PENN Entertainment, Inc. Q3 FY2020 Earnings Call

Thank you, Kamika. Good morning, everyone, and thank you for joining Penn National Gaming's 2020 Third Quarter Conference Call. We'll get to management's presentation and comments momentarily as well as your questions and answers, but first, as always, we'll review the safe harbor disclosure. In addition to historical facts or statements of current conditions, today's 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 anticipates or the negative or other variations of these or similar words or by discussions of future events, strategies or risks and uncertainties, including future plans, strategies, performance, developments, acquisitions, capital expenditures and operating results. Such forward-looking statements reflect the company's current expectations and beliefs but are not guarantees of future performance. As such, actual results may vary materially from expectations. The risks and uncertainties associated with the forward-looking statements are described in today's news announcement and in the company's filings with 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 otherwise 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. Thank you for your patience with that. And it's now my pleasure to turn the call over to the company's CEO, Jay Snowden.

Thanks, Joe. Good morning, everyone, and thanks for joining us for our third quarter earnings call. Here to present with me this morning is our Chief Financial Officer, Dave Williams; as well as other members of our senior executive team who are here to help answer your questions. I'm truly pleased to report that we were able to generate strong third quarter revenues as well as record adjusted EBITDAR and adjusted EBITDAR margins even with the ongoing social distancing and capacity constraints at our reopened casino properties, which at this point includes all the Zia Park in New Mexico. Our success this quarter is a clear reflection of the hard work, scrappiness and determination of our property, interactive and corporate management teams and all our team members who continue to work tirelessly to provide a healthy and safe environment for our valued guests and their fellow team members. I continue to be amazed and incredibly proud of the way our company has responded to the daily challenges this ongoing pandemic presents. One of the biggest highlights of the quarter, of course, was the launch of our much-anticipated Barstool Sportsbook app in Pennsylvania. While still early, the app has been very well received. I'll say more about our partners at Barstool Sports following Dave's financial update, but first, I want to touch upon our company's response to the devastating impact of Hurricane Laura on Lake Charles, which was soon followed, unfortunately, by Hurricane Delta. Needless to say, all of our team members at L’Auberge Lake Charles have been partially impacted by these storms, some having lost everything. This continues to be a challenging year in so many ways, but we will rally around our Penn family and the community members in Lake Charles because that's what we do. I'm grateful and proud of the way our sister properties came together to support our fellow team members in their time of need. Volunteers from Boomtown Biloxi, Boomtown New Orleans, Hollywood Gulf Coast and L’Auberge Baton Rouge have been helping with the cleanup and recovery efforts and have provided temporary housing for displaced team members. I'm also thankful for our partners at Barstool Sports who quickly stepped up and created special Lake Charles Strong merchandise that can be purchased on their website. All of the net proceeds from the sales were generously donated to our Hurricane Laura Relief Fund under the Penn National Gaming Foundation. Barstool Sports CEO, Erika Nardini, also hosted the Mayor of Lake Charles on her podcast, Token CEO, to help bring more awareness to the needs of the local community in the aftermath of Hurricane Laura. To date, we have contributed more than $2.5 million to assist L’Auberge Lake Charles and the community, which includes covering full wages and benefits for our Lake Charles team members during the property closure. While the national media's attention has almost entirely moved on to other stories, we plan to be there to continue to support Lake Charles and its ongoing recovery efforts. With that, I'll turn it over to Dave.

