What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-06 · 235 added, 205 removed, 324 unchanged (58% of the section changed)

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(“Barstool Sports”), a leading digital sports, entertainment, lifestyle and media company, and entered into a strategic relationship with Barstool Sports, whereby Barstool Sports will exclusively promote the Company's land-based retail sportsbooks, iGaming products and online sports betting products, including the Barstool Sportsbook mobile app, to its national audience.

We launched an online sports betting app called Barstool Sports in Pennsylvania, Michigan and Illinois.

We also operate iGaming in Pennsylvania and Michigan.

We launched an app called Barstool Sportsbook and Casino in Pennsylvania, Michigan, Illinois and Indiana, and anticipate extending this footprint to other states by the end of the year.

Our my choice ® customer loyalty program (the "my choice program") currently has over 20 million members and provides such members with various benefits, including complimentary goods and/or services.

The Company’s strategy continues to evolve from an owner and manager of gaming and racing properties into an omni-channel provider of retail and online gaming, and sports betting entertainment.

As of March 31, 2021, we owned, managed, or had ownership interests in 41 gaming and racing properties in 19 states and were licensed to offer live sports betting at our properties in Colorado, Illinois, Indiana, Iowa, Michigan, Mississippi, Nevada, Pennsylvania and West Virginia.

As of June 30, 2021, we owned, managed, or had ownership interests in 41 gaming and racing properties in 19 states and were licensed to offer live sports betting at our properties in Colorado, Illinois, Indiana, Iowa, Michigan, Mississippi, Nevada, Pennsylvania and West Virginia.

The majority of the real estate assets (i.e., land and buildings) used in our operations are subject to triple net master leases;

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GLPI) (“GLPI”), a real estate investment trust (“REIT”).

In addition, we are currently developing two Category 4 satellite gaming casinos in Pennsylvania:

Hollywood Casino York and Hollywood Casino Morgantown, both of which are expected to commence operations by the end of 2021.

In addition, we will soon commence operations of two Category 4 satellite gaming casinos in Pennsylvania:

Hollywood Casino York, which is scheduled to open August 12, 2021, and Hollywood Casino Morgantown is expected to commence operations by the end of 2021.

Update on the Impact of the COVID-19 Pandemic:

As of March 31, 2021, with the exception of Valley Race Park, all of our properties have reopened.

Zia Park, which reopened on March 5, 2021, was subsequently ordered by the New Mexico State Health Department to temporarily close from April 8, 2021 through April 20, 2021.

As of June 30, 2021, all of our properties have reopened, and majority of our properties are operating at full capacity while adhering to state mandated health and safety protocols.

Recent Acquisitions, Development Projects and Other

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Upon closing, we became Barstool Sports’ exclusive gaming partner for up to 40 years and have the sole right to utilize the Barstool Sports brand for all of our online and retail sports betting and iGaming products.

As noted above, Penn Interactive operates the Barstool Sports online sports betting app in Pennsylvania, Michigan, and Illinois and iGaming in Pennsylvania and Michigan.

As noted above, Penn Interactive operates the Barstool Sports mobile app in Pennsylvania, Michigan, Illinois and Indiana.

In addition, Penn Interactive has entered into multi-year agreements with leading sports betting operators for online sports betting and iGaming market access across our portfolio of properties.

In December 2020, the Company entered into a definitive agreement to purchase from GLPI the operations of Hollywood Casino Perryville for $31.1 million.

The transaction is expected to close early in the third quarter of 2021, subject to approval of the Maryland Lottery and Gaming Control Commission and other customary closing conditions.

Simultaneous with the closing

of the transaction, we would lease the real estate assets associated with Hollywood Casino Perryville from GLPI with initial annual rent of $7.8 million per year subject to escalation.

On March 15, 2021, the Company entered into a purchase agreement with PM Texas Holdings, LLC for the purchase of the remaining 50% ownership interest in the Sam Houston Race Park in Houston, Texas, the Valley Race Park in Harlingen, Texas, and a license to operate a racetrack in Austin, Texas.

The purchase price consisted of $56.0 million, comprised of $42.0 million in cash and $14.0 million of the Company's common equity, as well as contingent consideration.

The contingent consideration will be triggered in the event the State of Texas establishes a statutory framework authorizing land-based gaming or online gaming operations in the state prior to the ten-year anniversary of the closing date.

The transaction is expected to close in the second quarter of 2021.

On April 16, 2020, we sold the real estate assets associated with our Tropicana property to GLPI in exchange for rent credits of $307.5 million and utilized them to pay rent under our existing Master Leases and the Meadows Lease beginning in May 2020.

Contemporaneous with the sale, the Company entered into the Tropicana Lease (as defined and discussed in Note 9, “Leases” ).

On May 11, 2021, we acquired 100% of the outstanding equity of HitPoint Inc.

and Lucky Point Inc.

(collectively, “Hitpoint”).

The purchase price totaled $12.7 million, consisting of $6.2 million in cash, $3.5 million of the Company's common equity, and a $3.0 million contingent liability.

The contingent liability is payable in annual installments over three

years, through a combination of cash and the Company's common equity, and is based on achievement of certain performance factors.

The preliminary purchase price allocation resulted in recognition of $8.5 million of goodwill, $4.3 million in developed technology which is included in "Other intangible assets, net" within the unaudited Consolidated Balance Sheets, along with other miscellaneous operating assets and liabilities.

On April 16, 2020, we sold the real estate assets associated with our Tropicana Las Vegas Hotel and Casino, Inc.

("Tropicana") property to GLPI in exchange for rent credits of $307.5 million and utilized them to pay rent under our existing Master Leases and the Meadows Racetrack and Casino Lease (as defined in Note 9 , "Leases" of our unaudited Consolidated Financial Statements,) beginning in May 2020.

Contemporaneous with the sale, the Company entered into the Tropicana Lease (as defined and discussed in Note 9, "Leases" of our unaudited Consolidated Financial Statements ).

Pursuant to the purchase agreement, GLPI would conduct a sale process with respect to both the real estate assets and the operations of Tropicana for up to 24 months (the “Sale Period”), with the Company receiving (i) 75% of the proceeds above $307.5 million plus certain taxes, expenses and costs if an agreement for such sale is signed in the first 12 months of the Sale Period or (ii) 50% of the proceeds above $307.5 million plus certain taxes, expenses and costs if an agreement for such sale is signed in the remainder of the Sale Period.

On April 13, 2021, GLPI announced that it entered into a binding term sheet with Bally’s Corporation (“Bally’s”) whereby Bally’s plans to acquire both GLPI’s non-land real estate assets and Penn’s outstanding equity interests in Tropicana Las Vegas Hotel and Casino, Inc., which has the gaming license and operates the Tropicana, for an aggregate cash acquisition price of $150.0 million.

On April 13, 2021, GLPI announced that it entered into a binding term sheet with Bally’s Corporation (“Bally’s”) whereby Bally’s plans to acquire both GLPI’s non-land real estate assets and Penn’s outstanding equity interests in Tropicana, which has the gaming license and operates the Tropicana, for an aggregate cash acquisition price of $150.0 million.

GLPI will retain ownership of the land and will concurrently enter into a 50-year ground lease with initial annual rent of $10.5 million.

This transaction is expected to close in early 2022, subject to Penn, GLPI and Bally's entering into definitive agreements and regulatory approval.

This transaction is expected to close in late 2021 or early 2022, subject to Penn, GLPI and Bally's entering into definitive agreements and obtaining regulatory approval.

On December 15, 2020, we entered into a definitive agreement with GLPI to purchase the operations of Hollywood Casino Perryville for $31.1 million.

