Penn Entertainment (NASDAQ: PENN) informed investors on Monday that its interactive division, which encompasses ESPN Bet, is set to report a third-quarter loss that is smaller than anticipated. 

In a Form 8-K submission to the Securities and Exchange Commission (SEC), the regional casino operator announced that its digital gaming sector is expected to incur a loss of $90 million to $100 million for the September quarter, which is an improvement over the initially projected loss of $115 million to $135 million.

"Better than expected hold driven by a higher parlay mix from our improving product and lower promotional expenses accounted for the upside,” according to the regulator document.

Penn's remarks regarding hold and parlay mix may provide additional support for ESPN Bet's momentum, as noted by several analysts lately. However, there are suggestions that the online sports betting platform must enhance its parlay offerings to more effectively compete with DraftKings and FanDuel. 

The encouraging news regarding Penn Interactive’s finances came roughly three months after the operator announced plans to reduce an undisclosed number of positions in its digital sector. 

Penn Offers Strong Regional Casino Forecast 

To the disappointment of certain investors, ESPN Bet and Penn's previous online sports betting initiatives have often eclipsed the company's regional casino activities, which serve as the main source of its profits and income. 

Although Penn acknowledged that its quarter-end financial procedure has not been officially finalized, it provided a strong forecast for earnings before interest, taxes, depreciation, amortization, and restructuring or rent expenses (EBITDAR) for its retail gaming sector. This may please certain investors amid discussions suggesting that some patrons of regional casinos have recently reduced their spending. 

“The Company expects third quarter 2024 Retail Operations Adjusted EBITDAR to be in the range of $465 million to $475 million,” added Penn in the SEC filing. “Estimated third quarter 2024 Retail Operations Adjusted EBITDAR was negatively impacted by approximately $10 million due to unfavorable hold rates within our Northeast segment and volume declines in our South segment associated with severe weather disruptions and hotel remodeling.  As disclosed in our Form 10-Q for the quarter ended September 30, 2023, third quarter 2023 Retail Operations Adjusted EBITDAR was positively impacted by $14 million in business interruption proceeds related to Hurricane Laura, which was recorded in the South segment.”

Penn is set to announce its third-quarter results before the US markets open on Thursday, November 7. 

ESPN Bet's September Figures Wowed 

It may take some time for ESPN Bet — or any other rival, for that matter — to significantly challenge the DraftKings/FanDuel sports betting duopoly, but every growth has to begin somewhere, and it seems that Penn’s sports betting app is advancing. 

During a Monday investor gathering at its M Resort & Casino in Henderson, Nev., Penn informed analysts and shareholders that in September, ESPN Bet experienced a 161% year-over-year increase in monthly unique users, while parlay users skyrocketed by 211%. 

ESPN Bet's parlay mix surged 608 basis points compared to the previous year, while its hold rate went up by 430 basis points as gross gaming revenue soared 151%.