Thanks, Jay, and good morning, everyone. As you'll see in our earnings release and the accompanying deck we provided, Penn National had its best quarter in our company's history in terms of adjusted EBITDAR. That result is even more remarkable when you consider the continued capacity constraints, temporary closure of L’Auberge Lake Charles following the hurricanes, the late quarter reopening of Tropicana Las Vegas and the continued temporary closure of Zia Park in New Mexico. Our Ohio and Indiana properties were the standouts for the Northeast segment this quarter. In the South, all of our properties, excluding Lake Charles, delivered double-digit adjusted EBITDAR growth. Meanwhile, our Midwest segment was able to achieve year-over-year adjusted EBITDAR growth despite significant capacity constraints. This outstanding property performance, combined with our successful capital raise of nearly $1 billion in September, allowed us to repay our revolver balance of $670 million and increase our cash balance to $1.9 billion. In addition, we reduced our traditional net debt to approximately $693 million at September 30, bringing our lease-adjusted net leverage to approximately 4.9x based on 2019 adjusted EBITDAR. We are confident that our improved balance sheet provides ample liquidity to support high-return projects in our land-based business, such as the new and rebranded retail Barstool Sportsbooks and the further rollout of our interactive products. Finally, in terms of our capital expenditures this year, we're continuing to be very disciplined despite all but one of our properties being reopened. We spent $21.5 million on maintenance CapEx in Q3 and approximately $2 million on project CapEx related to our Cat 4 casinos in Morgantown and York. We're resuming construction on these projects and anticipate both opening in the second half of 2021. Back to you, Jay.

Thanks, Dave. As I referenced on September 18, we officially launched the Barstool Sportsbook app in Pennsylvania, and it was the #1 most downloaded sports betting and sports app in the country during its first weekend despite only having launched in one state. This app launch was a significant milestone for our company. And I'd like to personally thank our Penn Interactive team and our partners at Barstool Sports for their hard work and collaboration over the last several months. With all the excitement surrounding the app launch, we were able to acquire a significant number of new customers during the first two weeks of launch. As a result, our September results reflect higher promotional allowances as first-time depositors took advantage of our initial $500 risk-free bet and other promotions, all of which were in line with other operators during their first month of launch. As you will see on Slide 11 of the deck we provided in the earnings release, promo credits in September represented 7% of handle as we acquired new customers through promotions for first-time depositors. As promo credits and hold rates have normalized in October, we have continued to see strong handle while reducing our promo spend to 3% of handle, leading to meaningful net gaming revenue. We expect this trend to continue as we launch in additional states, given the ability of Barstool to quickly and efficiently convert their audience to our sports betting app and our collective ability to retain those customers. I would like to emphasize that the impressive results the app has achieved to date have been without any meaningful external marketing spend, which reinforces our belief that we should be able to, in the medium and long term, achieve a top 3 market share position in both the sports betting and iCasino space across the country in states where we operate and with best-in-class profitability. One of the ways in which we can deliver on this goal is through an innovative and unorthodox approach to marketing, advertising and customer acquisition costs. For example, Dave Portnoy from Barstool Sports reached out to me last week with the creative idea of teaming up to help save the historic Reading Terminal Market in downtown Philadelphia, which was hard hit by COVID and has been struggling to keep the lights on. They had a GoFundMe campaign underway to help sustain their operations but haven't quite met their goal. Dave and Penn stepped up together and agreed to contribute $100 for every $100-plus new account opened on our Barstool Sportsbook app in a 24-hour period. We ended up raising over $150,000 for the Reading Terminal Market to help them complete their goal. In addition, and this is largely due to Dave and his profile online, another nonprofit organization that supports small businesses in Pennsylvania was so inspired by our efforts, they reached out to Dave, and they offered to put up another $100,000 of matching contributions towards the cause. This was a great win-win in terms of attracting new customers and simultaneously providing support for our local community. While there's been plenty of focus on the performance of the Barstool Sportsbook app, we're also very pleased with our investment in Barstool Sports, the media company. Despite the temporary loss of live sports and a general slowdown in advertising spend, Barstool is having its strongest year yet and has seen profitable revenue growth through a diversified mix of advertising, brand licensing and merchandise business. Most importantly, Barstool continues to grow its audience across its podcast network and the largest social media platforms. Over the last year, we have seen some very favorable comparisons in the podcast sector and we feel good about Barstool's competitive positioning in that space as well. With Barstool actively promoting our retail and online sports betting offerings through their large loyal audience, we believe we can retain and cross-sell these customers to our land-based casinos and iCasino products. Our experience to date has shown that customers who play with us through multiple channels, including land-based casinos, retail sportsbooks and online casinos are over 12 times more valuable than customers who only play with us at one of our casinos, which illustrates the power of our omnichannel strategy. To further capitalize on Barstool's incredible momentum, we are working with them to launch stand-alone Barstool-branded entertainment destinations in key markets. These locations will serve as virtual sportsbooks in large metropolitan areas and states with approved online sports betting, which we believe will further expand the reach of the brands and help us acquire new customers at attractive economics. On the land-based side of our business, our operations and IT teams, led by Todd George and Rich Primus, have done a terrific job in helping to evolve our company and indeed our industry towards the new generation of cardless, cashless, contactless technology or what we internally refer to as the 3 Cs. In a post-COVID-19 world, we believe this will not only improve efficiency and customer service, but it will also result in incremental revenue as we appeal to a younger demographic that has come to expect a cashless experience in their daily life. On the legislative front, we remain actively engaged across the country and advocating for the passage of sports betting in those states where it is not currently legal, 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 election. We intend to exercise our option to acquire the operating assets of Hollywood Casino, Perryville and Maryland from GLPI before the end of this year, which will provide us with market access to an industry-leading 20 states in 2021. Also on the ballot this year is a statewide referendum 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. We've been and will continue to be heavily involved in the campaign in Colorado to support its passage on behalf of Ameristar Black Hawk. Looking ahead, we continue to see solid performance across the land-based portfolio in October, and we're anticipating an exciting finish to the year as we introduce Barstool-branded retail sportsbooks across several of the properties in our portfolio and the launch of our Barstool Sportsbook app and new iCasino products in Michigan pending final regulatory approval. And with that, Kamika, I'd like to turn it back over to you to open up the line for questions.