The transaction closed on July 1, 2021.

Simultaneous with the closing, we entered into a lease with GLPI for the real estate assets associated with Hollywood Casino Perryville for initial annual rent of $7.8 million per year subject to escalation.

On March 15, 2021, we entered into a purchase agreement with PM Texas Holdings, LLC for the purchase of the remaining 50% ownership interest in the Sam Houston Race Park in Houston, Texas, the Valley Race Park in Harlingen, Texas, and a license to operate a racetrack in Austin, Texas.

The purchase price consists of $56.0 million,, comprised of $42.0 million in cash and $14.0 million of the Company's common equity, as well as a contingent consideration.

The transaction closed August 1, 2021.

On August 4, 2021, we entered into an agreement with Score Media and Gaming Inc., a British Columbia corporation (“theScore”), under which we will acquire theScore in a cash and stock transaction valued at approximately $2.0 billion at the agreement date.

Under the terms of the agreement, theScore shareholders will receive (a) US$17.00 in cash consideration, and (b) 0.2398 of a share of common stock, par value $0.01 per share, of the Company’s common equity for each theScore share.

The agreement is conditioned upon obtaining theScore shareholders’ approval and is subject to regulatory approval.

Operating and Competitive Environment

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We have also made investments in joint ventures that we believe will allow us to capitalize on additional gaming opportunities in certain states if legislation or referenda are passed that permit and/or expand gaming in these jurisdictions and we are selected as a licensee.

As reported by most jurisdictions, regional gaming industry trends have shown little revenue growth the last several years as numerous jurisdictions now permit gaming or have expanded their gaming offerings.

In recent years, the proliferation of new gaming properties has impacted the overall domestic gaming industry as well as our results of operations in certain markets.

Prior to the COVID-19 pandemic, the economic environment, specifically historically low levels of unemployment, strength in residential real estate prices, and high levels of consumer confidence, had resulted in a stable operating environment in recent years.

In 2020, the COVID-19 pandemic increased the level of unemployment and decreased the level of consumer confidence, however we are optimistic both of these trends will reverse in 2021.

As the COVID-19 pandemic evolves, we continue to adjust operations and cost structures at our properties to reflect the changing economic and health and safety conditions.

We also continue to focus on revenue and cost synergies from recent acquisitions, and offering our customers additional gaming experiences through our omni-channel distribution strategy.

We seek to continue to expand our customer database through accretive acquisitions or investments, such as Barstool Sports, capitalize on organic growth opportunities from the development of new properties or the expansion of recently-developed business lines, and develop partnerships that allow us to enter new jurisdictions for iGaming and sports betting.

We seek to continue to expand our customer database by partnering with third-party operators such as Choice Hotels International, Inc.

to expand our loyalty program, as well as through accretive acquisitions or investments, such as Barstool Sports, capitalize on organic growth opportunities from the development of new properties or the expansion of recently-developed business lines, and develop partnerships that allow us to enter new jurisdictions for iGaming and sports betting.

The gaming industry is characterized by an increasingly high degree of competition among a large number of participants, including riverboat casinos;

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The vast majority of our revenues is gaming revenue, which is highly dependent upon the volume and spending levels of customers at our properties.

Our gaming revenue is derived primarily from slot machines (which represented approximately 85% and 91% of our gaming revenue for the three months in 2021 and 2020) and, to a lesser extent, table games and sports betting.

Aside from gaming revenue, our revenues are derived from our hotel, dining, retail, commissions, program sales, admissions, concessions and certain other ancillary activities, and our racing operations.

Our gaming revenue is derived primarily from slot machines (which represented approximately 85% and 89% of our gaming revenue for the six months ended June 30, 2021 and 2020) and, to a lesser extent, table games and sports betting.

Aside from gaming revenue, our revenues are primarily derived from our hotel, dining, retail, commissions, program sales, admissions, concessions and certain other ancillary activities, and our racing operations.

Key performance indicators related to gaming revenue are slot handle and table game drop, which are volume indicators, and “win” or “hold” percentage.

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as well as a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDAR and related margins.

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

(dollars in millions) 2021 2020 2021 2020

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Midwest segment 294.8 36.0 529.5 264.1

97.7 27.6 185.6 47.9

Intersegment eliminations (2)

(7.8) — (18.9) (2.9)

Total $ 1,545.8 $ 305.5 $ 2,820.7 $ 1,421.6

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(25.7) (8.7) (47.0) (27.6)

586.6 24.5 1,033.6 276.8

Rent expense associated with triple net operating leases (4)

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our management contract for Retama Park Racetrack and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour ("HPT").

The Other category also includes Penn Interactive, which operates our social gaming, internally-branded retail sportsbooks, iGaming and our Barstool Sports online sports betting app.

The Other category also includes Penn Interactive, which operates our social gaming, internally-branded retail sportsbooks, iGaming and our Barstool Sports mobile app.

Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property.

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As noted within “Non-GAAP Financial Measures” below, Adjusted EBITDAR, and the related margin, is presented on a consolidated basis outside the financial statements solely as a valuation metric.

(4) Solely comprised of rent expense associated with the operating lease components contained within the Master Leases (primarily land), the Tropicana Lease, the Meadows Lease, the Margaritaville Lease and the Greektown Lease (of which the Tropicana Lease, Meadows Lease, Margaritaville Lease and the Greektown Lease are defined in “Liquidity and Capital Resources” ) and are referred to collectively as our “triple net operating

(4) Solely comprised of rent expense associated with the operating lease components contained within our triple net master lease dated November 1, 2013 with GLPI and the triple net master lease assumed in connection with our acquisition of Pinnacle Entertainment, Inc.

(primarily land), our individual triple net leases with GLPI for the real estate assets used in the operation of Tropicana and Meadows Racetrack and Casino, and our

individual triple net leases with VICI Properties Inc.

for the real estate assets used in the operations of Margaritaville Casino Resort and Greektown Casino-Hotel (of which the Tropicana Lease, Meadows Lease, Margaritaville Lease and the Greektown Lease are defined in “Liquidity and Capital Resources” ) and are referred to collectively as our “triple net operating leases”.

The finance lease components contained within the Master Leases (primarily buildings) and the financing obligation associated with the Morgantown Lease (as defined in “Liquidity and Capital Resources” ) result in interest expense, as opposed to rent expense.

Consolidated comparison of the three months ended March 31, 2021 and 2020.

Consolidated comparison of the three and six months ended June 30, 2021 and 2020.

The following table presents our consolidated revenues:

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the three months ended June 30, Change For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ % 2021 2020 $ %

Gaming $ 1,305.5 $ 259.2 $ 1,046.3 403.7 % $ 2,387.5 $ 1,162.1 $ 1,225.4 105.4 %

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Total revenues $ 1,545.8 $ 305.5 $ 1,240.3 406.0 % $ 2,820.7 $ 1,421.6 $ 1,399.1 98.4 %

Gaming revenues for the three months ended March 31, 2021 increased $179.1 million compared to the prior year quarter primarily as a result of higher spend-per-visit and increased visitation levels during the three month period ended March 31, 2021 while the prior year quarter was negatively impacted by the COVID-19 pandemic, which caused temporary closures of all of our properties during the first quarter of 2020.

Food, beverage, hotel and other revenues for the three months ended March 31, 2021 decreased $20.3 million compared to the prior year quarter due primarily to the implementation of social distancing and health and safety protocols due to the COVID-19 pandemic at our properties which are subject to reduced hotel capacity, limitations on the number of food and beverage offerings and limitations on other amenities.

For the three month period ended March 31, 2021 , our properties have generally seen spend-per-visit that is much higher than it was pre-COVID-19 pandemic and visitation levels are now approaching 2019 levels in most of our markets.

