PENN Entertainment, Inc. (PENN) Earnings Call Transcript & Summary

You right in. Our next presenter probably doesn't need too much of an introduction. And I'm not surprised that it's a pretty full room for you. So it's my pleasure to welcome the management team from Penn Entertainment. To my left, Jay Snowden, Chief Executive Officer; and to his left, Felicia Hendrix, Chief Financial Officer. So Jay, Felicia, thanks for doing is with us.

Yes, great to be here.

Thanks Shaun.

We were just joking about how our summers may not have played out exactly how they thought -- we thought they would. And Jay, you just had a little bit going on. So let's just kind of hop right into it. The big news, obviously, ESPN BET, a huge change, both internally, very large strategic agreement, I mean massive partner, transformative sports landscape. I've spent a disproportion out of time learning about ESPN and changes in the media landscape too in the last few weeks. So take us through this just for a moment, kind of what drove the pivot here, what are we really looking forward to? And then I really quickly want to get into some of the unique features that ESPN is going to bring to you and you're going to be able to grow this platform with so.

Yes, happy to. Look, so what's sort of changed over the course of the last 3.5, 4 years. [PASPA] overturned 5 years ago, states started to legalize online sports betting soon thereafter. And then really the last 3 years, you've just seen a significant ramp as legalization has continued across the U.S. And as you look now versus maybe what we all thought we knew 3 or 4 years ago, but you look now at sort of what is that recipe for success to be on the podium. There's a few things that I think are very clear in that recipe. Actually bump to the next slide, Mike, it's perfect. And I think this really to what we believe that recipe looks like if you're going to be on the podium and online sports betting is that one, you have to have a brand that has got a ton of equity with sports fans is very relevant, has an extremely broad reach. Is mainstream and it's been around for a while, right? So we know that that's the case for sure. You also have to have best-in-class product that's super clear, and I think that's become abundantly clear as you've seen market share continue to consolidate at the top and the two at the top right now definitely have had the best product and continue to iterate and innovate on that product. We made an investment in acquiring the score and a big piece that was a couple of years ago. The big piece of that investment thesis was the technology that came with it. It wasn't just the brand. It wasn't just the access to Ontario. The score for those of you who don't know, is essentially the ESPN of Ontario of Canada. And so we made the acquisition of that media company, got the brand, but of course, got the technology that came with it and the talent that came with it, they built out all of their own media products from the ground up on the media side and they were in the middle of doing that for the betting side as well. Well, fast forward it takes to do that. And so you have to have best-in-class product. And what we found when we launched initially with the Barstool brand is that we have the top of funnel. We have the media integrations with Barstool Sports, and it was working. If you look at first two states that we launched in, in 2020 and 2021, Pennsylvania and Michigan, market share was well over 10% in both of those markets for many, many quarters. But you can only keep customers -- retention can only be so strong if your product is not competitive. And we had third-party product, third-party platforms. Fine partners, but there's a difference between having your own products and borrowing somebody else's. And when you're not in control of the product road map and the features and functionality, the UI-UX, then you are going to lose people because there's better products out there. And so we got people initially and then we started to leak them out. So we're now at a point where we have what we believe to be a very competitive products. It's been proven out in Ontario. We've been live in Ontario on this platform for over a year now, and we've had a great success on media integration, retention results and market share, sustainability, both on the online sports betting and online casino side. We have migrated that technology in those platforms that we've built back to the U.S. We've been live on those for the last couple of months. It was just baseball seasons. There was no real fireworks going off about that. But we felt like now that we have great product, we really need to lead with a brand that has the reach, that has the equity. And honestly, also has access to crazed fans, including their year-long fantasy sports database, which is over 10 million people. And so when you look at all of that together, we felt like that's a recipe that can win. We see that, that is the recipe that is currently working in the U.S. And when we got to know the folks at ESPN over the course of the last several quarters, you really felt a tremendous amount of alignment in terms of for the sports fan that is continuing to ask ESPN why they're not in the bedding business? Because I think you saw there were some research that came out a couple of days ago from one of your competitors, but it was actually a really good survey of information and 80% of the over 1,500 people surveyed go to ESPN as their primary source for sports consumption. So that's a lot on the top of funnel, 80%, right? That's -- so think about that across America, most people in this room would say the same thing is true. It certainly has been for me for decades. Now that you've got a great product and you believe you can move people into that product, and you have the ability to retain them. And we'll talk a lot about the product, I'm sure. We feel like that is the right recipe. And then lastly, ESPN, wants to be in this business for two reasons. One, they believe that we can win together. If you have great product and you've got the brand and you've got the commitment. And we have alignment, right? So the way that we structured this deal, it's not just a -- it's not an ad deal, it's not just cash out the door. There's also significant value of warrants every year. And so if the stock is not moving, there's no value, if the stock is moving, then there's value for Disney and ESPN as well. So there's a lot of alignment there. But there's also this other piece that ESPN has found to be true already before even launching their own ESPN BET branded product is that the fans who consume sports, when you add an element of betting, there's a lot more engagement that happens. They pay close attention. They spend more time in your digital products. They watch Monday Night Football all the way throughout. They watch the half-time show if there's betting elements. And so obviously, they're very committed to this through the way that we structured the relationship, the fact that we're using their brand, I think, is sometimes getting overlooked. ESPN doesn't utilize their brand to not be a top player. And so they're committed, we're committed, and we feel really good about the recipe and the ability to succeed in space.