[Operator Instructions] Our first question is from the line of Joe Greff with JPMorgan.

Jay, I know it's super early days in Pennsylvania for the performance of the Barstool Sports betting app, but I have a few questions on it. I guess one, what have you learned about the promotional credits to handle relationship? More so on not just in isolation, but also in the context of a competitive market. And then when we look at the performance in October relative to the walking 13 days or so in September, handle per day is down and I realize promos are down as well. Can you just talk about those two topics? And then just a follow up on that, if you guys were to, say, generate 15% to 20% margins, pick a margin, how much in handle do you need to generate in order to get those type of, say, mid-cycle type of margins? And that's all for me.

Sure thing, Joe. All good questions. And you're right, it is the early days. So I don't know that I'll be able to answer all of those with absolute precision because we're still learning as we go, obviously. Here's how I would sort of think about each of those is that the promotional credit question, we actually took a different view than I think many when they saw the results from September. We were really excited about not just the handle but also promo credit as a percentage of handle at 7%. The reason why that was high is because we broke every record for downloads and registrations and first-time deposits for any sportsbook launch in any state in the history of U.S. sports betting. So it was naturally going to happen because as every one of our competitors do, we offered people for their first-time deposit a free bet of up to $500. So that was expected on our end. We knew that percentage would come down as it has in October. I think if you look at where Pennsylvania has been since sports betting really started to ramp, just call it, throughout 2020 is that you typically see promo credits as a percentage of handle right around 3%. And we're seeing already in month #2 that our percentage is right in that range of 3%. So I think it's natural to see that first month high. Most of our competitors, when they launched, the same thing happened. They just -- maybe not as much attention was drawn to that as it was for our first couple of weeks in September. And we also think about the handle per day, as you look at October, it's really important to think about what's happening from a promo credit standpoint because part of what's driving that handle per day number in September being a little bit higher than October is that many of those bets were on us, right? Those were -- that was Penn money that people were betting with on that initial bet. So the fact that it really has -- it's almost immaterial, the decline from September to October, but yet, we're generating real revenue, both on the growth side and the net side, as we share in Slide 11 of the presentation that we attached to our earnings release. We couldn't be happier with what we're seeing in October so far, and we think this is just -- we're still in the first inning. We're learning a lot in terms of what works, what's effective. 39% of bettors since day 1 of our launch have bet with Barstool, exclusive bets, which I think is really, really telling in terms of retention and stickiness and the experience, the UI/UX. These -- the customers, the stoolie fans and others, maybe they weren't stoolie fans but have downloaded the app. They really like the experience, the 4.8 Apple app rating is as good as anybody. It's best-in-class. And people are -- they're watching Dave and team on their live streams, and this is sort of starting to play out how we thought it would likely play out. With regard to your margin question, I'm going to need more time on that one. It's really hard for me to answer that. We have -- there's so much work to do. And we're in 1 state today. We hope to be in 2 by the end of this year, and I would say hope because we haven't gotten final word from Michigan. We'll be ready when they're ready. And we plan on being live in every state where we operate and where sports betting and online casino is legal by the end of 2021. And so I think when you're thinking about what do margins look like, we'll be much more educated and scale helps, right? So right now, we're building out an infrastructure of product developers and engineers that are going to support this launch across all of these states, whereas right now, it's all based on 1 state. So we're going to need a little bit more time to answer your third question, if that makes sense.

