Greetings, and welcome to the Penn National Gaming Fourth Quarter Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator instructions] I would now like to turn the conference over to Mr. Joe Jaffoni of Investor Relations. Please go ahead.

Thank you, Frank. Good morning, everyone, and thank you for joining Penn National Gaming's 2021 fourth quarter conference call. We'll get to management's presentation and comments momentarily as well as your questions and answers, but first as our practice, 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 anticipates or the negative or other variations of these or similar words or by discussion 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. And 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 now my pleasure to turn the call over to your host, the company's CEO, Jay Snowden. Jay, please go ahead.

Thanks, Joe. Good morning, everyone. Here with me in Wyomissing, as usual is our CFO, Felicia Hendrix, our Head of Operations, Todd George as well as other members of my Exec team, and we're all happy to jump in and answer questions you might have later on the call. I thought before I get into prepared remarks, I first wanted to address the article about Dave Portnoy that dropped last night from the same Paywall subscription based publishers the last article, and which also happened to be on the same day of our earnings call exactly three months ago. The allegations are from anonymous sources made about Dave and his personal life. And David's responded publicly, many of you have probably seen that just as he did last time. So before we get started, I just wanted to respectfully ask three things for the call today. One, if you have read or plan to read the article, I would just recommend that you also read and watch Dave's response that he posted last night, two, that like last time, we give this time to play out. There undoubtably will be more to come in the coming days, just as what transpired three months ago. And then lastly, that we keep today's call focused on Penn and our earnings release, and our exciting and unique future outlook. So with that, let me jump into prepared remarks from my readers on here that my team's never seen me wear before but I'm getting old. We provided a link to the slide presentation along with our earnings report this morning that if you haven't already opened or printed it out, I would suggest you do it now, if you have access. Our prepared remarks will reference several of those slides today. So I'd like to start and spend some time on Slide 4 as it provides an appropriate backdrop for all of our comments today. There's been so much focus the last few months on online sports betting handle and questions about path to profitability that I think it is helpful for context to highlight at a strategic level what it is that makes Penn truly different from the competition, we have the nation's largest portfolio of regional gaming assets that generate significant and sustainable free cash flow. In fact, 2021 was a record year of free cash flow at Penn that resulted in year-end lease adjusted net leverage of 4.1 times. This balance sheet strength and financial flexibility has afforded us the opportunity to pursue the continued evolution of our differentiated omni channel strategy, which includes a thriving and profitable media business anchored by theScore and our investment in Barstool Sports, and a rapidly growing interactive business with a clear path to near-term profitability and a long-term path to meaningful value creation, a path that is not entirely contingent on TAM or scale or marketing spend, but one that is more in our control and based on a business model and margin profile that has unmatched structural advantages that I'll cover in more detail a little later. Given this unique competitive positioning and confidence in our future growth prospects, I'm pleased to share that our board of directors has authorized a $750 million three-year share repurchase program. Our strong financial position provides us with the ability to continue to grow our business and invest where appropriate while also returning capital to shareholders in a rapidly evolving marketplace. If you move on to Slide 5 and 6, you can see that we had a strong finish to really what was a tremendous year for us at Penn with our fourth quarter revenues and adjusted EBITDAR exceeding both 2020 and 2019 levels despite the ongoing pandemic. I'm incredibly grateful for the hard work and dedication of our team members across the entire enterprise during this challenging time as they continue to deliver best in class service to our guests while managing the virus related impact on their own lives. In the fourth quarter, we successfully advanced several of our long-term strategic objectives. Most significantly, we closed on our acquisition of theScore, a transaction that provides us with another powerful sports media brand loyal audience and full control of our product and technology roadmap. Looking ahead a year from now, we also have the opportunity to fully own Barstool Sports which together with theScore will mark our transformation into a major media and entertainment company. You will know in our release that we have created a new operating segment for Interactive, which delivered very impressive results, certainly relatively speaking, I think there is a misperception right now in the market that there is no clear path to near-term or even medium term profitability in the sports betting sector. But I'd like to remind you that we are employing a very unique strategy and we are already seeing the benefits of our disciplined marketing approach and numerous structural advantages. In fact, our Interactive segment exceeded our EBITDA expectations in the fourth quarter, despite launching sports betting in Iowa, and iCasino and sports betting in West Virginia, as well as some costs associated with the integration of theScore and an extremely aggressive competitive environment that's been well documented by many of you. We have all seen the incredible level of marketing spend in this space, which we all know is not sustainable in a competitive environment. We have not at Penn and will not jump into that fray as we remain focused on channeling our investments into ownable and differentiated products, experiences and technology platforms for our end-users that will have long-term benefits versus spending irrationally on short-term marketing initiatives with very questionable returns. We are also very fortunate to have two dynamic and growing customer acquisition funnels in Barstool Sports and theScore together with our leading portfolio of retail casinos and sportsbooks that provide us with highly effective organic marketing and monetization opportunities without the need to incur massive losses to compete. And we're going to stay committed to our strategy of leveraging these strengths. Looking ahead, we expect our Interactive business to lose approximately $50 million in 2022, which is an improvement from our prior $80 million EBITDA loss for the year and obviously pales in comparison to the anticipated losses of the competitive set. Importantly, this estimate is inclusive of investments we are making to scale our operations and infrastructure in anticipation of bringing our technology in-house and launching in a minimum of four new jurisdictions. Regarding the cadence of the year, we expect to incur most of that EBITDA loss in the first three quarters as we launch in several new markets and prepare our products and technology stack for football season, 2023 -- sorry, 2022. By 2023, we