So ESPN, as you know, has already done some smaller deals, basically link out partnerships and a little bit of branding stuff with other operators in the space. So we get this question all the time, I'm sure it's front of mind for a number of people sitting in front of us. What are you going to have access to that these other partners haven't because those definitely subscale deals relative to what you've struck here have not delivered, I think, as much as maybe people thought that ESPN bump was going to. So walk us through what are some of the themes you mentioned fantasy, possibly one. But what are you going to have access to that's new here?

Almost everything. So think about it this way. I think the question is not where will you see ESPN bet integration with the ESPN assets. It's where will you not as opposed to the link out deals that were in place before. And I think this question of how much value were the previous two partners getting -- there's things that are said publicly and then there's things that happen privately about the value that was being received. And I don't think there would be nearly as much attention on this announcement and this partnership if it simply wasn't working before. There's a lot of attention on what we're doing. And I think it's because everyone understands the power that ESPN brings, the value that they bring. And I think it really starts with the using of their brand, which I've talked about. That is different than anything that was in place before. But think about it this way, that you're going to have access to top talent that's going to be exclusively promoting ESPN BET versus anything else out there at ESPN, that was not part of those previous deals. We're going to have access to their social media network, which is massive across the United States, their fantasy database, which is massive over 10 million people and growing every year. Really important, I think the integrations around editorial content, live broadcasts, Monday Night Football, NBA playoffs, people talking about ESPN BET during these live games, and they have sports rights that are unmatched, obviously, across the United States. And so -- and you have odds attribution. So any time that they're talking within editorials, storylines anytime that there is any mention of betting lines, futures, chances of the Tennessee Titans win the Super Bowl, it's all going to be attributed to ESPN BET. So it's really it's everything as opposed to an ad deal. And I think that's -- look, people in this room, obviously, aren't in the meetings that we have with ESPN that are happening daily and we have a number of different work streams from marketing to product to launch plans to PR. And it's very clear when you're in those meetings, how important this is to ESPN. Now Disney has got a lot going on right now. So this may not be the top of the list of things they talk about publicly. I would tell you within ESPN, this is a -- it's a very significant priority and you feel it. You see it, you hear it. I jump into a lot of these work stream calls, sometimes participate, sometimes to listen in, and I couldn't be happier with the energy, the resources, this is a strategic priority for ESPN as it obviously is for us at Penn.