[Operator Instructions] Our next question is from the line of Felicia Hendrix with Barclays.

I first wanted to -- I got one question on your traditional business and then one Barstool question. So just on your traditional business, a lot of your competitors already have been talking about the sustainability of revenue growth for now and also the sustainability of the margins. I'm just wondering, outside of specific taxes in the regions, are there any regional segments where it's going to be harder to maintain that sustainability of the cost savings? Or is it pretty similar across the board, again, ex the tax rates? And then also, Ohio has been on fire. So why do you think that is? And can that keep up?

Sure thing, Felicia. Thanks for asking the question. No, we actually -- we were just talking about this a couple of days ago of how remarkably consistent the revenue patterns, the visitation patterns, the spend per visit patterns have been since these properties reopened. You got that first couple of days was a mad rush. And then after that, it's just been really steady and stable. And that goes really across all of the regions. And so there really isn't a region that stands out, Felicia, as being more challenging other than there's just some capacity constraints and sort of local requirements that are different from market to market and region to region. That's more of the challenge today than anything around tax structure or our ability to generate great margins and flow-through on top line revenue from one market to the next. So I think that -- and that will all smooth out over time. I don't know when that is. But when we have these capacity constraints lifted, then I think you'll see even improved performance in several of these regions. Right now, we're kind of boxing with one hand tied behind our back.

And just on Ohio?

I'm sorry, yes. And on Ohio -- well Ohio has been a healthy market for us for forever, right, since we went live in Ohio. And Toledo benefited tremendously in the third quarter from Detroit going live a couple of months after Toledo did. Toledo is still performing very, very well. And we actually think some of that business that we've picked up is going to be around for the long run, which is great. We have a beautiful property there. And I think many people saw it for the first time and realized that it's a great offering. It's well run. Justin Carter and his team there do an amazing job. So I think you'll see Toledo continue to perform really well relative to past years. And Ohio's just always going to -- I shouldn't say always, for the foreseeable future, it's going to be a growth market for us because it's still relatively new. Our properties there have been open for 6, 7, 8 years. And it's -- I think you're going to see higher performance there, Felicia, than you will probably versus other markets across the country.

Great. And then just kind of transitioning to Barstool. Prior to your launch, you put out in at least one deck, I think it was two, statistics about kind of what you would need for the Barstool conversion and the mychoice conversion to get to a certain rate -- for Barstool to get to certain market share. So just in the early days of this launch, I was just wondering if you have any -- what kind of data you could share with us on those players now. Does the makeup of the folks who have signed up match what you expected, percentage of stoolies, percentage of mychoice? Can you give us any color there? And particularly given mychoice conversion more than -- or adaptation more than the stoolies, but those would be helpful.

