I understand from what the regulators said yesterday, sounds like about what it's going to be for the whole state. Slots were down about 20%. If you look at 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 our app is up over 40% year-over-year. You just think about the power of omnichannel. 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. 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.

Our next question comes from Thomas Allen with Morgan Stanley.

Congrats on the strong execution in the quarter. 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?

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 executives at Barstool's hands right now. It's a fantastic product. We want to ensure that we launch this right because 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 and launching it in September when we know it's going to deliver a great experience, UI/UX, for the end user? That's what we're in this for, the long game. The difference between August and September — would it be nice to be open now or be live now because there's some pent-up demand? Sure. By the way, we're seeing great pent-up demand in our retail sportsbooks last week. I think our sports betting handle was up 60% year-over-year for the two days over the weekend. That demand is going to be there. If we miss a few games in August but we're ready for football season in September, while MLB is still going, this is a heck of a time to be launching your app 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. 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. It's going to have features like a traveling wallet. Our bet slip experience is second to none. The intuitiveness of how to use the app, and importantly, the exclusive betting options, is really 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 one, 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, Big Cat, Brandon Walker, and Marty Mush among others at Barstool. If you want to bet with them or bet against them, if you want to fade their bets, those are things we'll be able to do day one. The content and the branding integration into our app with Barstool is just going to get better with each version release. We're very confident in how competitive this product will be when we launch next month.

I think we're all excited. And if you need some more testers for the beta, I'm coming over. Just some follow-ups. Just on the iCasino customers you are seeing, can you just talk a little bit about what they're playing? Any other thoughts or recent thoughts on the cross-sell opportunity between iCasino and sportsbook customers?

Yes. That's a great question. We've been surprised, honestly, because the iCasino customer skew is younger than our brick-and-mortar customer. Our brick-and-mortar customer is more in that 55 average age range, and we're seeing, for online casino, it's 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 towards table game-centric, and we haven't seen that yet. This is part of our strategy, and we think that if you're excited about the stack IPOs of DraftKings, for example, which is a pure sports betting online play, we bring omnichannel to the table. We feel really good about the reasons I mentioned earlier. Recently, a couple of stack IPOs focused more on online casino, that being Golden Nugget and Rush Street. The beauty of Penn's strategy, in our partnership and ownership structure with Barstool, is that you really get the best of all of that where we have a very compelling sports brand to lead with. We have a database with access to 66 million sports enthusiasts, over 60% of whom we know bet on sports and over 40% are avid sports betters, those who are significant Barstool loyalists today. If 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. We've seen it work in New Jersey, and we're seeing it work in Pennsylvania. We only, today, in Pennsylvania, have online casino. We're running north of 10% market share just because of our marketing approach with our database of getting inactive users engaged with us and some of our active customers. If you're at 10% with casino only, what does that look like when you think about the launch of Barstool Sports betting app and our ability to convert those customers, and in that case, more table game customers, to our online casino products? That's why we decided to launch in Pennsylvania first because it's sports and iCasino. We're very focused on Michigan because that's sports and iCasino, when Michigan is ready. We think that will probably be sometime in Q4. New Jersey sports and iCasino will be very high on our list. We believe we 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 cases, online casino to online sports. We have great products that, again, are wholly owned by Penn. That's a real differentiator when you're talking about Penn's strategy with Barstool.

Our next question comes from Steve Wieczynski with Stifel.

Jay, you've 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? What levers do you still have to pull to drive that number lower, if you can get it lower? I understand it's not going to get into the 60s, given the rental payments. Is that a number that could eventually get into the mid-80s as time goes on?