Can you help us like even go layer deeper, let's fast forward 2 months from now when this goes live, what are we going to see as a customer? So when we talk about an integration right? Are we going -- we were actually able to open the score. We're able to see -- we've got a menu and then you've got at the bottom, you've got a button, the score bet. It's going to take me through to your platform, right? Is it that level of depth? I mean, is there going to be an ESPN button in the ESPN app, is there going to be a fee at the top of when I go to espn.com, like guilty as charged, I'm on there, like it's like almost like a weird habit, where you just kind of like, I'll just check in the score and like, but is it going to be at the top of my web app, not even have to go into an app, like give us that feature set of like what am I -- how am I going to get into your back end?

Yes. I mean, we're obviously not going to have everything I talked about done day 1, right? But we're going to have a lot of it done day 1. Think about the editorial and the live broadcast and all of the integrations into and the talent. That all happens day 1. The integration into the web and mobile web will be day 1. So you'll be doing what you do, pulling up ESPN and able to click on to ESPN BET and seamlessly go over to ESPN BET app if that's something that you're interested in doing? And then the integration within [Technical Difficulty] let ESPN Media be the place where people go for scores and storylines and box scores if they're interested in betting, it will be very intuitive, very easy to get over. And when you get over to the betting platform, -- it's very -- it's going to be fast, seamless, all of the betting markets you're interested in, all of the teams, the league deals, we have it all. Parlay bets and so when you're in there functioning, you create your bet slip and then you want to go back over to media to follow what's going on in college football day or NFL, you can do that and your bet slip can follow you along. So if you forget what you get, you don't have to go back to the betting app. It's like everything is just going to integrate and you'll be able to seamlessly go back and forth without even feeling like you're having to open up separate apps. It's just taking you between the app seamlessly. We've been doing this in Ontario for a year now. So this is not something that's like pie in the sky. It's going to take years to do this. Some of that will be done day 1. Some will be done month 1. Some will be done month 3. And everything we've talked about will be done certainly in between '23 and '24.

You do own the score, which allows that -- your control of that integration. So we talk a lot about control of the tech platform, right? When you control the tech platform and that media app that's going to allow you to get your talent where it needs to be. So what's ESPN bringing in on the talent side in terms of like the back end to help you do this because you will still have to work with them and make sure. So yes, we get that there's warrants and we get the financial piece. But -- is there also -- I mean, it sounds like it was some of the workflow things you talked about, but can you just talk about like are they dedicating people to this effort to internally and help us think about that a little bit?

Yes. I mean, that's -- I was referencing earlier. And I'm sitting here very comfortable, right? I'm not [ANSI]. I'm in these meetings. And when I say there's resources in the room on both sides, it's significant. And so let's take the sort of products work stream. You've got dozens of people in the room on both sides working on these things. This is not a "oh, I was told to go to this PENN meeting and I got to do this thing". This is a strategic priority. It's very clear that they're excited about it and their names on it, which means a lot -- there's a lot of pride at ESPN. And this is something that they've been working on for years behind the scenes. They had to make sure they had buy-in all the way through their organization, of course, they have that now. They had to make sure that they could land the right partner. That took some time to figure out who was the right partner. Obviously, it turned out to be us, that's great. But the first meeting we ever had, I was shocked by how many people were in the room and this is like their full-time gig has been working on ESPN BET behind the scene. So this is not a part-time role for folks. They're dedicated, they're focused, they're energized and we are, too. So we're looking forward to launch.

Not to go too far down the rabbit hole all the way. Thinking to the future, but Sean has been doing a lot of like in-depth research. I've been doing some anecdotal research trying to watch the U.S. open. I've now signed up for like four different streaming services because they blocked ESPN on spectrum. Does this agreement sort of contemplate the fact that the media landscape is changing rapidly from ESPN's perspective how people are consuming ESPN, where it's going to be available like does this feel that like ESPN Plus and if now I am watching ESPN through Hulu because that's the only way I can right now.