Yes. Sure thing, Felicia. So a few things. We set internal goals, obviously, when we launched the app in Pennsylvania. And I would tell you that based on where we are today, we've exceeded every one of the goals that we had set. The only one that we're still working to improve right now is the live in-game betting is a little bit lower than we would like to see. It's getting better every week, but it's not yet where we want it to be. But as you think about some of the key stats, you've got over 60,000 downloads of the app in Pennsylvania alone. And then those 61,000 downloads have converted into 48,000 registrations. So you've got almost an 80% conversion from downloads to registrations, which means that once people download it, they're continuing to go, right? People are going through the process of providing you their information. And then from registrations to first-time depositors, you're seeing that conversion rate at 64%, which is also great. We thought it'd be around 50% and we think 50% is around industry standards. So once people register, going through the process of actually establishing a deposit, and that's obviously key because people can't bet until they do that. So I think we believe those are some best-in-class percentages of conversion. And it's continuing to get better and better the more unique promotions that we do with our partners at Barstool. We're doing things differently. I think really creative promotions, really creative, unique sort of unorthodox unique betting opportunities. And you bet the over on this game and you bet $100 or more and then you can join the Overs Club and you win merchandise from Barstool. So these are things that we're doing that others haven't done, but we're seeing that the -- it's very effective. And again, the fan base really connects with that Barstool brand, so winning merchandise that only a few thousand people in the country have is a big deal. So those are important for us. And things like average handle per bettor and average wager per bettor, it's still so early. I want to see how all of that materializes. So we're above where we thought we would be. But even if it came down some, we're still in great shape right now. The question on mychoice is a good one, and I'm actually -- we've been digging into this a lot. And I'm happy to share that 95% of those that have downloaded the app and registered are brand new to the Penn ecosystem. So think about that in the reverse, 5% of them were already members of mychoice, 95% of them weren't. So in terms of acquisition of new customers to the brand and to our entire ecosystem, what a success story. I mean that is big news for us. And that same 95% holds true when you look at downloads across the country. And there's been over 300,000 downloads across the country, 95% of those being new to our ecosystem. But within that 5% of mychoice customers that are using the app and betting on the app, they represent about 20% of the wagers or the wager amount, the handle. So I think it tells you everything that you would want to know in terms of how incremental from a customer acquisition standpoint has the online sports betting opportunity been and how amazing, I think, Barstool and their brand and their team have been on driving new people to the -- within the ecosystem at Penn National Gaming. And then, of course, what we already know is that our mychoice customers are very loyal and they love to game. And whether it's inside a casino or online casino in PA or now betting on the sportsbook app, their spend per bet and per time spent on the app itself is higher than the average player. So we're learning a lot, but I think those are all some nuggets that we're certainly keeping a close eye on and factoids that you probably want to continue to look at and ask us about because they will evolve as time goes and we launch in additional states.

That's super helpful. And anything creative you're doing to drive in-game betting?

To drive what, I'm sorry, Felicia?

The live in-game betting.

We're trying some things. Honestly, we're starting to use -- certainly use push notifications and be smarter about when and how to remind people about certain things, if there's a favorite that's down at halftime and betting on halftime. So we're talking to Dave and Big Cat and others at Barstool. Everyone's got ideas. We're just -- it's still so early. I'm just kind of highlighting that I think that's a number that we can continue to improve upon. It's not that it's bad. It's just -- it has room for growth. And in-game betting is great because there's more engagement with the fan base.

[Operator Instructions] Our next question is from the line of Shaun Kelley with Bank of America.

Jay, just 1 or 2 more follow-ups. There was something, both in the prepared remarks and the press release, a comment on stand-alone, I think, Barstool brand entertainment destinations. And I'm kind of really curious about what that could mean. Could you explain that a little bit more? I think I'm envisioning something like perhaps Barstool sports bars or something along that line. But what kind of structure would we evaluate here? Is this -- how would the economics work if something like this in terms of sharing between the Barstool and the media side and kind of Penn's interaction with some idea like that?

