John DeCree: Maybe one, I guess, kind of elements your housekeeping, but on Slide 6, with the free cash flow bridge, if you could just kind of clarify the net cumulative investment in digital interactive with $300 million. Is the translated to kind of cumulative EBITDA losses, is it included in CapEx, just if you could kind of help us frame that a little bit?
Jay Snowden: Yes. There’s not a ton of CapEx, that goes into the interactive side now that we’ve built out the team, and we’ve gotten ready for ESPN BET launch, there will be some, but it’s not at a magnitude for example, of what you see on the retail casino side of things. So the reason we provided the range of $200 million to $400 million, we wanted that to be all inclusive. So that would be EBITDA loss and CapEx investment over the 3-year time horizon. And again, as I mentioned before, the losses will really accumulate in the first 2 years, and then we anticipate inflecting and starting to see some positive EBITDA in the third year.
John DeCree: Got it. And then maybe at the property level. Earlier question, the margins were pretty strong. I realize there was $10 million of of onetime benefits in there, but still pretty good margins. Conversation that we still have often is OpEx inflation. Curious if you could give us your views on what you’re seeing in terms of utility and wage inflation, labor inflation? And if any kind of outlook for where you have visibility in your business, that would be helpful.
Todd George: Thanks. I’ll take that. This is Todd. So we actually have been looking at this a lot. We’ve got a great team that has really helped us on the utilities front. We’ve completed several projects coming out of COVID, around energy efficiency. So we’ve really been able to mitigate some of that, as well as locking in futures for a lot of the utilities that we use. So, we have been very fortunate and very prepared to kind of deal with this. So we haven’t seen that yet. And then on the wage and labor front, I would say that, yes, there are some wage and labor creep there, and we specifically called out Griptown and what’s happening there. But for the most part, you’re looking at this new dynamic, where you can do more with less labor. A lot of the technology initiatives that we have in place have made us a more efficient operations. So we’re able to mitigate a lot of that as well.
Jay Snowden: The one area where I believe some of our competitors have mentioned this on their calls, where there you’re seeing some cost creep is certainly on the insurance side, property insurance. It’s just the market right now plus concern around hurricanes and things of that nature. And of course, cyber insurance is not going down, especially after what’s happened not just in our industry, but in so many of late. So you’re definitely seeing some cost creep on the insurance side. But as Todd mentioned, I think he and our operations team have done an amazing job and have a good handle on all of this. And obviously, the margins that we’ve delivered on, includes some of those headwinds.
Operator: Our next question comes from Dan Ppolitzer with Wells Fargo.
Daniel Politzer: Just one here on Interactive. I mean I think that you gave a lot of good commentary on how to think about the cadence of the losses going forward. But I guess as we kind of try to unpack 3Q and look at your kind of scale and operating expenses, you gave a few pieces related to Barstool and then there’s market access fees in there. But — any way to help us think about kind of the run rate of your fixed costs in this business? And do you feel like you’re at a scale, where we’ll really start to see that EBITDA start to inflect, as you maybe get that GGR share that you’ve aspired to?
Jay Snowden: Yes. I mean I’m trying to keep it largely focused on what we’ve said already, Dan, just because I think the way we sort of laid out what you can anticipate in the next couple of years versus year 3 speaks to the timing of inflection. We anticipate having a successful launch, having a stable platform throughout that launch period, growing the business over time. And I think that as you’re thinking about the cadence, I think Carlo asked the question earlier, we gave some information on kind of what you should expect for next year. So I don’t know if Felice or Todd, do you have anything to add there, but I don’t really have anything else in terms of what to expect.
Felicia Hendrix: No, I think you said it.
Jay Snowden: Yes, yes. I just don’t — Dan, unless you have a specific question, I think I covered whatever you are saying.
Daniel Politzer: Yes. I guess another way to ask it is the incremental losses from kind of where we are today? Is that all marketing and advertising? Or are you assuming any incremental fixed cost adds in there, you may be at engineers or some administrative stuff?
Jay Snowden: It’s all in. I mean, I don’t — yes, there’s — it’s not one of those things driving. That’s why we wanted to do this 3-year look of. And there’s so many factors that go in. What’s your hold percentage is going to be, what’s your handle market share, what’s your promo cost and percentage of handle and GGR going to be and what’s your paid media. And I think this what we provided here on the 3-year outlook, includes all of that, including ramping on the staffing side with engineers and product team members and marketing folks and operators. We’ve done a lot of ramping, as you can imagine, over the course of the last 3 months in anticipation of this launch. We’ve hired hundreds more people for our call center, for example.
So there’s a lot of that ramping, that has gone into the third quarter result, that we just reported, but we don’t have any of the benefits yet of ESPN BET launch. So that’s why you see the loss there. There were some onetime noise on the media side, as well that we disclosed and Felicia covered. But just you should assume, Dan, that this range we provided on the 3-year includes all of that and that our thoughts around how we’re going to spend both on channel with ESPN from a marketing perspective, $150 million per year and then off channel, they’d be roughly that same number. That thought process and approach has not changed, as we show you what this 3-year outlook looks like.
Operator: Our next question comes from Stephen Grambling with Morgan Stanley.
Stephen Grambling: I thought I just clarify some of the guidance commentary. I think you previously talked to EBITDA for the year. Just want to make sure that if we’re looking at some of the puts and takes in the 4Q that on my math, maybe gets around $650 million. Just if you could provide some brackets around what at least 4Q we should be looking at in terms of the brick-and-mortar business.
Jay Snowden: Yes. The midpoint for the brick-and-mortar business for the year is $2.022 billion. So when we say within 1%, we’re talking about brick-and-mortar. We gave separate guidance for Interactive of between $100 million and $150 million in losses for the fourth quarter.
Stephen Grambling: That’s helpful. Great. And then one other quick follow-up. So I think on the digital side, this past quarter was a little bit elevated, relative to people’s expectations, and I know you kind of touched on this a little bit, but does that include some onetime things? Or is that also reflective of kind of like a new base level of cost that we should be layering the ESPN deal on top of?
Jay Snowden: You’re talking about the third quarter Interactive results, Stephen?