Yes. Think about it this way, that anything that is branded ESPN will be supporting ESPN BET, the ESPN Plus, the ESPN digital assets, their app, mobile, ABC. So if you're watching sports on ABC, that's ESPN. So it all works together. Now I'll let Disney talk about what they're doing with obviously, on the media and linear side. There's a lot going on right now. But I -- as I sit here today, they'll figure it out. They have, they will. And we know that the brand and the distribution and the -- what they have from a sports rights perspective, it's unmatched. I don't think anybody in this room would disagree with that.

So maybe I want to follow up with James. But on the Disney earnings call, Bob Iger made a comment. It was something like Penn stepped up in a very aggressive way and made us an offer that was better than any other competitive offers out there by far. That's I think, generated some discussions as to whether or not Penn was the highest bidder here. So could you help us understand that a little bit more? Because we also know that these some idea of this package had been around for quite a while in shop in various forms. So yes, how did this all -- did this come together? What does that comment really mean?

Yes. Well, I'm not going to speak for Bob Iger or anybody for that matter. I will tell you that all of the meetings that we've had with everybody at ESPN and Disney, all the way through this process. this was about the package that the partner was bringing to the table. So my understanding is that the financial portion of it, which again was structured different than anyone else's. There's 3/4 of it per year is in cash and 25% of that is in warrants for strategic alignment and incentive reasons is that the financial portion of it was competitive. Maybe it was the highest. It wasn't the highest by a lot. If that's -- if it was the highest, but let's assume that it was the highest, okay? What comes with Penn in addition to that was they felt like we had a product that's been built for the North American markets, which it has been. This is not built for Europe and brought over and now you're trying to sort of figure out what to do with it and build upon a European model of Soccer and other sports that are more popular there. This was built for North America. They went through very deep due diligence on our technology and our products and came out of those meetings very excited, and they've met with everybody. So that tells you a lot about what -- how we feel and how they feel about the technology and about the product. I think we have a lot of alignment with them around this interface between sports media and sports betting and what's the best experience for the fan, right? Not what's best for the company, what's the best experience for the fan. Tremendous alignment and how we're thinking about that, which I covered a little while ago. Don't try to jam one into the other and let people who are there for sports media content. Let them go do that. And if they're interested in betting, it will be very intuitive and very easy to move over to betting. You can bet and if you want to spend more time there, great. But if you want to go back to ESPN media, you can do that as well. A lot of alignment. And then I think as we introduced more people on our teams. There was a culture fit. There was alignment on vision in terms of wanting to be on the podium. Neither of us are doing this deal to be in fourth, fifth or sixth place. We expect to be competing for the top. That's not going to be day 1, but we expect to be able to compete for the top spot over time. And so that's a package deal that -- and then, of course, the ESPN Bet brands, I think most of the folks that they were talking to didn't -- they felt like they wanted to lead with their own brands, and we were ready to lead with that brand. We had a great run with Barstool, but I think it became very clear to Barstool and us that they're just not they're not -- we're not a natural owner long term because of how highly regulated our industry is. And we figured out a package that was good enough for all three parties to move forward in a way that was good for them.

Let's walk through the -- a couple of the financial components, and I'd like to give you guys a little kind of shout out our credit because I think it was very clear the way you laid out some of your commitment here, both from a -- we know the long-term economics of the model, but more how we think about it financially as analysts. So I believe those targets were the $150 million spend per year, that is largely, I think, focused on the ad spend, the committed spend to ESPN. You talked about an incremental investment, roughly the same amount to kind of one time to build the brand back up and talk about kind of, I think, get your name back out there in other channels beyond maybe just ESPN and then some promotional commitment that probably sits above that level. So we think about those components, specifically on the ad spend commitment you yourself had been. We go back to the Barstool days a little bit, probably had to hear a year ago. yourself had been skeptical maybe is the right word on look, what are the ROIs on that. Now it's different when it's your brand and maybe your spend for that brand, but yes, help us walk through that iteration because Barstool was this really unique scene that you guys felt like you had found where you didn't have to get into this. Now you're in the malaise. Like there is a lot of dollars. We were playing with numbers that could be like couple of $1 billion that are going to get spent over a year -- calendar year just on this type of brand spend and advertising spend. So help us understand kind of how did you come around on that? And why is this going to work better for you?