Sure thing. So yes, we've been -- we've actually been talking about doing these probably since -- well before we even announced the close of the deal. This is something that Dave and Erika and Big Cat are very excited about. And we think there's still -- as great a job as they've done with their brand, and you think about the evolution and growth of that brand over the last 2, 3, 4, 5 years, it's been spectacular. And there's still so much that we can do. It's a matter of timing and resources and prioritization. But you can envision these. They're not completely defined yet, Shaun. We're still working through with the folks at Barstool what exactly these will be when we say it's an entertainment destination. But you can definitely think about it as some sports bar, certainly like a virtual sportsbook because we would be launching these in states where sports betting is legal. And you'd walk in, and it's not going to be an actual retail sportsbook, but with technology and iPads and other things that we can do, it will feel like a virtual sportsbook, certainly during the daytime. And there will likely be a nightlife component as well that we have and Dave has lots of ideas on. So more to come. I would -- with your question with regard to how to think about the economics, we'll share more as we start to develop these. But I'm certainly viewing it more as an opportunity for getting the brand out there even more than it is today and as another efficient way to acquire new customers in key markets. Those are the top priorities for us. I think that the economics will be what they are, but that's not really the sole motivation or really even the top motivation for wanting to deploy some resources behind this idea.

Interesting. Look forward to hearing more. And then -- so the second thing would just be, obviously, you've been pretty clear, and I appreciate all the detail on the promo side, but there's still the external marketing piece here, which you've been, I think, very disciplined on, given the way you wanted to launch this product. So kind of curious on what's your expected cadence around a broader external marketing spend. I think it would be unfair to assume you guys are going to do 0 external marketing spend as kind of the final steady state. But obviously, you probably want to have markets to leverage it -- leverage that spending across. So kind of where are you at in that phase? When should we expect to see some external marketing spend? And how do you think that could impact your trends that we're ultimately going to see in some of the KPIs?

Yes. TBD, really, Shaun. We're working through our plan. And to date, despite the results, we've spent 0 on TV. We spent 0 on radio. Billboards, well billboard is already in our portfolio that we just swapped out the creative on the billboard. So we've spent 0 incremental dollars on billboard. We've really been spending on the customer. And so when they come into the app, they have a great experience, and we've got some different boost opportunities for them to get good odds on games or online to bet with people that they know at Barstool. And of course, there are things that we can do like we did with the Reading Terminal Market in Philly that I think is just like that's super creative. It's a win-win everywhere. It's unorthodox, but we got more buzz out of that than we would have gotten for spending $10 million on TV in Pennsylvania for the month. And so we're just -- we're going to do things differently. I think you'll find it to be more efficient. I think it's safe to say that when we do start to spend some third-party marketing dollars on advertising that it will still be best-in-class and lowest in class. But it's not to say that we never will, to your point, especially as we move from Pennsylvania to Michigan and on to other states. We'll have a little bit of a different approach in the states that we're sort of moving on from because we want to stay super relevant in those states. And so we're still working through exactly what that plan is. But I think it's safe for you to assume and everyone to assume that we'll continue to do things in a very Penn Barstool way, and it's not going to include the same approach as everybody else in the space.

[Operator Instructions] Our next question is from the line of Thomas Allen with Morgan Stanley.

Thank you for all the incremental color on Barstool. So just qualitatively, what have you been hearing from the bettors in terms of what they like about the app? And then conversely, where there are stoolies who have not been betting on the app, have you heard anything of why they're not betting on the apps? And then a second question on sports betting. Do you think you've been more successful since launch attracting more casual or more serious betters versus kind of your expectations before?