Let's see, Steve. Let's see how this plays out. Todd and I talk about this daily. We wouldn't put 90% out there if we weren't comfortable with 90%. Let's leave it at that. There are a lot of variables; it depends on how great margins can be. It also depends on what sustained revenue levels look like. We have a good sense as to what our cost structure will be moving forward. I look at our major competitors in regional gaming, listening to their earnings calls and what they’re saying publicly; there's a big focus on margin improvement, reimagine what the industry has always done and the traditional expectations. I think we whiteboarded everything, and I believe our competitors are going through a similar exercise. It's not to say that in a market where we compete against a privately owned operator, if they do something different, we may have to think about what we do there. Regarding our portfolio of properties, most changes we’ve made, with very few exceptions, we believe can carry forward into the future and not look back. We're excited about our vendor relationships and how we can enhance them, how marketing and acquisition costs, advertising and promotional spend and staffing our businesses will evolve. We're having great conversations with regulators in several states about cashless technology. Customers expect cashless options, particularly with the younger customers we’re seeing. The industry has to do this; otherwise, we will lose opportunities to engage with younger customers and keep our existing ones. The days of going to ATMs are gone, and we realize that. Regulators understand that, too. We’re moving quickly as an industry.

Got you. Specifically, with marketing and advertising, those remained very depressed right now in terms of your spend levels. When do you actually make that decision to start getting more aggressive in those areas? Do you fear that certain markets start to get overly promotional?

I just -- Steve, as we sit here today, based on how we're thinking about the business and what I'm hearing in the space, I don’t see that happening in the next year or two. Even in terms of advertising and promotional spend, a lot of that was done in paid media, TV, and radio. I believe there are more efficient methods of advertising. We're focused on surgical digital opportunities; that's where eyeballs are. Barstool has helped us think differently because they understand digital advertising as well as any company on the planet. We are truly reimagining our approach. This is a once-in-a-career opportunity for companies to challenge everything they've historically done and figure out the best models moving forward. We're certainly doing that at Penn.

Our next question comes from Shaun Kelley with Bank of America.

And Jay, I'm 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. If we look at the 90% number you gave, that implies a 300 to 350 basis points of margin improvement on those 2019 levels. What's the difference? Is it primarily marketing dollars? We haven't relayered in any promotions, and some of those will naturally come back? Or is it operating expenses because visitation levels are lower? Is it higher productivity that you don't think is sustainable? Or is it something else? Just what's the difference?

Yes. It is, Shaun. I'd say there are two things I think about for why we're going to stick with 90% today. One is that it's early. In some cases, it's been a month, some two months, and for properties like Mississippi and Louisiana, three months. We don't want to get over our skis and make promises we can't keep. The other reason is you're seeing spend per visit up 45%. Do I think that's going to last forever? I don't. I think you'll see a higher spend per visit as we move forward for many reasons we've talked about today, but it won't be 45%. You will likely see visitation levels grow at some point. When there's a vaccine or effective treatments and when visitors feel more comfortable again, your cost structure will creep up. Those are the primary reasons. I wouldn't get hung up on why only this or that. We've said July and August have looked a lot like May and June, with the exception of the Fourth of July weekend. We'll keep you posted as we move forward.

Great. That's perfect. And then the follow-up question I have is about the Barstool engagement you discussed. I know you mentioned that the 66 million number is somewhat dated. Any chance we could get an update on this, or some color if we can't get the hard data?

That's the number we've been using, and we'll continue to use it. The Barstool brand has definitely grown since we started using that number. It's a Nielsen number, and it changes daily depending on what's going on. I wouldn't change that number; all I can share is that this month, in June, numbers have been striking: Instagram followers up 49% year-over-year to 46 million; Twitter up 49% to 23 million; TikTok, which they weren't even engaging last year because it was just launching, now 16 million followers in June. Podcasts are up 40% to 9 million, and Snapchat up 37%. This brand has grown even during a time when there were no sports. They've creatively leveraged their platforms, and it has massively expanded their reach and engagement. I believe the number is bigger than when we first started, but I don’t have official data to share.

Our next question comes from Barry Jonas with Truist Securities.