Importantly, the younger demographic continues to choose gaming as a viable entertainment option while the 55+ age group has been returning to our casinos as vaccines continue to roll out.

Unrated play continues to show strength that mirrors what we have seen from our rated guests.

We largely attribute the higher spend-per-visit to pent-up demand, visitation from our higher worth customers, and customers’ propensity to spend after a prolonged period of limited domestic commerce and upon receipt of government stimulus payments.

In addition, in many of the states in which we operate, leisure alternatives remain partially limited (e.g., bars, concerts, entertainment events, etc.), which may have impacted our operating results upon reopening our properties.

See “Segment comparison of the three months ended March 31 , 202 1 and 20 20 ” below for more detailed explanations of the fluctuations in revenues.

Gaming revenues for the three and six months ended June 30, 2021 increased $1,046.3 million and $1,225.4 million, respectively, compared to the prior year corresponding periods, primarily due to a full quarter of operating results in the current periods, strong visitation levels, and increased length of play.

The prior year periods were negatively impacted by the COVID-19 pandemic, which caused temporary closures of all of our properties during the three and six months ended June 30, 2020.

Food, beverage, hotel and other revenues for the three and six months ended June 30, 2021 increased $194.0 million and $173.7 million, respectively, compared to the prior year corresponding periods, primarily due to strong visitation levels, increased length of play, and lifting of capacity and operational restrictions previously in place in response to the COVID-19 pandemic.

Additionally, other revenues include a gross-up of gaming tax reimbursement amounts derived from arrangements which allow for our third party partners to operate online casinos and online sportsbooks under our gaming licenses of $46.0 million and $85.5 million for the three and six months ended June 30, 2021, respectively.

T he prior year periods were negatively impacted by the COVID-19 pandemic, which caused temporary closures of all of our properties during the three and six months ended June 30, 2020.

Additionally during 2020, upon reopening o ur properties operated within locally restricted capacity and limited food and beverage and other amenity offerings.

For the six month period ended June 30, 2021 , our properties experienced strong visitation levels and increased length of play across all age segments of our player database, attributable to the increased willingness of the 55+ age group to engage in social gatherings as vaccines continue to roll out across the country and the younger demographic’s continued engagement even as other entertainment options become available.

In addition, our unrated play continues to perform well as we work to introduce these customers into our my choice loyalty program.

See “Segment comparison of the three and six months ended June 30, 2021 and 2020” below for more detailed explanations of the fluctuations in revenues.

Operating expenses

The following table presents our consolidated operating expenses:

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the three months ended June 30, Change For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ % 2021 2020 $ %

Operating expenses

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Gaming expenses consist primarily of salaries and wages associated with our gaming operations and gaming taxes.

Food, beverage, hotel and other expenses consist principally of salaries and wages and costs of goods sold associated with our food, beverage, hotel, retail, racing, and other operations.

Gaming expenses for the three months ended March 31, 2021 increased $26.9 million compared to the prior year quarter primarily due to an increase in gaming taxes resulting from the increase in gaming revenues, as discussed above.

Additionally, during the first quarter of 2020, our properties were temporarily closed as a result of the COVID-19 pandemic, which reduced our gaming taxes, marketing expenses, and salaries and wages.

Fo od, beverage, hotel and other expenses for the three months ended March 31, 2021 decreased $33.9 million compared to the prior year quarter as our properties are operating with reduced hotel capacity and limited food and beverage options.

Gaming expenses for the three and six months ended June 30, 2021 increased $478.9 million and $505.8 million, respectively, compared to the prior year corresponding periods, primarily due to an increase in gaming taxes resulting from the increase in gaming revenues, as discussed above.

Additionally, during the three and six months ended June 30, 2020 , our properties were temporarily closed as a result of the COVID-19 pandemic, which reduced our gaming taxes, marketing expenses, and salaries and wages.

Food, beverage, hotel and other expenses consist primarily of salaries and wages and costs of goods sold associated with our food, beverage, hotel, retail, racing, and other operations.

Also included in other expenses are gaming taxes of $46.0 million and $85.5 million f or the three and six months ended June 30, 2021, respectively, on revenues derived from arrangements which allow for third party partners to operate online casinos and online sportsbooks under our gaming licenses for which we collect and remit applicable gaming taxes.

Fo od, beverage, hotel and other expenses for the three and six months ended June 30, 2021 increased $115.7 million and $81.8 million, respectively, compared to the prior year corresponding periods, primarily due to the inclusion of the gaming taxes in the current year periods, discussed above, and due to continued revenue recovery in food, beverage, hotel and other activity as various health and safety restrictions are relaxed or lifted.

In response to the COVID-19 pandemic, we implemented cost saving measures such as:

operating with a reduced workforce, focusing on higher margin gaming offerings, reducing marketing costs, and limiting certain lower margin food and beverage offerings which reduced our salaries and wages, costs of goods sold, and other expenses which further reduced our food , beverage, hotel and other expense during the first quarter of 2021.

operating with a reduced workforce, focusing on higher margin gaming offerings, reducing marketing costs, and limiting certain lower margin food and beverage offerings which reduced our salaries and wages, costs of goods sold, and other expenses which helped mitigate our food, beverage, hotel and other expenses during the first six months of 2021 as compared to the previous year corresponding periods.

General and administrative expenses include items such as compliance, facility maintenance, utilities, property and liability insurance, surveillance and security, lobbying expenses, and certain housekeeping services, as well as all expenses for administrative departments such as accounting, purchasing, human resources, legal and internal audit.

General and administrative expenses also include stock-based compensation expense;

pre-opening and acquisition costs;

pre-opening expenses;

acquisition and transaction costs;

gains and losses on disposal of assets;

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and rent expense associated with our triple net operating leases.

For three months ended March 31, 2021, general and administrative expenses increased period over period primarily due to the increase in expense associated with the Company’s cash-settled stock-based awards of $30.4 million, which is largely driven by the increase in the Company's stock price.

Rent expense associated with our triple net operating leases increased by $12.9 million, as compared to the prior year period;

the increase principally relates to the Tropicana Lease.

The increase in general and administrative expenses was offset by a $21.4 million decrease in payroll expenses resulting from the implementation of c ost saving measures described above.

Depreciation and amortization for the three months ended March 31, 2021 decreased period over period primarily due to fixed assets becoming fully depreciated , the sale of the real estate assets of Tropicana in April 2020, and a decrease of $0.8 million in amortization expense at Penn Interactive.

Impairment losses for the three months ended March 31, 2020 primarily relates to impairments taken on our goodwill and other intangible assets of $113.0 million and $498.5 million, respectively, as a result of an interim impairment assessment during the first quarter of 2020.

For the three months ended June 30, 2021, general and administrative expenses increased period over period primarily due to a $70.6 million increase in payroll expenses as minimal payroll costs were incurred as a result of property closures during the three months ended June 30, 2020, and a $12.7 million increase in rent expenses associated with our triple net operating leases, offset by a $28.5 million decrease associated with the Company’s cash-settled stock-based awards.

Additionally, the prior year quarter included a $28.5 million gain on disposal of capital assets related to sale of our Tropicana property in April 2020.

For the six months ended June 30, 2021, general and administrative expenses increased period over period primarily due to an increase of $49.2 million in payroll expenses as minimal payroll costs were incurred as a result of property closures during the six months ended June 30, 2020, a $25.6 million increase in rent expenses associated with our triple net operating leases, principally related to the Tropicana Lease, and the inclusion of the gain on the sale of our Tropicana property discussed above.