Sure thing, Thomas. I'll answer the second one first. We've been pleasantly surprised. We've got a lot of heavy action on games from people we did not know when we launched the app. They're definitely in that 95% of being new to the Penn ecosystem. We've got, obviously, the masses. We mentioned, we've got 30,000 first-time depositors in Pennsylvania since we launched the app. So it's really a good -- it's a good mix of both. When sportsbooks across the country get hit hard, we're in there as well because you have a lot of action on a lot of the same games and from -- sometimes some of the same bettor. So I'm happy to see that we certainly have attracted some of those more serious, sharp bettors. But I love seeing the masses. I mean that to me is how you win in the long term, and we're continuing to grow those registrations and first-time depositors in Pennsylvania, which I think is great. Going back to your first question in terms of what have -- what feedback have we gotten qualitatively and what do people enjoy about the app and maybe what are we hearing that could be better. Look, I would say that the one thing we're hearing that could always be better is that the more integration you have in the app with Barstool, the better, right? So we're working on video integration and dynamic promotional opportunities within the app, shareable bet slip to where when Barstool folks tweet out their bets, you could click on it, and it takes you straight to the app. So those are things that we're working on that'll just make everything more seamless than it is today and make the app feel, even though it's already heavily branded, even more heavily branded and integrated with Barstool, the brand. And so those are things we're working on. It's not -- nobody's screaming. They're just things that we know will make the app better and make it just a better overall UI/UX for the end user. In terms of what's working, the exclusive bets have been an absolute home run. As I mentioned earlier, you've got 3,000 people betting $100 or more on a Monday Night Football game so they can win a jacket that is bespoke to Barstool and what we're offering. Big Cat and Dave tweet that out, and it's just awesome to watch when something happens, how the response is for the end user because of how loyal that audience is, and they're following what Dave and Dan and others do, all day, every day. And so that's been great. We have some unique features on ours. One is called Move the Line where you can kind of move -- if you don't like where the money line is, you can kind of spread it one direction or the other, and the odds move with it. But a lot of people like that for point spreads and money lines. And of course, whenever we're boosting odds, that's a big deal. And so those help when you're doing push notifications, and people get a chance to, especially when it's hometown teams, we've been doing most of those sorts of things around the Eagles and the Steelers while we're in PA. And we'll continue to do those things. We're getting -- the app rating at 4.8 is there for a reason and that's after thousands of app ratings. We'd love to be 5.0. And it's actually interesting, if you look at the ratings that have brought it from a 4.9 to a 4.8, it's like 90% frustration that we're only in Pennsylvania. That's what you see when people download, and it's really not critiquing the app as much as it is. "Hurry up and come get to us because I want to play on this app," which I think is a really good sign.

Good news, I just have one question. So we'll try to squeeze a little bit more data or anecdotes out of you, Jay. I think a lot of what we talked about today, given the short time frame that Barstool has been live, is on registrations, first-time download. So it's probably a little early, but I'll give it a shot anyway. If you have any anecdotes you could share about the frequency of use. Are you seeing customers who've been first-time depositors, first-time wagers -- are they betting frequently? Are they coming back in the first couple of weeks? Any kind of thoughts on frequency would be interesting.

Sure, John. Again, it's early, right? So we're tracking it every week in terms of those that downloaded and deposited in week 1, what's their behavior in week 2 and week 3 and week 4 and then what do those in week 2 look like. So we're seeing pretty consistent patterns. I think they're probably largely a bit better than industry standard in terms of what is your overall churn rate, right, so those that maybe bet once and then didn't bet again against how many new people have signed up and deposited. We're seeing really good patterns there. But it's early. We obviously -- that's something that we'll never stop focusing on, downloads, registrations, first-time deposit. And you can't just bank on the first week. You got to keep at it. And I think that we'll figure out creative ways to continue to do that like we did with the charity event around the Reading Terminal Market, which was a huge success for us and the local community there to generate a lot of first-time depositors and to write a big check for a local business, nonprofit, in need. So more to come, I guess, is the way to answer that, but we're pleased so far with the trends. Thanks, John. Thank you, everybody, for dialing in this morning, and look forward to speaking with you in early February.

That does conclude the conference call for today. We thank you all for your participation, and we ask that you disconnect your lines. Thank you, and have a great day.