expect to be generating positive EBITDA in our Interactive division as I said before. And as I mentioned earlier, we see a lot of attention in the press about handle market share. And while that is a useful metric, particularly when a state first launches, it doesn't mean as much when those incoming dollars generated from that handle are completely offset by marketing and promotions. While we think at this point is becoming more widely understood, unfortunately, because of the varied ways the state's report sports betting metrics, the investment community is forced to use handle to compare company performance in each state. Fortunately, there are a few states that report net gaming revenue, which we believe is a more relevant measure of performance. You can see that in states like Pennsylvania and Michigan, our NGR market share underscores the benefit of our profit focus strategy as shown on Slide 16 in our slide deck. While we like all operators have seen volatility from month-to-month based on hold and now is well with a return to Football season. We have gained traction pretty much across the board with our online sports betting revenue more than doubling in the fourth quarter. And we are doing this while spending a fraction -- a small fraction of what our competitors spend on marketing. Our performance in New Jersey which is perhaps the most competitive online sports betting market in the world is particularly notable as we captured meaningful share despite launching three years or more after our primary competitors, Felicia and I regularly are asked when we can expect to see positive contribution margin following new state launches. As you will see on Slide 18, our low customer acquisition costs and high retention rates are providing a very short payback period, specifically within two or three quarters of launching in a state. By the time we are in a state for a year, we typically achieve over a two times return on our initial investment in that state. This return is even faster, of course and higher in states that also offer online casinos. Slide 19 reinforces this point by illustrating the impact of our structural advantages versus the competition. We are confident our organic marketing strategy and market access footprint will lead to outsize profitability over the long-term. This doesn't even factor in the impact of our retail sportsbooks, which are highly profitable and provide significant opportunities for cross-sell. We now operate 24 retail sportsbooks across the country. And we estimate that our total retail market share outside of Nevada is 12%. In Louisiana, we generated over half of the state's retail handle and revenue during the first two months of operation at temporary sportsbooks at our five casinos. We expect even greater upside when we complete the Barstool rebranding at our signature locations in Lake Charles, Baton Rouge, and Bossier City. Speaking of Louisiana, following our recent launch of online sports betting there on January 28. We now operate online sports betting in 12 states and iCasino in four. Looking ahead we have several important milestones on the horizon, including anticipated launches in Ohio and Maryland. The establishment of remote mobile registration in Illinois in early March, which if you recall we went live about a year ago and only had one month of remote mobile registration before it reverted back to on prem. So that's a big deal for us in the state of Illinois. And the recently announced launch date for sports betting and iGaming on April 4 in Ontario. And speaking of Ontario just a quickly recap. On December 20, theScore Bet became one of the first mobile gaming operators to secure certification from GLI for the sports betting and iGaming platform in the province of Ontario. And just yesterday, the Alcohol and Gaming Commission of Ontario approved theScore Bet registration as an internet gaming operator. These are two important milestones before theScore Bet can begin operations in the province on April 4. And theScore continues to work to satisfy all remaining requirements including execution of an operating agreement with iGaming Ontario. Our team at theScore has been hard at work preparing for this launch in their home province for a long time. A province with a population of 15 million people, which would rank as the fifth largest state in the U.S. on a population basis. And we believe theScore Bet brand supported by the personalities at Barstool Sports will allow us to be very competitive in that highly lucrative market. As for our iCasino products, we made a number of upgrades during the quarter, including the introduction of our first in-house developed games. These improvements have led to steady month-over-month growth this past fall in both handle and revenue for the Barstool Casino. I'm particularly pleased with the performance of our in-house games, which have contributed over 20% of our Barstool Casino handle and revenue since their launch. Our ability to leverage Penn Game Studios in developing the sport games like Barstool Blackjack and Barstool Slots allows us to capitalize on cross-sell from the Barstool audience, while also reducing third-party content fees. We see opportunity to expand our iCasino share this year as we refine our omni-channel strategy to better leverage our growing mychoice database, which is now over 25 million members. Turning to the retail side of the business. We saw strong property level performance across our segments most of the quarter with some softness in late December due to Omicron and the increase in COVID related restrictions. Our properties are still seeing strong visitation from the younger demographics. And we are continuing to reimagine our casinos with offerings such as our market leading retail Barstool Sportsbooks and other food and beverage and entertainment options that will help to drive long-term retention of this demographic. Overall, we continue to benefit from a rational and stable marketing and promotional environment and feel confident that the EBITDAR flow-through achieved in the second half of 2021 is sustainable borrowing any unforeseen macro or competitive developments. In December we celebrated the opening of Hollywood Casino Morgantown, our fourth casino in Pennsylvania, and the 44th property in our industry leading portfolio. Like its sister property that opened last August in York Pennsylvania. This state-of-the-art casino about an hour outside of Philly is built for the future with our new technologies and customer conveniences including our 3Cs cardless, cashless and contactless mywallet experience. The property also features the latest evolution of our Barstool sportsbook, Tony Luke's famous cheesesteaks and several other F&B and entertainment amenities. We're encouraged with the early results at Morgantown as we were able to reach into a new market with approximately 80% of our rated business being driven by new members to our active database. The 3Cs are now live at all of our Pennsylvania properties, and our four casinos in Ohio. And we are excited about the potential to introduce this technology to additional properties across the portfolio pending regulatory approvals. Our 3Cs solution removes friction from transactions and reduces wait times and lines, while also bolstering our marketing capabilities. Our mychoice loyalty app now has nearly 750,000 downloads up 23% during the fourth quarter. And we now have 30,000 users of mywallet, which provides our customers with a seamless mobile wallet solution to connect directly to their favorite games. And with that, I'll now turn it over to Felicia.