Depreciation and amortization for the three and six months ended June 30, 2021 decreased period over period primarily due to fixed assets and intangible assets becoming fully depreciated and amortized , and the sale of the real estate assets of Tropicana in April 2020.

Impairment losses for the six months ended June 30, 2020 primarily relates to impairments taken on our goodwill and other intangible assets of $113.0 million and $498.5 million, respectively, as a result of an interim impairment assessment during the first quarter of 2020.

During the first quarter of 2020, we identified an indicator of impairment triggered by the COVID-19 pandemic, which caused all of our gaming properties to temporarily close.

There were no impairment losses during the three months ended March 31, 2021.

There were no impairment losses during the three and six months ended June 30, 2021.

Other income (expenses)

The following table presents our consolidated other income (expenses):

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the three months ended June 30, Change For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ % 2021 2020 $ %

Other income (expenses)

Interest expense, net $ (138.0) $ (135.0) $ (3.0) 2.2 % $ (273.7) $ (264.8) $ (8.9) 3.4 %

Income from unconsolidated affiliates $ 9.6 $ 4.1 $ 5.5 134.1 %

Income tax benefit (expense) $ (20.6) $ 99.5 $ (120.1) N/M

Other $ 21.1 $ (21.8) $ 42.9 N/M

Income from unconsolidated affiliates $ 9.1 $ (1.7) $ 10.8 N/M $ 18.7 $ 2.4 $ 16.3 679.2 %

Other $ 2.8 $ 29.3 $ (26.5) (90.4) % $ 23.9 $ 7.5 $ 16.4 218.7 %

Income tax benefit (expense) $ (53.1) $ 58.4 $ (111.5) N/M $ (73.7) $ 157.9 $ (231.6) N/M

N/M - Not meaningful

Interest expense, net increased for the three months ended March 31, 2021, as compared to the prior year period, due to a $5.6 million increase in interest expense related to the issuance of our 2.75% Convertible Notes in May, 2020.

Income from unconsolidated affiliates relates principally to Barstool Sports and our Kansas Entertainment JV.

The increase for the three months ended March 31, 2021, as compared to the prior year period, was due to an increase in the results

of Hollywood Casino at Kansas Speedway and full quarter of income earned from our Barstool Sports investment, which we completed i n February, 2020.

Interest expense, net increased for the three and six months ended June 30, 2021, as compared to the prior year corresponding periods, due to an increase in interest expense related to the issuance of our 2.75% Convertible Notes in May, 2020 and interest expense related to our Other long-term obligations.

Income from unconsolidated affiliates relates principally to Barstool Sports and our Kansas Entertainment joint venture.

The increase for the three and six months ended June 30, 2021, as compared to the prior year corresponding periods, was due to ongoing positive results in the operations at Hollywood Casino at Kansas Speedway, which was closed for a period during the three and six months ended June 30, 2020, and income earned from our Barstool Sports investment, which we completed in February, 2020.

We record our proportionate share of Barstool Sports' net income or loss one quarter in arrears.

Income tax benefit (expense) was a $20.6 million expense for the three months ended March 31, 2021, as compared to a $99.5 million benefit for the three months ended March 31, 2020.

Our effective tax rate (income taxes as a percentage of income or loss from operations before income taxes) including discrete items was 18.5% for the three months ended March 31, 2021, as compared to 14.1% for the three months ended March 31, 2020.

The change in the effective rate for the three months ended March 31, 2021 as compared to the prior year period was primarily due to an increase of pre-tax income.

Other includes miscellaneous income and expense items and primarily relates to unrealized gains and losses on equity securities (including warrants), held by Penn Interactive and unrealized gains and losses related to certain Barstool Sports shares.

The securities are multi-year agreements with sports betting operators for online sports betting and related iGaming market access across our portfolio.

During the three and six months ended June 30, 2021 we recorded an unrealized holding loss of $7.4 million and an unrealized holding gain of $18.8 million, respectively, compared to unrealized holding gains of $29.5 million and $7.7 million for the three and six months ended June 30, 2020, respectively.

During the three months ended June 30, 2021 the $7.4 million unrealized holding loss was offset by a $5.8 million unrealized gain related to certain Barstool Sports shares and other miscellaneous income.

Income tax benefit (expense) was a $53.1 million and $73.7 million expense for the three and six months ended June 30, 2021, respectively, as compared to a $58.4 million and $157.9 million benefit for the three and six months ended June 30, 2020, respectively.

Our effective tax rate (income taxes as a percentage of income or loss from operations before income taxes) including discrete items was 21.1% and 20.3% for the three and six months ended June 30, 2021 respectively, as compared to 21.4% and 16.1% for the three and six months ended June 30, 2020, respectively.

The change in the effective rate for the six months ended June 30, 2021 as compared to the prior year period was primarily due to an increase of pre-tax income.

Our effective income tax rate can vary each reporting period depending on, among other factors, the geographic and business mix of our earnings, changes to our valuation allowance, and the level of our tax credits.

Certain of these and other factors, including our history and projections of pre-tax earnings, are considered in assessing our ability to realize our net deferred tax assets.

Other includes miscellaneous income and expense items.

The amount for the three months ended March 31, 2021 relates primarily to unrealized holding gains of $26.1 million compared to unrealized holding losses of $21.8 million in the prior year quarter on equity securities (including warrants), held by Penn Interactive.

The securities are multi-year agreements with sports betting operators for online sports betting and related iGaming market access across our portfolio.

Segment comparison of the three months ended March 31, 2021 and 2020

Segment comparison of the three and six months ended June 30, 2021 and 2020

Northeast Segment

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the three months ended June 30, Change For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ % 2021 2020 $ %

Gaming $ 602.5 $ 94.1 $ 508.4 540.3 % $ 1,129.5 $ 552.8 $ 576.7 104.3 %

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Total revenues $ 652.5 $ 102.7 $ 549.8 535.3 % $ 1,223.4 $ 623.4 $ 600.0 96.2 %

Adjusted EBITDAR $ 193.2 $ 124.5 $ 68.7 55.2 %

Adjusted EBITDAR margin 33.8 % 23.9 % 990 bps

The Northeast segment’s revenues for the three months ended March 31, 2021 increased by $50.2 million, primarily as a result of increased gaming revenues resulting from higher spend-per-visit and increased visitation levels compared to the prior year quarter, when our properties were mandated with temporary closures to combat the rapid spread of COVID-19.

All of our properties within the Northeast segment continue to operate with reduced gaming and hotel (if applicable) capacity, limited food and beverage and other amenity offerings.

For the three months ended March 31, 2021, the Northeast segment’s Adjusted EBITDAR and Adjusted EBITDAR margin increased $68.7 million and 990 basis points, respectively, as compared to the prior year quarter, due to both the higher proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin, and cost saving initiatives implemented throughout the prior year, designed to mitigate revenue degradation in 2020, such as:

Adjusted EBITDAR $ 231.6 $ (3.6) $ 235.2 N/M $ 424.8 $ 120.9 $ 303.9 251.4 %

Adjusted EBITDAR margin 35.5 % (3.5) % 3,900 bps 34.7 % 19.4 % 1,530 bps

N/M - Not meaningful

The Northeast segment’s revenues for the three and six months ended June 30, 2021 increased by $549.8 million and $600.0 million, respectively, over the prior year corresponding periods, primarily due to a full quarter of operating results in the current year periods, strong visitation levels, and increased length of play.

During the three and six months ended June 30, 2020, the COVID-19 pandemic caused temporary closures of all of our properties which negatively impacted our operations.

Our properties located at Greektown, Bangor and Plainridge Park were temporarily closed during the entire quarter ended June 30, 2020.

