This strength was offset by declines in Penn National Gaming, Inc. (PENN, Financial), a regional U.S. casino company, due to investor concerns over accelerating losses from its Barstool business. Those losses were the result of high marketing expenses and questions about business profitability. We believe this expenditure represents customer acquisition costs incurred as additional states legalize online gambling. Since it is far less expensive to retain an existing customer than to acquire new ones, we think marketing costs will decline as Penn builds its customer base. Penn’s core bricks and mortar casino business remains strong, and the company has a healthy regional casino business and a strong balance sheet to fund the digital losses.
Penn National Gaming, Inc., a regional U.S. casino company, detracted dueto investor concerns over accelerating losses from its Barstool business due to high marketing expenses and questions around profitability. We believe this is money well spent to acquire more customers as more states legalize online gambling. As it is far less expensive to retain an existing customer, we think marketing costs will decline as it builds out its customer base. The core bricks and mortar casino business remains strong, and Penn has a strong balance sheet to fund the digital losses.
From Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund fourth-quarter 2021 letter.