Thanks, Jay. As referenced -- as Jay referenced, we generated record free cash flow in 2021 of approximately $800 million, as well as record net leverage of 4.1x. Given our strong financial positioning, as well as our confidence and improved visibility in our overall business. We not only received board authorization for a $750 million share repurchase program, but we're also reinitiating guidance. For 2022 we're providing a net revenue range of $6.07 billion to $6.39 billion and an adjusted EBITDAR range of $1.85 billion to $1.95 billion, which implies a 37% EBITDAR margin at our core operations. We believe these ranges capture the uncertainty that still exists in most consumer sectors. While also appropriately bracketing our financial expectations for the year. I'd like to provide you with several other metrics to help your modeling. For 2022, our corporate expense is expected to be $100.5 million inclusive of our cash-settled stock-based awards. Maintenance CapEx is expected to be roughly $300 million. We expect total interest expense of $566 million of which $95 million is cash interest. Cash taxes of $159 million, and an annual share count of roughly $187 million. Our new interactive reporting segments that we added this quarter reflects our view that the results of our interactive operations represent a strategic and high growth component of our overall operations. The interactive segment which was previously reported within the other segment, includes the operating results of Penn Interactive including Barstool sportsbook and casino, theScore, and our proportionate share of earnings attributable to our investment in Barstool Sports. Corporate expense will continue to be reported in the other segment, in addition to stand-alone racing operations, other joint ventures and management contracts in the Heartland Poker Tour. As a result of this change in reportable segments. We recap previously reported segment information to conform to the current management view for all prior periods presented, which you can find in this morning's release. These changes have no impact to our company's consolidated financial statements. Before I hand it back to Jay, I'll just leave you with a few housekeeping items. In the fourth quarter, corporate expense inclusive of cash settled stock-based awards was $24.3 million. Our cash rent payments were $228.8 million, cash interest was $14.8 million, cash taxes were $32.7 million and maintenance CapEx was $55.3 million with total CapEx at $102.1 million. Our balance sheet remains a key asset for us. Total liquidity as of December 31, 2021 was $2.5 billion, consisting of $1.9 billion in cash and our $700 million undrawn revolver. Traditional net debt was $886 million, an increase of $841 million during the quarter, principally due to a cash payment of approximately $923 million for the acquisition of theScore. And As Jay mentioned earlier, our lease adjusted net leverage was 4.1x a record low for the company. Our balance sheet gives us the flexibility to be opportunistic in a dynamic marketplace, and to return capital of shareholders through share repurchases. While we're not guiding to an optimal net leverage level today, our strong free cash flow generation should enable us to naturally de-lever over time. And with that, I'll turn it back to Jay.

Thanks, Felicia. As you saw in our release, we're continuing to expand on our ESG initiatives as well and look forward to sharing our 2021 corporate social responsibility report in April in conjunction with our proxy filings. Highlights from the quarter include the launch of a $4 million STEM scholarship fund an internship program at historically Black Colleges and Universities in states in which we operate. In addition, we started a new pilot program to help mentor and develop our hourly and early career team members who want to pursue leadership positions at our company. We also kicked off our annual $1 million diversity scholarship program for the children of team members, and are now reviewing applications for the 2021, 2022 school year. In our inaugural year, we awarded over $1 million in two and four year scholarships to 58 individuals. The majority of whom were first generation college students, which is an awesome story. We expect this year's program to be similarly successful, and I look forward to sharing more details with you next quarter. And other positive Penn news. Earlier this week, we were honored to come in second place out of 34 companies as an employer of first choice in the annual casino gaming executive satisfaction survey by Bristol Associates and Spectrum Gaming. I believe that now marks six or seven, maybe eight years in a row that we've finished first or second and this anonymized survey. We're also proud to report that in the iGaming and mobile sports betting division, Penn Interactive came in first place out of 28 organizations. So congratulations to everybody at Penn and Penn Interactive. Our support of our nation's heroes also continues. We are approaching 100,000 customers enrolled in our myheroes loyalty program, which provides special benefits for veterans, active duty, and first responders. When we hit that milestone our properties will be contributing $100,000 to local veterans groups in their communities. Also in conjunction with this year's Army, Navy football game Barstool Sportsbook ran a special Viva La Troops promotion, matching certain first-time deposits and raising $200,000 to support the Fisher House Foundation, and Semper Fi & America's fund veterans organizations. Yet another example of how our marketing approach can be a win-win for our bottom line and those in need in our communities. So let me just reiterate how excited I am for the significant milestones ahead of us over the next 12 to 24 months, including several new state and province launches, the debut of theScore proprietary risk and trading platform in Ontario, the integration of the Barstool Sportsbook into theScore media app in the U.S., and the migration of the Barstool Sportsbook to theScore's player account management and trading platforms before Football season 23. So with that, Frank, we'll turn it over to you and we'll open it up for our first question.