For the three months ended June 30, 2021, the Northeast segment’s Adjusted EBITDAR increased $235.2 million, and Adjusted EBITDAR margin increased to 35.5% due to high proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin and due to the negative impact of temporary closures during the three months ended June 30, 2020.

For the six months ended June 30, 2021 , the Northeast segment's Adjusted EBITDAR increased by $303.9 million and Adjusted EBITDAR margin increased to 34.7% primarily due to a higher proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin, and cost saving initiatives implemented throughout the prior year, designed to mitigate revenue degradation in 2020, such as:

operating with a reduced workforce, focusing on higher margin gaming offerings, reducing marketing costs, and limiting certain lower margin food and beverage offerings.

South Segment

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the three months ended June 30, Change For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ % 2021 2020 $ %

Gaming $ 304.4 $ 103.7 $ 200.7 193.5 % $ 549.8 $ 272.3 $ 277.5 101.9 %

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Adjusted EBITDAR $ 177.1 $ 44.4 $ 132.7 298.9 % $ 311.0 $ 97.0 $ 214.0 220.6 %

Adjusted EBITDAR margin 45.3 % 23.6 % 2,170 bps

The South segment’s revenues for the three months ended March 31, 2021 increased by $72.6 million, primarily as a result of increased gaming revenues resulting from higher spend-per-visit and increased visitation levels compared to the prior year quarter when our properties were mandated with temporary closures to combat the rapid spread of COVID-19.

All of our properties within the South segment continue to operate with reduced gaming and hotel (if applicable) capacity, limited food and beverage and other amenity offerings.

Gaming revenues at t he South segment benefited from less restrictive COVID-19 protocols in the region compared to our other reportable segments.

For the three months ended March 31, 2021, the South segment’s Adjusted EBITDAR and Adjusted EBITDAR margin increased $81.3 million and 2,170 basis points, respectively, as compared to the prior year quarter, due to both the higher proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin, and cost saving initiatives implemented throughout the prior year, designed to mitigate revenue degradation in 2020, such as:

Adjusted EBITDAR margin 48.1 % 36.5 % 1,160 bps 46.8 % 28.1 % 1,870 bps

The South segment’s revenues for the three and six months ended June 30, 2021 increased by $246.7 million and $319.3 million, respectively, primarily due to a full quarter and year-to-date operating results in the current year periods, strong visitation levels, and increased length of play.

During the three and six months ended June 30, 2020, the COVID-19 pandemic caused temporary closures of all of our properties which negatively impacted our operations.

For the three months ended June 30, 2021, the South segment’s Adjusted EBITDAR increased $132.7 million, and Adjusted EBITDAR margin increased to 48.1%, due to high proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin and due to the negative impact of temporary closures during the three months ended June 30, 2020.

For the six months ended June 30, 2021 , the South segment’s Adjusted EBITDAR increased $214.0 million and Adjusted EBITDAR margin increased to 46.8% primarily due to a higher proportionate share of gaming activity yielding a higher overall

Adjusted EBITDAR margin, and cost saving initiatives implemented throughout the prior year designed to mitigate revenue degradation in 2020, such as:

operating with a reduced workforce, focusing on higher margin gaming offerings, reducing marketing costs, and limiting certain lower margin food and beverage offerings.

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the three months ended June 30, Change For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ % 2021 2020 $ %

Gaming $ 96.7 $ 12.8 $ 83.9 655.5 % $ 165.8 $ 84.7 $ 81.1 95.7 %

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Total revenues $ 140.4 $ 17.7 $ 122.7 693.2 % $ 237.0 $ 144.3 $ 92.7 64.2 %

Adjusted EBITDAR $ 35.2 $ 24.6 $ 10.6 43.1 %

Adjusted EBITDAR margin 36.4 % 19.4 % 1,700 bps

The West segment’s revenues for the three months ended March 31, 2021 decreased by $30.0 million due to the continued closure of our property at Zia Park, which remained closed until March 2021, and the reduced gaming and food, beverage, hotel and other revenues at the Tropicana, Las Vegas property, due to lower traffic resulting from visitor and international travel restrictions.

In spite of the revenue decrease, the West segment’s Adjusted EBITDAR and Adjusted EBITDAR margin increased by $10.6 million and 1,700 basis points respectively, primarily due to the higher proportion of higher margin gaming activities and reduced operating expenses due to limited food, beverage and hotel offerings.

Adjusted EBITDAR $ 61.4 $ (3.0) $ 64.4 N/M $ 96.6 $ 21.6 $ 75.0 347.2 %

Adjusted EBITDAR margin 43.7 % (16.9) % 6,060 bps 40.8 % 15.0 % 2,580 bps

N/M - Not meaningful

The West segment’s revenues for the three and six months ended June 30, 2021 increased by $122.7 million and $92.7 million, respectively, primarily due to a full quarter of operating results in the current year periods, strong visitation levels, and increased length of play.

During the three and six months ended June 30, 2020, the COVID-19 pandemic caused temporary closures of all of our properties which negatively impacted our operations.

Our Tropicana and Zia Park properties were temporarily closed during the entire quarter ended June 30, 2020.

For the three months ended June 30, 2021, the West segment’s Adjusted EBITDAR increased $64.4 million and Adjusted EBITDAR margin increased to 43.7% due to high proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin and due to the negative impact of temporary closures during the three months ended June 30, 2020.

For the six months ended June 30, 2021 , the West segment’s Adjusted EBITDAR increased $75.0 million and Adjusted EBITDAR margin increased to 40.8% primarily due to a higher proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin, and cost saving initiatives implemented throughout the prior year designed to mitigate revenue degradation in 2020, such as:

operating with a reduced workforce, focusing on higher margin gaming offerings, reducing marketing costs, and limiting certain lower margin food and beverage offerings.

Midwest Segment

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the three months ended June 30, Change For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ % 2021 2020 $ %

Gaming $ 272.1 $ 33.5 $ 238.6 712.2 % $ 489.0 $ 229.7 $ 259.3 112.9 %

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Total revenues $ 294.8 $ 36.0 $ 258.8 718.9 % $ 529.5 $ 264.1 $ 265.4 100.5 %

Adjusted EBITDAR $ 106.0 $ 69.5 $ 36.5 52.5 %

Adjusted EBITDAR margin 45.2 % 30.5 % 1,470 bps

The Midwest segment’s revenues for the three months ended March 31, 2021 increased by $6.6 million, primarily as a result of increased gaming revenues resulting from higher spend-per-visit and increased visitation levels compared to the prior year quarter when our properties were mandated with temporary closures to combat the rapid spread of COVID-19.

All of our properties within the Midwest segment continue to operate with reduced gaming and hotel (if applicable) capacity, and limited food and beverage and other amenity offerings.

For the three months ended March 31, 2021, the Midwest segment’s Adjusted EBITDAR and Adjusted EBITDAR margin increased $36.5 million and 1,470 basis points, respectively, as compared to the prior year quarter, due to both the higher proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin, and cost saving initiatives implemented throughout the prior year, designed to mitigate revenue degradation in 2020, such as:

Adjusted EBITDAR $ 142.2 $ (4.6) $ 146.8 N/M $ 248.2 $ 64.9 $ 183.3 282.4 %

Adjusted EBITDAR margin 48.2 % (12.8) % 6,100 bps 46.9 % 24.6 % 2,230 bps

N/M - Not meaningful

The Midwest segment’s revenues for the three and six months ended June 30, 2021 increased by $258.8 million and $265.4 million, respectively, primarily due to a full quarter of operating results in the current year periods, strong visitation levels, and increased length of play.