Yes. Well, I would say a few things about that. One, this has been an evolution, right? So what we know today is a lot more than we knew 2 years ago or 3 years ago. I think that there is a lot of value in a very strong, powerful sports media brand to be integrated with a sports betting, especially when it is under the same brand umbrella. We had a lot of early success with Barstool. We have 1.5 million digital customers today that we didn't have before we met Barstool. So just think about that from a CPA perspective. People are like, oh, did you get a return? We have 1.5 million that are in our database today that stay with us after we moved on from Barstool. So CPAs have continued to come down. And I've been very critical in the past about the arms race. And because if you were if you were advertising at the beginning of football season in 2020 or 2021, I don't know that it was effective. You couldn't watch a football game without seeing 40 commercials from five different brands, and it was just like your head is going to explode. That has changed. It's dialed back. I think the promotional and marketing advertising environment, a lot more rational today than it was a couple of years ago. And I would also say that when you're -- let's take the ESPN spend of $150 million a year in marketing dollars outside of obviously just getting the brands all the integrations that we talked about, we're going to get $150 million of value that you can just look on paper and say, "There it is, there's $150 million through TV commercials and all the typical ad stuff.'' But a lot of the integration stuff that we're talking about that's not enough that's not in the $150 million. So that $150 million that we're spending with ESPN, I would make the argument, given the commitment I know from both sides to winning here, there's likely to be a multiplier on that. So if you're thinking about how are they going to compete. When you have an exclusive relationship with the #1 name in sports in the United States, that has a multiplier effect. And so what we'll spend beyond that, we'll be very focused on returns and CPAs. And we're seeing a much more attractive CPA environment today than we saw a year ago, 2 years ago or 3 years ago, a much more attractive promotional environment. And I also think the time of year that we're launching, having it be mid-season is actually great, not -- I mean, we -- it's really been driven by preparation, and we have to reskin the app and all that. But it's -- we're going to be cutting through what a lot of noise in September tonight, Thursday night football, the first game of the year, we're launching sometime in November. And so I think we're going to be able to make a lot of noise, get a lot of attention, and you're coming in at a point in the year where people have probably burned through most of their free bet promos and deposit matches. And so to be able to sort of reload midyear with a new app and a new experience that's fully integrated with ESPN. I think that speaks to the top of funnel and based on what we're seeing in Ontario and all the enhancements we continue to make on the product, we feel really good about our ability to retain once we get people in the top of funnel.

I think one of the big investor points that has brought people back to this space, right? Obviously, it was a huge run on that kind of front-end incredible growth piece, then things cooled off a year ago as everybody sort of things kind of came back to earth on growth, and we all came back to work apparently and all of those things. But one thing that's really helped turn the corner for the space is the rationalization on costs and promotions and particularly the CAC side of the equation. So do you worry about destabilizing that at all? And I mean, you yourself are going to be out there pushing this and the question we get back is like, well, they're doing it. What does that mean for -- what does that mean for the landscape? Is this sustainable? Or did we just push back profitability curve for the entire industry. So how do you worry about that? I mean, you kind of got to do what you got to do, but how do you keep that in check?