Thank you. [Operator Instructions] One moment please for the first question. First question comes from Joe Greff with JPMorgan. Please proceed.

Good morning, everybody. My first question is a multi part one and relates to your 2022 guidance and related commentary. One, what's your assumption for same-store land based revenue growth, and how much of the $6.2 billion or so in revenues relates to Interactive, I know you gave us sort of EBITDA metric for Interactive this year?

Joe, we're not going to comment on Interactive guidance at this point on the revenue side, we have given you the historical levels and we've given you the EBITDAR, but we're just not at the place that we're going to start talking about on the revenue side. And I'll turn it to Todd for the same-store.

Thanks, Felicia. Joe, basically, we're looking at relatively flat, some upside in the South. But we are going to have some headwinds related to our Council Bluffs property, which we'll see new competition coming from Nebraska, later in the year as well as a full-year now in East Chicago with a Hard Rock property. And then we'll have just one more in Lake Charles with Horseshoe, the former Isle property being rebranded as a Horseshoe in Q3. But all in all, it'll be minimal growth on a same-store basis due to those being offset by some of the other properties.

I would only add to Felicia and Todd's comments just from a sort of quarter-to-quarter cadence perspective, Joe that Q2 is going to be really hard to match I think for everybody in the industry that was definitely sort of as good as it gets high watermark. So as you think about quarterly modeling, I think, Q1 assuming that Omicron impact really does fade away here as we enter February and we can get some bad weather events on weekdays versus weekends, which would be nice, which didn't happen in January. But I think you should expect Q1 to show upside versus last year Q1, Q2 would likely not meet Q2 of 2021. And Q3 and Q4, probably pretty close to in line with what we saw in 2021. Somewhere there abouts, I think is a decent way to model quarter-by-quarter.

Yes, great, Jay. Again, Joe excellent point by Jay on Q1, because we do have a somewhat favorable comparison as last year, especially in the Midwest, there were a lot of restrictions still in place.

Got it. And then Felicia, you gave us a breakdown on different 2022 items such as maintenance CapEx, can you repeat that with $300 million the right number?

Yes, and Joe, thanks for that question.

Why is that so high?

Yes, historically, it's been about $200 million. And there's some, there's a few items in there now, revenue enhancing investments such as investing in Barstool Sportsbooks, or retail sportsbooks. On the hotel side, we're renovating our hotels with a very new and exciting prototype. Also, our investments in technology and 3C's are in that number. So I would use even as you're modeling out past '22, for the near-term, I would use $300 million as your new maintenance CapEx number for a while.

Okay, and my last question, I was going to ask something on Barstool and Dave maybe I will ask that offline after the call, but Jay just thinking about on Ontario and the anticipation of the market dynamics there and competition there, when you think about Ontario versus some of the U.S. markets, what's different about Ontario, what's similar to Ontario versus some of the maturing online sports betting markets in the U.S.?

Yes, good question, Joe. And I honestly, I think there's probably more differences than similarities. As I look at any of the individual states, here in the U.S. for a couple of reasons. One, Canada has been a gray market, has been a gray market for some time now. But the regulators in Ontario are requiring those gray market operators to go through some KYC and regulatory requirements before they relaunch, post April 4. So I think that'll be interesting to see how that plays out versus maybe some of the U.S. markets, not so much operators, it was more of a dynamic where maybe people were betting illegal offshore with bookies, whereas it was really gray, they were there, it wasn't illegal or legal, just kind of gray. So we'll have to see how that competitive dynamic with gray market operators in Canada plays out. One of the other factors that I think is encouraging versus what we've seen in all the U.S. states is that, there are advertising restrictions in our Ontario, as it relates to iGaming, and you cannot advertise promotions, or discounting to your business which we welcome. And so it's going to be a lot more about I think just educating we'll spend some money when we launched there, because you're really an education mode about this move from gray market to above the board market legalized. And you want to make sure that people know who those legal operators are going forward. But I like the fact that you can't just put your business on sale and heavy discount to get people to download and deposit and bet, which is what we've seen here in the U.S. in most states. And then lastly, of course, we think we have a, we're in a really strong position, because I think it's somewhere close to 20% of people in Ontario have theScore sports media app on their phones. And so you think about the ability to convert from sports media, to sport betting, when you can do both on the same app and see all the live ads. If you're just in there checking scores, you're going to know very quickly if you're theScore media app user that we are now offering live sports betting with theScore Bet app. So I think we're in a really strong position, obviously, we're going to be very focused on conversion of sports media to sports betting, we're going to definitely make sure that everybody in Toronto and Greater Ontario, that they definitely know that we're now live and that it's a legal market and that there are legal operators that have offerings there. So what we'll see how it plays out, certainly our expectation is to be kind of no lower than low double-digit market share from an online sports betting perspective, and maybe on the online casino side, we'd like to start off in the mid to high single digit range and then just continue to grow both of those from beginning.

Great, thank you.

Thanks, Joe.

Our next question comes from Bernie McTernan with Needham & Company. Please proceed.

Great, thanks for taking the question. Good morning. I was wondering if I could just pry a little bit in terms of the '23 Interactive guidance if what meaningful means are we talking 10s of millions of dollars or maybe something bigger than $100 million?