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, there are some outliers, both good and bad. But what we're sharing with you is within a very tight range for the vast majority of our properties. Competitive reasons drive some to be higher and some lower. If you look across the property portfolio, you'd see that 50% to 65% are within a very tight range, very close to what we shared today about revenues down 6% and EBITDAR up 33%, margins up 1,300. This isn't being driven by just one or two properties; it's driven by the bulk of the portfolio.

Fantastic. And then just on the cashless contract growth initiatives. What's your expectation regarding player adoption in the medium to long term? Do you think this is more additive or a substitute for cash?

I think it's both. Very few places you go today use cash; grocery stores, forms of entertainment, bars, restaurants—everyone has debit and credit cards. The expectation has shifted, and we have to do this as an industry, or risk losing opportunities to engage younger customers and keep existing ones. The days of going to ATMs to withdraw cash are gone; customers just don’t want to deal with cash. We need to move fast as an industry.

Our next question comes from Chad Beynon with Macquarie.

I wanted to go back to sports and iGaming. Jay, I know you've talked about potential goals regarding more vertical integration around the tech stack. I know it's early in the resources with Kambi and White Hat on the onboarding side, which has been successful. Are there places in the tech stack where you might find more vertically integrated opportunities, like on the casino content side, with slots or blackjack?

Great question, Chad. Our focus right now is to launch this app in Pennsylvania successfully. We have the right technology partners in Kambi and White Hat, a fantastic team of engineers, product developers, and customer service folks that are going to support the launch and further development of that app. There may be opportunities to think about vertical integration technology down the road, but we're not focusing on that right now. This is why we took time to launch the app; we don't want an off-the-shelf product that isn’t competitive. We want proprietary features and functionality and content integration with Barstool for differentiation.

Okay. And then on the land-based side, do you have an estimation of what percentage of units have been active since your properties reopened? Do you believe you have the right amount of products, too much, or too little? How will this change post-pandemic?

I've mentioned a couple of times in past calls that this 50% capacity limitation only affects us during the busiest hours on weekends, like Fourth of July; a factor in the busiest holidays. If you look at the day-to-day, it's a non-issue on weekdays and weekends. Our properties were built decades ago, and they were built in a different competitive environment; they were built with a lot less supply. Our casino floors are big enough for the busiest of days, like New Year's Eve. Our focus is on comfort and safety; even if we have the ability for 100% reopening, we might space out the games more to enhance consumer experience.

Mr. Snowden, I'll turn the call back to you for any final remarks.

No final remarks here. Why don't we take one more question? We have a few minutes before the hour, and let's just do one more, if we have someone.

Our next question comes from John DeCree with Union Gaming Group.

I think you've covered pretty much everything, so forgive me if this is a bit more granular. Earlier, you spoke about database engagement in Pennsylvania on the Hollywood real-money product. I was wondering if you could give context. I think you mentioned about 20,000 customers have played online. Is that half or a large portion of the customers you've seen come through Hollywood casino since launch? I know it's only been a short time, but I'm curious how that compares to your expectations and the overall mix of either users or revenue coming from the database so far.

Yes, that's a great question, John. It's still early innings, obviously. Here's how to think about it: roughly 1/3 of those 20,000 are database customers that were inactive or dormant. About 1/3 were database customers active at our brick-and-mortar casinos. The final 1/3 engaged with us online and were new customers. We're getting cards in their hands. Given that our paid media for Hollywood Casino online in PA has been virtually nothing, we've focused on activating our database and enhancing the exposure of Hollywood Casino online at our properties. We’re pleased that 2/3 of our engaged users are either dormant or new to the company; this is quite encouraging. The 1/3 of customers that were already engaged at brick-and-mortar casinos, their total spend is significantly higher now that it’s combined with online revenue too. We're encouraged, but it’s still early, and we will share more in 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. Congratulations on all the work you've done so far.

Great, John. Thank you for your questions. That concludes our call. Thank you for dialing in. I know it's challenging times. We're, like everyone else, figuring out how to navigate this as we go. I couldn't be more proud of how the company has stepped up from top to bottom. No complaints; everyone asks, 'What can I do to help us move forward?' 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.