Yes. Look, we're not going to be out spending for the sake of spending. We're going to be spending if we're seeing really attractive CPAs and we're seeing retention and you're going to spend if that's what you're seeing and you're going to build a business that can compete. And so that's what we're going to do. I really can't speak to what level of disruption that will create for the marketplace. We're trying to grow the market. That's very important to us. There obviously will be some taking of business or sharing of business with others. That's naturally going to happen. But we're not -- we're going to be measured as we always are. We're not going to just -- we don't have a dollar spend figure that we're just going to go figure out how to hit, right? That we're going to do this in a way that if we're seeing progress, you're seeing momentum. There is going to be pieces of what you've spent on that are working and pieces of what you've spent on that aren't working. So do less of the things that aren't working, do more of the things that are working. And look, we're probably, from just like a cycle perspective, we're probably a year to 18 months behind where, let's call it, DraftKings and FanDuel were, or are, right? So like they were at this point of like, hey, we can see the turn down the road, 18 months from now, and that's probably where we are now, but we're in we're launching this to win. We're launching this to be a real top player. And so that's the focus for '23 and '24. And I think '25, you should expect us to be making that turn from breakeven and starting to go positive.

Can we just talk about the iGaming strategy for a minute, right? Because ESPN sports first brand, what's the move for you on the iGaming side, still a big part of the business, it's a lot of dollars and can be pretty valuable on the margin side as well. And it was an area where you were pushing before this change and rebrand came along. So kind of where -- how are you -- what's the go-to-market strategy? And then could you give us a little bit of color on like how this has worked in Ontario because I think we actually have some pretty good. I gave you numbers, but again, that's a sports-first brand. So you know this may work, but we may not know it works. So help us understand that.

Look, it's a great question. And we much like on the online sports betting side, same thing in iCasino. We really haven't had a good product in the U.S. until 2 months ago. We've had that great product for both sports betting and online casino on the same platform in Ontario for over a year now. And what we've seen in Ontario since we've launched is that our online sports betting market share, whether you're looking at handle or win matches our online casino market share for handle and win. So they're both double digit. They have been from day 1 all the way to where we are now despite when we launched in Ontario, that was a great market for a long time. And so you're competing against those same operators for market share, and we took a strong position. They don't report by operator. My guess is we're probably third in the market there. And we haven't lost that position despite the number of operators, legal operators going from 25 to close to 70. And so we feel really good about having online casino platform within the online sports betting platform, we'll eventually launch our stand-alone online casino app as well. for now, they're in the same brand new platform. And so we think the success that we're seeing in Ontario, we can duplicate that here in the U.S. in terms of how successful can you cross-sell folks from online sports betting to online casino. I think if you look at the online casino, market share trends, they have largely mirrored online sports betting success or lack thereof. And it says some of the other competitors have fallen off and online sports betting share, they've fallen off in online casino share. And as others have picked up an online sports betting share, they picked up an online casino share. And so it's going to be -- ESPN obviously is a sports-first brand and sports first approach, but that is what feeds the online casino part of the business as well, primarily.

And will it be -- do we know yet? Will it be a Hollywood -- will be Hollywood will be the branding for the casino product and that will be how it sort of stands?

That's right. So you'll have Hollywood Casino as a casino option within the ESPN BET app. So you can seamlessly -- just like today, it's Barstool Sportsbook, Barstool Casino, it will be ESPN BET go into Hollywood. We felt like that was probably a better approach given that the Hollywood brands represents close to 2/3 of our land-based properties. And so it just creates more ability from an omnichannel standpoint to cross-sell. So if you're within Hollywood online casino to send an offer to somebody to go to a land-based casino that has the same brand, makes a lot of sense versus a disconnect between the online casino brand and the brick-and-mortar casino brand. So that's the plan. I actually think longer term that having -- I think having a single online sports betting brand is the way to go. I think having multiple online casino brands is likely the way to go. Today, it's Hollywood and it will Hollywood, but we'll probably have some other online casino brands in the mix as well.