Yes, I would say stay tuned, Bernie, I mean, I don't want to get too far ahead of ourselves. It will be it'll be real EBITDA. And you will likely not have to wait until Football season to see it, I actually think we have a good chance of Football season '22 of showing profit. It really depends on the Ontario launch and momentum and is Ohio live and Maryland. But I think once we hit that point of being profitable, which hopefully is late '22, you should expect that to just go forward ramping into '23.

Understood, and thinking about that $50 million investment going into profitability in '23. Is it possible to break down maybe the $50 million into some buckets, whether it's U.S., Canada in the tech stack not sure if those are the right three to think about, but if there's a way to kind of bracket it out?

Yes, at a high level, Bernie I would say that you should think about our Interactive operation in the U.S. as a standalone as being profitable in 2022, which I think is noteworthy. But we didn't want to over highlight that because at the end of day, it's still net negative 50 when you put everything together, there's going to be continued ramping and scaling of our headcount and our infrastructure, as we are continuing to hire lots of engineers and product development people working on our tech stack. So there's a lot of staff ramping that's going into the technology investments, which is actually going very well. And we're so pleased to have a big office in Toronto where we can recruit people and then of course, the Penn Interactive office in Philadelphia, where we do the same thing. There's definitely going to be an investment into Ontario at launch, because of the education investment that I mentioned earlier, just making sure if people in Ontario know that you have live and legal sports betting options as opposed to maybe gray market ones that have been offered for a long time in that marketplace. So when you throw all that into the pot is where you get to approximately a negative $50 million EBITDA. But if you just think about the core Interactive operation in the U.S. that will be profitable in 2022.

Understood, thanks for taking the questions.

Thanks, Bernie.

Our next question comes from Barry Jonas with Truist Securities. Please proceed.

Hey, guys, can you talk about the health of the consumer in this rising inflationary environment? How much of that weighs into your guidance beyond the new supply risks you talked about?

Hey, Barry, this is Todd. Great question, what we've seen, I mean, obviously last year, there was some stimulus money floating around through many of the quarters. But the encouraging take Omicron out and some calendar noise in December, what we saw in Q4 is continued into January outside of weather, especially the second half, we actually just were coming off the best weekend that we had in January was actually this last weekend. And that was with we actually had property closures at Bangor, and Plainridge up in the Northeast. But the rest of the countries seem pretty healthy. I feel that we're seeing increased visitation in many of our properties. But really much of the story, as it was last year continues into this year where a higher value per trip. So people are still coming in and they're spending to the levels that we were seeing in 2021. So to date hasn't really been much of an issue for us.

Great, and then just Jay maybe just a high level follow-up question, as the overall North American Interactive market develops, has anything changed in your view relative to the size, scale or maybe timing of Penn's long-term opportunity?

Well, there's always the big question that we can never answer with accuracy is what is the TAM going to be? When are more states going to legalize online gaming? How many states will there be at full scale from an online sports betting perspective, what's going to happen in California and Texas? And so there are a lot of questions that we unfortunately can't answer. I think we have a perspective on but no, I think that the way we viewed this opportunity from the beginning and we still deal is that online sports betting is a unbelievable acquisition tool for us. It's not ever going to be as high margin standalone as online casino or brick and mortar Casino. But because of our structural advantages, we think we can run industry best margins in online sports betting, we have marketing advantages, we're going to have technology advantages, of course we have access advantages given our footprint. So really things as I guess played out mostly how we thought they would, we want to continue to improve our market share in online casino, we have not performed as well there as we anticipated performing. And we're on top of that. We have created Penn Game Studios, which has put out some fantastic bespoke product and content that we're already seeing over 20% of our handle in online casino coming from games that we created. And that's very encouraging, as we'd love to see that get to 50 plus percent down the road. And we've only launched a few games up to this point. So I think we're very pleased with the things that we have within our control. We think the launches this year in particular, Ontario, and Ohio are very, very exciting for us, Louisiana, Louisiana in there as well, because we have such a strong presence from a retail casino perspective in Ohio, as well as Louisiana. And then of course in Ontario, we talked about that already. So no, I wouldn't say the outlook is different other than the big question, how it continues to be what is the ultimate TAM going to be? But as I mentioned in our prepared remarks, from our perspective, we've got a model that is built to make money. And that's what we do at Penn and whether that TAM is $20 billion, $30 billion, $50 billion, we're going to be in the business of making really good margins and generating cash flow.

That's great. Thanks so much.

Thanks, Barry.

Our next question comes from Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed.

Good morning, Jay, Felicia, and congrats on the strong business trends and good to see the buyback authorization as well.

Good morning, Ryan.

Curious on Interactive, I know there's been several questions. But the loss you are previously expecting a couple months ago $100 million, give or take in 2022. It's half that now. I guess first was New York in that previous assumption. And then secondly, what's changed positively versus a few months ago?

Yes, happy. Honestly, when we put that, when we talked about this on our last earnings call, New York was not in our assumption, because we hadn't heard one way or the other. So we wouldn't have built that in because we just didn't know at that time on the call, it really over the course of the fourth quarter, we just continued to operate, I think smart. We didn't know what the heavy promotional environment and paid media spend environment was going to do in terms of pressuring our margins. And maybe moving customers I've been blown away, impressed at the resiliency and the retention that we see in the online sports betting space, as we share it in a number a couple of our slides. And as you saw throughout the fourth quarter, we didn't change the way we market in the fourth quarter. And it was as irrational as you could ever imagine, the amount of money that's being burned that I'm sure we'll hear about from future earnings calls this quarter and we didn't jump into the fray yet, we grew our market share. And we were operating at better margins than we anticipated. We had built in a little bit of flux there of what if we need to spend a little bit more in marketing to hold on to our base. Instead, what we saw, as we said, we probably would, which was Football season came back, we saw our market shares in states that we've been live in like Michigan and Pennsylvania, bump back up again. Our NGR market share was the best quarter we've had, I believe in both of those states at launch. And we did all that without participating in the really aggressive discounting that we see from most of the others. So, we're really, really pleased with how we see the Interactive business. And that's why we anticipate the loss being less than 2022 than we did just a quarter ago.