During the three and six months ended June 30, 2020, the COVID-19 pandemic caused temporary closures of all of our properties which negatively impacted our operations.

Our Alton, Aurora and Joliet properties were temporarily closed during the entire quarter ended June 30, 2020.

For the three months ended June 30, 2021, the Midwest segment’s Adjusted EBITDAR increased $146.8 million, and Adjusted EBITDAR margin increased to 48.2%, due to high proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin and due to the negative impact of temporary closures during the three months ended June 30, 2020.

For the six months ended June 30, 2021 , the Midwest segment’s Adjusted EBITDAR increased $183.3 million and Adjusted EBITDAR margin increased to 46.9% primarily due to a higher proportionate share of gaming activity yielding a higher overall Adjusted EBITDAR margin, and cost saving initiatives implemented throughout the prior year designed to mitigate revenue degradation in 2020, such as:

operating with a reduced workforce, focusing on higher margin gaming offerings, reducing marketing costs, and limiting certain lower margin food and beverage offerings.

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the three months ended June 30, Change For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ % 2021 2020 $ %

Gaming $ 29.8 $ 15.1 $ 14.7 97.4 % $ 53.4 $ 22.7 $ 30.7 135.2 %

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Adjusted EBITDAR $ (25.7) $ (8.7) $ (17.0) 195.4 % $ (47.0) $ (27.6) $ (19.4) 70.3 %

Total revenues for the Other category increased for the three months ended March 31, 2021, as compared to the prior ye ar quarter, primarily as a result of the activities at Penn Interactive.

Penn Interactive's operations continue to build with the launch of the online Barstool Sportsbook in Pennsylvania during the third quarter of 2020 and the launch of Michigan and Illinois during the first quarter of 2021 and with ongoing increases in online social and real-money gaming revenue.

Adjusted EBITDAR decreased by $2.4 million for the three months ended March 31, 2021 as compared to the prior year quarter, primarily due to increased expenses related to the ramp up of the Penn Interactive online sportsbook operations.

Total revenues for the Other category increased for the three and six months ended June 30, 2021, as compared to the prior ye ar corresponding periods, primarily as a result of the activities at Penn Interactive.

T he three and six months ended June 30, 2021 include a gross-up of gaming tax reimbursement amounts derived from arrangements which allow for our third party partners to operate online casinos and online sportsbooks under our gaming licenses of $46.0 million and $85.5 million, respectively.

Penn Interactive's operations continue to build with the launch of the online Barstool Sportsbook in Pennsylvania during the third quarter of 2020 and the launch of Michigan, Illinois and Indiana in 2021, and with ongoing increases in online social and real-money gaming revenue.

Adjusted EBITDAR decreased by $17.0 million and $19.4 million for the three and six months ended June 30, 2021, respectively, as compared to the prior year corresponding periods, primarily due to increased expenses related to the ramp up of the Penn Interactive online sportsbook operations and increases in corporate overhead costs as operations returned to pre-pandemic levels.

For the three and six months ended June 30, 2021 , corporate overhead costs were $26.1 million and $50.1 million, as compared to $16.7 million and $40.9 million for the three and six months ended June 30, 2020 .

Non-GAAP Financial Measures

Use and Definitions

In addition to GAAP financial measures, management uses Adjusted EBITDA, Adjusted EBITDAR and Adjusted EBITDAR margin as non-GAAP financial measures.

In addition to GAAP financial measures, management uses Adjusted EBITDA, Adjusted EBITDAR, Adjusted EBITDA margin, and Adjusted EBITDAR margin as non-GAAP financial measures.

These non-GAAP financial measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

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gain or loss on disposal of assets, the difference between budget and actual expense for cash-settled stock-based awards;

pre-opening and acquisition costs;

and other income or expenses.

pre-opening expenses;

Adjusted EBITDA is inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as interest expense, net;

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depreciation and amortization;

and stock-based compensation expense) added back for Barstool Sports and our Kansas Entertainment joint venture.

Adjusted EBITDA is inclusive of rent expense associated with our triple net operating leases (the operating lease components contained within the Penn Master Lease and Pinnacle Master Lease (primarily land), the Meadows Lease, the Margaritaville Lease, the Greektown Lease and the Tropicana Lease).

and stock-based compensation expense) added back for Barstool Sports, Inc.

("Barstool Sports") and our Kansas Entertainment, LLC joint venture.

Adjusted EBITDA is inclusive of rent expense associated with our triple net operating leases (the operating lease components contained within our triple net master lease dated November 1, 2013 with Gaming and Leisure Properties, Inc.

("GLPI") and the triple net master lease assumed in connection with our acquisition of Pinnacle Entertainment, Inc.

(primarily land), our individual triple net leases with GLPI for the real estate assets used in the operation of Tropicana Las Vegas Hotel and Casino, Inc.

and Meadows Racetrack and Casino, and our individual triple net leases with VICI Properties Inc.

for the real estate assets used in the operations of Margaritaville Casino Resort and Greektown Casino-Hotel).

Although Adjusted EBITDA includes rent expense associated with our triple net operating leases, we believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our consolidated results of operations.

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These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value companies within our industry.

In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including us, have historically excluded from their Adjusted EBITDA calculations certain corporate expenses that do not relate to the management of specific casino properties.

In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including us, have historically excluded from their Adjusted EBITDA calculations of certain corporate expenses that do not relate to the management of specific casino properties.

However, Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP.

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The following table includes a reconciliation of net income (loss), which is determined in accordance with GAAP, to Adjusted EBITDA and Adjusted EBITDAR, which are non-GAAP financial measures, as well as related margins:

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

(dollars in millions) 2021 2020 2021 2020

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Income tax expense (benefit) 53.1 (58.4) 73.7 (157.9)

Income from unconsolidated affiliates (9.6) (4.1)

Loss (income) from unconsolidated affiliates (9.1) 1.7 (18.7) (2.4)

Interest expense, net 138.0 135.0 273.7 264.8

Other (income) expense (21.1) 21.8

Other income (2.8) (29.3) (23.9) (7.5)

Operating income (loss) 377.9 (165.4) 594.4 (726.0)

Stock-based compensation (1)

9.2 2.9 13.4 8.9

Cash-settled stock-based award variance (1)(2)

(Gain) loss on disposal of assets (1)

(12.4) 16.1 9.1 7.2

Gain on disposal of assets (1)

(0.1) (28.5) (0.2) (27.9)

Contingent purchase price (1)

Pre-opening and acquisition costs (1)

1.2 0.8 1.3 (1.4)

Pre-opening expenses (1)(3)

(0.4) 3.5 1.2 6.7

Depreciation and amortization 81.9 91.9 163.2 187.6

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Insurance recoveries, net of deductible charges (1)

Income from unconsolidated affiliates 9.6 4.1

Income (loss) from unconsolidated affiliates 9.1 (1.7) 18.7 2.4

Non-operating items of equity method investments (4)

1.4 1.1 3.0 2.0

Other expenses (1)(3)(5)

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Rent expense associated with triple net operating leases (1)

116.5 103.8 226.9 201.3

Adjusted EBITDAR $ 586.6 $ 24.5 $ 1,033.6 $ 276.8

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As such, significant fluctuations in the price of the Company’s common stock during any reporting period could cause significant variances to budget on cash-settled stock-based awards.

During the three months ended March 31, 2021, the price of the Company’s common stock increased significantly, which resulted in unfavorable variances to budget.

During the three and six months ended June 30, 2021, the fluctuations in the price of the Company’s common stock resulted in respective gains and losses.

(3) During 2020 and during the first quarter of 2021, acquisition costs were included within pre-opening and acquisition costs.