Interesting. All right. I'm running out of time, and I could go on for -- we definitely needed an hour for this not 35 minutes. I want to talk about product very quickly on the digital side. Like you said, best product has been, I think we've seen an acceleration in the importance of that as we've kind of watched our own market share trends and done our own work on that. So what will we see -- I mean we -- you're live, but we're not. It's not as visible and it's not live in New York, unfortunately. So how would you gauge or rate your own product features as you think about the things that are starting to really matter, same game Parlays, in-game betting. The speed of all this stuff has really picked up. And kind of how would you rate where you're going to be when you make this transition and then where you want to be beyond that and sort of that tech road map?

We're in a great spot. Listen, we're in New York, so maybe a lot of people in this room haven't spent time on our app since we migrated over in July. I would recommend you try it out in New Jersey, not a far drive. I think you'll be blown away impressed by how fast, how intuitive, we have all the markets, all the betting options, same game Parlay. We actually just launched Microbets with simple bet a few days ago. One of the beauties of owning your own tech stack is that you can make decisions like, hey, do we want to add micro bets? We made that decision a month ago, and now we're live. So you can just do things a lot faster, you can innovate and iterate. One of the other things that we haven't been able to do is we were on third-party platforms is this whole customization of offers. So just think about as an example, I think this is a pretty exciting example. If you are an ESPN season-long fantasy player and you don't spend as much time on the ESPN media app, but you spend a lot of time on the fantasy app. There's plenty of people who do that. chances are, you're probably more interested in player-type prop bets, if you were going to place a bet. And so our -- if we know that you're an ESPN fantasy player and we know that you haven't placed a bet yet to offer you a free bet on a micro market or on a player prop on a same game parlay but more player focused versus game-focused is pretty powerful. And so when you have your own promotional engine and event engine and you can target customers and based on their behavior as opposed to we had to just do shot gun promotions. Stealers minus 4 has been boosted. That goes out to everybody. We have no idea if you like the Stealers or not now we can target individually. So the level of customization on the marketing side is tremendous. The ability to move faster and control what that product road map looks like. And those priorities shift. And so you can say, take those two things off through these three things on. When you're working with third parties that are in the B2B business, that could set you back months that might set us back 3 weeks or 4 weeks. So it's really all of that, that I think having your own technology. It's a must if you're going to compete at the top levels.

And largely, you're already here, but single app, single wallet across all states that you're in.

What was before and is now. As a matter of fact, thank you for reminding me because we've been asked this question a few times, "Oh, are people going to have to download the ESPN bet app if they already have their own Barstool Sportsbook today". And the answer to that is no. So the Barstool Sportsbook today is on our new technology, the new platforms. And so when we go live in November, it's going to -- you're going to wake up and get an alert that say, you need to update your app, you update the app and it turns from Barstool Sportsbook into ESPN BET. All of your account information, your wallet deposits, your bets, your bet slip, everything goes over with you that day and it's ESPN BET. So that 1.5 million people that we've acquired with our friends at Barstool, their experience over to ESPN, that's going to be 100% seamless.

So much more I could do. So it's hard to pick one out of like the entire page of questions that I have. But let's we still are at a gaming conference. So let's do brick-and-mortar for one, right? For 56 seconds. Yes, in 55 seconds. Just give us the quick reminder of where we are with the core business, the regional consumer, I think, in general, the steady as she goes and the margin, I think holding on to your margin profile was the reiteration on second quarter. around 36%. But just give us a quick thing and Felicia, if you want to.

I was going to say I've been talking to the whole time.

Maybe now is the time.

I mean, look, the thing that we've been talking about for a while now is consistent and we reported a great quarter. Unfortunately, it got kind of backstage due to this huge announcement, but we just continue to see consistent performance. We talked about when we reported in early August seeing early signs in August of continued consistency, like you said, our 36% EBITDA margins are sustainable despite some still bumps in the economy, despite the additional supply that we're seeing in markets. And so we feel comfortable with the guidance we provided at the beginning of the year, and nothing's really changed from that perspective.

Great. Well, Unfortunately, very unfortunately for me, that's what we have time for. So Jay, Felicia, thank you for doing this. And again, thank you for spending the day with us. We appreciate you.