Great, then just moving on to the retail side with one, you have CCC at eight properties now I believe added one quarter-over-quarter but you have a little bit more duration at a few of these properties now. Any financial metrics you can share kind of before after of what that looks like from either a play standpoint, a margin standpoint, et cetera. Thanks. Good luck.

Yes, thank you. So a couple of things. We're live in Pennsylvania and Ohio and today what we're seeing obviously the whole goal with this was to remove friction and so we've been able to improve service times, we're obviously taking people out of the lines of the cage and at the players club. So that has helped and all drives, more time on device, more time playing. So that all helps. And then we've seen this adoption that you would normally see from the younger demographic and really, this is what we thought we would see. But it's now working into the older demographics 30s, 40s. So we're seeing actually people that are engaging with the app. And with the wallet, we're seeing actually a higher level of play. Some of that driven by, they're more engaged, and they're making more trips. But this is a very encouraging trend for us as we look to roll out into the other states. So it's really kind of proof of concept was in Pennsylvania. And now moving into Ohio, we're starting to pull these trends together. And we'll have more to talk about, as we have more time and more people adopting the technology. And Todd, you want to maybe also highlight the demographic trends we're seeing by age in the fourth quarter and even, it is very encouraging when you think about technology launch, and how sticky these relationships have become?

Yes, great point, Jay. Really last year, and I think we talked about this in some of the other calls, that younger demographic is what everybody was trying to solve for, and how to get the younger demographic into casinos. So Q4 was not unlike the other quarters. And really that under 35 demographic was up about 40% year-over-year, and then the 35 to 44 was up high 30%. And the part that's been missing, we actually started to be able to see some of that coming back that 55 to 64 was up about 6% and then the 65 Plus that that will be the one that is really impacted by flare ups of the Omicron virus. So we were seeing encouraging trends October, November, first part of December. But then as Jay spoke to in his opening remarks, when we have that bit of a flare up, that part is still lagging behind. And we feel that once we can move some of these things behind us, that will be the last segment that comes back. But especially with these younger demographics that we're seeing. What I would throw the unrated play segment in there as well, that was still up 12% for the quarter. So all of these are greatly encouraging. And we feel comfortable that with our technology rollouts, we'll see higher adoption than what we initially modeled.

Yes, I would just add to Todd to hit it earlier in terms of some new competition, a couple of pockets across the U.S. that when you pull those impacted properties out, our margins obviously look even better. I think we pick up another over 1000 basis points, or certainly a 100 basis points when you pull those out. So it is something that I'm not sure was modeled and well enough into people's estimates in terms of how they thought about Q4 and how they think about '22. I think the fact that we're going to -- we're anticipating coming in at the property level of roughly 37% margins, which is going to be 500 basis points plus better than 2019 is really impressive given that we've got Chicago land, and Nebraska, Colorado. You've got some pockets of new competition or new supply entering these markets.

Well done. Thanks, guys.

Thanks, Ryan.

Our next question comes from Stephen Grambling with Goldman Sachs. Please proceed.

Hi, thanks. Jay, you noted that the -- there is the opportunity to buy the remainder of Barstool. What are the key considerations that you are evaluating in determining the right ownership level and with the leadership team and/or content creators at Barstool have to be licensed at certain ownership levels? Or would that impact their ability to create certain types of content written down on the app? Thanks.

Yes, I mean, were we couldn't be more excited about moving our ownership position up from its current 36%. And we anticipate in the -- at the third anniversary, that obviously it naturally -- contractually goes up to 50% as we disclose before. And then there's put call rights after the 50%. We anticipate taking that to a 100%. So there really isn't sort of a decision process. We look forward to being the owners of Barstool a 100% they've been great partners of ours. It's a hyper growth, sports media business. They've grown their revenues over the last two years, somewhere close to a 150% in total. And it's profitable, which most smaller sports they're not even that small anymore sports media businesses don't make money, they burn quite a bit. And so we're really excited for the third anniversary. And in terms of what is the structure and how does that impact certain things from a licensing perspective? I would just say TBD on that one. Those are things that we're continuing to work through internally. It won't just be, we acquire Barstool and then we don't announce anything beyond that. I think there's going to be some structural implications as well. And we're working through all of that behind the scene. So you should expect to hear something before the end of the year.

Got it. That's helpful. And then on the buyback, maybe this is for Felicia. I know that you have a three year window there. But is that generally the cadence that we should think through? Or is this purely opportunistic? Or will it be viewed more as a consistent buyback? And if it is opportunistic, is there any kind of upper bound on leverage ranges that you will be willing to go to take advantage of the stock?