As of and for the quarter ended June 30, 2021, acquisition costs are presented as part of other expenses.

(4) Consists principally of interest expense, net;

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depreciation and amortization;

and stock-based compensation expense associated with Barstool Sports and our Kansas Entertainment JV.

(4) Consists of non-recurring restructuring charges (primarily severance) associated with a company-wide initiative, triggered by the COVID-19 pandemic, designed to (i) improve the operational effectiveness across our property portfolio;

and (ii) improve the effectiveness and efficiency of our Corporate functional support areas.

and stock-based compensation expense associated with Barstool Sports and our Kansas Entertainment joint venture.

(5) Consists of finance transformation costs associated with the implementation of our new Enterprise Resource Management system, other non-recurring transaction costs, and non-recurring restructuring charges (primarily severance) associated with a company-wide initiative, triggered by the COVID-19 pandemic, designed to (i) improve the operational effectiveness across our property portfolio;

(ii) improve the effectiveness and efficiency of our Corporate functional support area.

LIQUIDITY AND CAPITAL RESOURCES

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Our ongoing liquidity will depend on a number of factors, including available cash resources, cash flow from operations, acquisitions or investments, funding of construction for development projects, and our compliance with covenants contained under our debt agreements.

For the three months ended March 31, $ Change % Change

(dollars in millions) 2021 2020 2021 vs 2020 2021 vs 2020

For the six months ended June 30, Change

(dollars in millions) 2021 2020 $ %

Net cash provided by (used in) operating activities $ 504.6 $ (130.9) $ 635.5 N/M

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Operating Cash Flow

Net cash provided by operating activities of $180.5 million for the three months ended March 31, 2021, compared to net cash used of $33.2 million in the prior year quarter, is principally due to increased gaming revenues as operations at our properties benefited from increased spend-per-visit and visitation levels and higher overall Adjusted EBITDAR margins, resulting from cost saving initiatives implemented throughout 2020, such as:

Net cash provided by operating activities of $504.6 million for the six months ended June 30, 2021, compared to net cash used of $130.9 million in the prior year period, is principally due to increased gaming revenues as operations at our properties benefited from strong visitation levels, increased length of play, and higher overall Adjusted EBITDAR margins, resulting from cost saving initiatives implemented throughout 2020, such as:

operating with a reduced workforce, focusing on higher margin gaming offerings, reducing marketing costs, and limiting certain lower margin food and beverage offerings.

The prior year quarter operating cash flows were negatively impacted by the temporary closures of all of our properties due to the COVID-19 pandemic, which significantly decreased cash receipts from customers.

Operating cash flows in the prior year were negatively impacted by the temporary closures of all of our properties due to the COVID-19 pandemic, which significantly decreased cash receipts from customers, offset by the utilization of rent credits resulting from the sale of our Tropicana property.

Investing Cash Flow

The decrease in net cash used in investing activities of $156.1 million for the three months ended March 31, 2021, compared to the prior year quarter, is primarily due to the completion of our investment in Barstool Sports during the three months ended March 31, 2020.

Capital expenditures decreased by $17.1 million for the three months ended March 31, 2021, as compared to the prior year quarter.

The decrease in capital expenditures in the current year primarily reflects our efforts to reduce maintenance capital expenditures as we mitigate the impact of the COVID-19 pandemic.

The decrease of $119.4 million in net cash used in investing activities for the six months ended June 30, 2021 compared to the same period in the prior year was due to the completion of our investment in Barstool Sports in February of 2020, as well as decrease in capital expenditures, partially offset by $6.2 million in cash consideration related to the Hitpoint acquisition and purchases of gaming licenses and developed technology.

Capital Expenditures

Capital expenditures are accounted for as either project capital (new facilities or expansions) or maintenance (replacement) capital expenditures.

Cash provided by operating activities as well as cash available under our Revolving Credit Facility is used to fund our capital expenditures for three months ended March 31, 2021 and 2020.

Capital expenditures for the three months ended March 31, 2021 and 2020 were $25.7 million and $42.8 million, respectively.

Capital expenditures related to our York and Morgantown development project were $10.9 million for the three months ended March 31, 2021.

Capital expenditures decreased for the three months ended March 31, 2021, as compared to the prior year period, due to continued cautionary spending and uncertainty surrounding the COVID-19 pandemic, which has carried forward to the current year.

Cash provided by operating activities as well as cash available under our Revolving Credit Facility is used to fund our capital expenditures for six months ended June 30, 2021 and 2020.

Capital expenditures for the six months ended June 30, 2021 and 2020 were $64.6 million and $73.7 million, respectively.

Capital expenditures related to our York and Morgantown development project were $25.6 million for the six months ended June 30, 2021.

Capital expenditures have decreased for the six months ended June 30, 2021, as compared to the prior year period, due to continued cautionary spending and uncertainty surrounding the COVID-19 pandemic, which has carried forward to the current year.

We expect that as operations continue to recover, capital expenditures will increase.

Financing Cash Flow

For the three months ended March 31, 2021, net cash provided by financing activities totaled $60.1 million compared to $508.8 million provided in the prior year quarter, reflecting a decrease of $448.7 million, primarily related to net borrowings under our Senior Secured Credit Facilities of $518.3 million during the three months ended March 31, 2020.

For the six months ended June 30, 2021, net cash provided by financing activities totaled $18.8 million compared to $1,155.1 million in net cash provided in the prior year period.

During the six months ended June 30, 2020, we had net borrowings under our Senior Secured Credit Facilities of $540.0 million, net cash proceeds of $322.2 million related to the issuance of our 2.75% Convertible Notes, and net cash proceeds of $331.2 million related to the issuance of the Company's common equity in May 2020, which primarily resulted in a decrease of $1,136.3 million as compared to the current year period.

Debt Issuances, Redemptions and Other Long-term Obligations

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The Company elected to draw down the remaining available funds from its Revolving Credit Facility in order to maintain maximum financial flexibility in light of the COVID-19 pandemic.

On April 14, 2020, the Company entered into a second amendment to its Credit Agreement with its various lenders (the “Second Amendment”) to provide for certain modifications.

During the period beginning on April 14, 2020 and ending on the earlier of (x) the date that is two business days after the date on which the Company delivered a covenant relief period termination notice to the administrative agent and (y) the date on which the administrative agent received a compliance certificate for the quarter ended March 31, 2021 (the “Covenant Relief Period”), the Company does not have to comply with any Maximum Leverage Ratio or Minimum Interest Coverage Ratio (as such terms are defined in the Amended 2017 Credit Agreement).

During the Covenant Relief Period, the Company would be subject to a minimum liquidity covenant that required cash and cash equivalents and availability under its Revolving Credit Facility to be (i) at least $400.0 million through April 30,

(ii) $350.0 million during the period from May 1, 2020 through May 31, 2020;

(iii) $300.0 million during the period from June 1, 2020 through June 30, 2020;

and (iv) $225.0 million during the period from July 1, 2020 through March 31, 2021.

The Second Amendment also amended the financial covenants that are applicable after the Covenant Relief Period to permit the Company to (i) maintain a maximum consolidated total net leverage ratio of 5.50:1.00 for the quarter ended March 31, 2021, 5.00:1.00 for the quarter ended June 30, 2021, 4.75:1.00 for the quarter ended September 30, 2021, 4.50:1.00 for the quarter ended December 31, 2021, and 4.25:1.00 thereafter, tested quarterly on a pro forma trailing twelve month (“PF TTM”) basis;

(ii) maintain a maximum senior secured net leverage ratio of 4.50:1.00 for the quarter ended March 31, 2021, 4.00:1.00 for the quarter ended June 30, 2021, 3.75:1.00 for the quarter ended September 30, 2021, 3.50:1.00 for the quarter ended December 31, 2021, and 3.00:1.00 thereafter, tested quarterly on a PF TTM basis;

and (iii) maintain an interest coverage ratio of 2.50:1.00, tested quarterly on a PF TTM basis.

