Penn Reports Strong 2Q, Competition Intensifying; Downgrading Economic Moat Rating

Penn National Gaming PENN announced second-quarter revenue and EBITDA growth of 15% and 33%, respectively, slightly ahead of our expectations. Growth was driven by the introduction of table games at two casinos, the acquisition of M Resort casino in Las Vegas, and the opening of a new casino in Maryland. These benefits were partially offset by a flood-driven revenue decline at a casino in Mississippi. We expect Penn to continue to post strong results the remainder of this year, and in 2012, due to its strong new project pipeline, which also includes a casino set to open at the Kansas Speedway in the first quarter of 2012, and two casinos in Ohio set to open in 2012.