Yes, thanks, Stephen. I don't think we're going to talk about the cadence of our buyback program. But it is a three year program. And like he said, we're going to be opportunistic, obviously, it also gives us the opportunity to offset stock option dilution. So it puts us in a much stronger place than we've been in for the past few years. And then obviously, over time, where you have to balance our choices of buyback or growth, and also -- we're in this great situation where it's not an either or for us, right. We can continue a buyback program and pursue growth opportunities at the same time, given our balance sheet. And regarding the leverage and our 4.1x now, we are looking at that level as being kind of where our focus is. You're probably not going to see us do anything that would be meaningfully levering. So as I said before, we're not going to talk about an optimal level, but we really like where we are now. And so that's always going to be a focus for us as well as we think about the different opportunities that we face. But I would think about it as a three year program and as being opportunistic as things come up.

Yes, I'd just add, Stephen. I know that -- I think it's lost sometimes that we generate significant free cash flow. And we could use the majority, I'm not saying we're going to. We could use the majority of that authorized share repurchase level in 2022. And have it not be a leveraging event for us. So we'll be opportunistic. I think we obviously feel like we're undervalued. That's why you put these things in place. And there might be some dislocation in the marketplace. We'll see how things play out. We'll see how the cadence works out. It's all like a natural time for us to institute that authorization.

Makes sense. That's all super helpful. I'll jump back in the queue. Best of luck.

Thanks Stephen.

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

Hey, good morning, everyone. Jay just wanted to go back to your comment. I think maybe was in Felicia's part of the prepared remarks were you talked about the 37% core margin. Just to be kind of clear on what's in that? Is that just that -- is that excluding interactive on both sides, both revenue, and obviously, both corporate and losses from the online side or investments for the online side? So that's kind of the first question on just clarifying that. And then the second would be, I think that's actually a little bit better than what you did this quarter. So what would be driving improvement if I'm doing the math, right?

Yes, you are doing the math right, Shaun, it's apples-to-apples. It excludes interactive, it excludes corporate expense and racing and the other stuff that falls in other. It is slightly better than fourth quarter. And fourth quarter is typically one of your -- if not the slowest quarter of the year, certainly from a margin perspective, it historically has been for us. And there was some Omicron impacts during the busiest week of the year, Christmas to New Year's as we definitely felt a bit of a fall off from what we were seeing earlier in fourth quarter. And what you would have anticipated as a normal ramp heading into the holidays. So we feel like 37% is a good target. It's going to be aggressive, but we think we can achieve that internally. Todd and our team of regionals and our general managers have and continue to do an amazing job of sharing best practices and just looking under every rock and making sure that we're thinking about the business differently as we launch new technologies. So what, it's very difficult in this environment, as you can imagine, Shaun, but we debated this guidance thing over and over and over again, because one thing we know is the number we gave will be wrong. I don't know if it's going to be directionally. We feel like we give a number that we hopefully we can beat or exceed. But if there are new variants and casino restrictions and shut down in some markets are, it's very difficult to anticipate. But 37% at the property level feels achievable for us in 2022.

Yes, Shaun the only thing I would add, and Jay touched on is that that week between Christmas and New Year's is really it's what saves December or the time from Thanksgiving to New Year's Eve. So when that saw the spike in Omicron, it really made it difficult, but also the way the calendar laid out, you typically have a weekend between Christmas and New Year's and obviously, with Christmas holiday falling on the weekend and New Year's Eve falling on the weekend, you kind of lost the extra days where you outperform in over index. So I think with all that, and then the seasonality again, Q4 is kind of a tough comparison. Our 37%, it doesn't mean that were 37% every single month, there is some seasonality in there.

Todd it's really encouraging. Thanks for the detail. And then just as my follow-up Jay kind of zooming out a little bit. Kind of curious on theScore, it's an interesting acquisition. And obviously, there's a lot of directions, you can take it, but could you talk about just sort of getting maybe some more content and traction for that app here in the United States. And what might it take to convert, maybe some of that business into actual revenue. Obviously, its usage, and its loyalty is extraordinary. It's kind of trying to figure out how monetizable that might be in the next couple of years.

Yes. And remember, when we announced our acquisition of theScore it was really for three strategic reasons. One, number one sports media app in Canada, and we knew Ontario was coming soon in terms of legalized online sports betting, online casino. Number two, it's a very healthy and fast growing media business as a standalone. And so we knew there'd be a great opportunity of audience conversion. And they are as good as they come in the sports media world in terms of retention, they really just don't lose users. When people download the app. They use it a lot. And they stay in the ecosystem. And of course, last this is a technology company that is helping us to solve for owning our tech stack and our product roadmap, short-term, medium-term, long-term. Those are the reasons why we made it happen. Last one, culturally, we are very aligned with the Levy's and it gets back to your question in terms of the U.S. where they didn't jump into the fray either, they didn't burn through, 10s of millions or 100s of millions of dollars of paid media expense. They want to make sure that they launched their live in four states, or we're live with them in four states here in the U.S. We don't plan on them going live in more states in the U.S., because we're going to work on integrating the Barstool Sportsbook into theScore media app across the U.S. And so they've really been able to just sort of perfect what they do and try a lot of things with their new pam and promotional engine here in the U.S. in preparation for Ontario. So I would expect that you should see improvements in the U.S. in terms of our ability to convert theScore media ecosystem to Barstool Sportsbook as we throw more effort at that in the second half of this year around football season. And we'll have more information to share with you as the quarters track on. But the focus right now is on building out the tech stack and a very successful launch in Ontario.

Thank you very much.

Our next question comes from Chad Beynon with Macquarie. Please proceed.

Hi, good morning. Thanks for taking my question. Congrats on the results. On Slide 15, you laid out the handle and the gross gaming revenue for the sportsbook. It appears that you're -- the conversion or the hold rate is higher than what some of your peers have been talking about. I'm assuming that's just because of the lower reduction from promos, which Jay you also highlight is a big strategy. But I'm wondering if you can just talk about how you see hold rates long-term, and then any mix of pregame versus end game that you're happy to disclose for the quarter? Thanks.

Yes, whole percentage. It's sort of like talking about blackjack hole that it's some quarters work for you, some works against you. There are times where you can have a really good hold in a quarter and then Mattress Mack beat you for 5 million and there goes your hold for the quarter and we have the balance sheet to be able to fade action like that, which is why Mattress Mack and VIP players like that enjoy that in with us amongst our service and VIP focus. I think that over the long-term, we've sort of modeled in somewhere in that 7% maybe 7.5% hold. And if you look at our life-to-date results across all of our online sports betting launches, that's about where we are. I think we're at like 7.1, 7.2 somewhere in there. I would imagine, I don't know, Chad, I would imagine that's probably going to be about average for industry. We obviously are really placing a significant focus on our endgame offerings, and we launched football season. This year was the first time that we had same game Parlay, or what we call Parlay Plus that was very popular. We saw the Parlays, as a percentage of total handle went up significantly, football season this year, that probably drove some of the whole percentage premium that you're referencing. And also, we just tend to be more discipline around what we're giving customers to generate the revenue. We try to give them enough to be somewhat competitive, and to make sure that we're able to incentivize them to stay loyal with us without giving them so much that it actually exceeds your total revenue brought in, which is what we're seeing with a lot of competitors on an NGR basis, when you think about their total marketing reinvestment. So anyway, I think from a whole percentage standpoint, you should probably just model in somewhere in that 7% to 7.5% range. I would like to see our in-game betting percentages continue to increase they have been. I think that as you see have seen over in the U.K., those percentages will continue to be outsized as opposed to pre-match. Some sports in the U.S., it's just hard for in-game. Basketball moves too fast. Baseball is a perfect in-game betting sport. And we will be live at the start of baseball season whenever they get through this labor dispute. But we will be alive with same game Parlay for baseball season this year, which I think is going to be a nice shot in the arm for us. Because if you only have pre-match in baseball, it's just a long, slow game. And in-game, it keeps the fun going throughout and keeps you engaged as you're consuming that content. So I would expect to see some improvements in terms of how we perform during baseball season this year with better products. And we've made other enhancements to our app as well. And we'll see what happens to hold percentage in baseball season now that we have that product.

Thanks Jay. And then from a land based portfolio standpoint, there were a few assets that traded in 2021 in Vegas, and it appears that there's a few more for sale in 2022. Just wanted to take your temperature on how important that consideration for a destination property is at this point?

Look at it. It would be nice to have one in the portfolio. I just would really stress this, we're not going to take something that we can't get a return on. And there's been a couple of transactions recently, but actually three transactions recently in Las Vegas. And they were at valuations that we weren't comfortable with. One of them, I think there was worth stretching for because of the condition of the property and how new it is. But you should not expect Penn to be a leading bidder if it's an irrational competitive bid process. With all of that said, we have the balance sheet to do things that not every company can do. And so if the price is right, and the property is right for us, and the location is something we're comfortable with. We would probably take a look at it at a minimum and kick the tires.

Thank you very much.

Thanks, Chad. And Frank, we'll take one more question.

Next question comes from Ben Chaiken with Credit Suisse. Please proceed.

Hey, how's it going? Thanks for taking my question. Just a quick clarification from earlier. I believe it might have been in response to Shaun's question. You were mentioning taking some of the attributes of the Barstool Sportsbook and adding it to theScore app in the U.S. if I heard you correctly. Is that in line with the strategy you've been thinking all along? Or you emphasizing theScore in the U.S. sold more than previously maybe? I guess it more about clarification. Thanks.

Yes, happy to Ben and when we announced that we were acquiring theScore what I'd said at the time, which is by the way consistent. Not to say we won't change our mind on things. But on this one, we really haven't changed our mind, which is that we will be leading with theScore Bet brand in Canada and supporting it with Barstool personalities and content, but really pushing that audience to theScore Bet. And in the U.S. the exact opposite where we'll continue to lead the Barstool Sportsbook and do our best to move that score audience on to Barstool Sportsbook I think having two different sports betting brands in the same market gets confusing and we felt like just keeping it simple and focusing on one brand in the U.S. versus the other brand in Canada was the best scores rev. With all that said we might find a year from now, but that was wrong and we want to have both brands in both markets. And we're launching Barstool Sportsbook in addition to theScore in Canada and vice versa here in the U.S. But as of right now and really since we start talking to our partners up to theScore the Levy's. And as we talked about it with Dave and Dan and Erica and our team internally here at Penn. We all agree that was the right approach single brand Canada, single brand in the U.S.

Make sense. I appreciate it. Thanks.

Thanks Ben. Thank you everybody for joining us this morning. And we look forward to speaking to you again in three months.

That does conclude the conference call for today. We thank you for your participation and as that you please disconnect your lines. Have a great day everyone.