In addition, the Second Amendment (i) provided that, during the Covenant Relief Period, loans under the Revolving Credit Facility and the Term Loan A Facility shall bear interest at either a base rate or an adjusted LIBOR rate, in each case, plus an applicable margin, in the case of base rate loans, of 2.00%, and in the case of adjusted LIBOR rate loans, of 3.00%;

(ii) provided that, during the Covenant Relief Period, the Company shall pay a commitment fee on the unused portion of the commitments under the Revolving Credit Facility at a rate of 0.50% per annum;

(iii) provided for a 0.75% LIBOR floor applicable to all LIBOR loans under the Senior Secured Credit Facilities;

(iv) carved out COVID-19 related effects from certain terms of the Senior Secured Credit Facilities during the Covenant Relief Period;

and (v) made certain other changes to the covenants and other provisions of the Credit Agreement.

Interest on the Term Loan B-1 Facility was not affected by the Second Amendment.

Upon conclusion of the Covenant Relief Period, loans under the Senior Secured Credit Facilities bear interest at either a base rate or an adjusted LIBOR rate, plus an applicable margin.

The applicable margins for the Revolving Credit Facility and Term Loan A Facility range from 1.25% to 3.00% per annum for LIBOR loans and 0.25% to 2.00% per annum for base rate loans, in each case depending on the Consolidated Total Net Leverage Ratio (as defined in the Amended 2017 Credit Agreement) as of the most recent fiscal quarter.

The Term Loan B-1 Facility continues to bear interest at 2.25% per annum for LIBOR loans and 1.25% per annum for base rate loans.

All loans under the Senior Secured Credit Facilities are subject to a LIBOR “floor” of 0.75%.

In addition, a commitment fee is paid on the unused portion of the commitments under the Revolving Credit Facility at a rate that ranges from 0.20% to 0.50% per annum, depending on the Consolidated Total Net Leverage Ratio as of the most recent fiscal quarter.

In May 2020, the Company completed an offering of $330.5 million aggregate principal amount of 2.75% unsecured convertible notes that mature, unless earlier converted, redeemed or repurchased, on May 15, 2026 (the “Convertible Notes”) at a price of par.

On April 14, 2020, the Company entered into a second amendment to its Credit Agreement with its various lenders (the “Second Amendment”) to provide for certain modifications to financial covenants and interest rates during, and subsequent to a Covenant Relief Period, which concluded on May 7, 2021.

a price of par.

After lender fees and discounts, net proceeds received by the Company were $322.2 million.

Interest on the Convertible Notes is payable on May 15th and November 15th of each year, commencing November 15, 2020.

The Convertible Notes are convertible into shares of the Company’s common stock at an initial conversion price of $23.40 per share, or 42.7350 shares, per $1,000 principal amount of notes, subject to adjustment if certain corporate events occur.

However, in no event will the conversion exceed 55.5555 shares of common stock per $1,000 principal amount of notes.

As of March 31, 2021, the maximum number of shares that could be issued to satisfy the conversion feature of the Convertible Notes is 18,360,815 and the amount by which the Convertible Notes if-converted value exceeded its principal amount was $1,594.4 million.

Starting in the fourth quarter of 2020 and prior to February 15, 2026, at their election, holders of the Convertible Notes may convert outstanding notes if the trading price of the Company’s common stock exceeds 130% of the initial conversion price or, starting shortly after the issuance of the Convertible Notes, if the trading price per $1,000 principal amount of notes is less than 98% of the product of the trading price of the Company’s common stock and the conversion rate then in effect.

The Convertible Notes may, at the Company’s election, be settled in cash, shares of common stock of the Company, or a combination thereof.

The Company has the option to redeem the Convertible Notes, in whole or in part, beginning November 20, 2023.

In addition, the Convertible Notes convert into shares of the Company’s common stock upon the occurrence of certain corporate events that constitute a fundamental change under the indenture governing the Convertible Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase.

In connection with certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate events or during the relevant redemption period for such Convertible Notes.

In February 2021, the Company entered into a financing arrangement providing the Company with upfront cash proceeds while permitting us to participate in future proceeds on certain claims.

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Consistent with an obligor’s accounting under a debt instrument, period interest will be accreted using an effective interest rate of 27.0% and until such time that the claims and related obligation is settled.

The amount included in interest expense related to this obligation was $1.5 million for the three months ended March 31, 2021.

At March 31, 2021, we had $2,488.8 million in aggregate principal amount of indebtedness, including $1,612.0 million outstanding under our Senior Secured Credit Facilities, $330.5 million outstanding under our Convertible Notes, $400.0 million outstanding under our 5.625% senior unsecured notes, and $146.3 million outstanding in other long-term obligations.

The amount included in interest expense related to this obligation was $3.7 million and $5.2 million for the three and six months ended June 30, 2021, respectively.

On July 1, 2021.

the Company completed an offering of $400.0 million aggregate principal amount of 4.125% Senior Unsecured Notes that mature on July 1, 2029 (the “4.125% Notes”).

The 4.125% Notes were issued at par and interest is payable semi-annually on January 1st and July 1st of each year.

The Company intends to use the proceeds from the 4.125% Notes for general corporate purposes.

At June 30, 2021, we had $2,468.3 million in aggregate principal amount of indebtedness, including $1,595.9 million outstanding under our Senior Secured Credit Facilities, $330.5 million outstanding under our Convertible Notes, $400.0 million outstanding under our 5.625% senior unsecured notes, and $141.9 million outstanding in other long-term obligations.

No amounts were drawn on our Revolving Credit Facility.

We have no debt maturing prior to 2023.

As of March 31, 2021 we had conditional obligations under letters of credit issued pursuant to the Senior Secured Credit Facilities with face amounts aggregating to $28.0 million resulting in $672.0 million available borrowing capacity under our Revolving Credit Facility.

Our Senior Secured Credit Facilities and 5.625% Notes require us, among other obligations, to maintain specified financial ratios and to satisfy certain financial tests.

In addition, our Senior Secured Credit Facilities and 5.625% Notes restrict, among other things, our ability to incur additional indebtedness, incur guarantee obligations, amend debt instruments, pay dividends, create liens on assets, make investments, engage in mergers or consolidations, and otherwise restrict corporate activities.

As of June 30, 2021 we had conditional obligations under letters of credit issued pursuant to the Senior Secured Credit Facilities with face amounts aggregating to $27.8 million resulting in $672.2 million available borrowing capacity under our Revolving Credit Facility.

Our Senior Secured Credit Facilities, 5.625% Notes and 4.125% Notes require us, among other obligations, to maintain specified financial ratios and to satisfy certain financial tests.

In addition, our Senior Secured Credit Facilities, 5.625% Notes and 4.125% Notes, restrict, among other things, our ability to incur additional indebtedness, incur guarantee obligations, amend debt instruments, pay dividends, create liens on assets, make investments, engage in mergers or consolidations, and otherwise restrict corporate activities.

Our debt agreements also contain customary events of default, including cross-default provisions that require us to meet certain requirements under the Penn Master Lease and the Pinnacle Master Lease (both of which are defined in Note 9, "Leases" of our u naudited Consolidated Financial Statements ), each with GLPI.

If we are unable to meet our financial covenants or in the event of a cross-default, it could trigger an acceleration of payment terms.

As of March 31, 2021, the Company was in compliance with all required financial covenants.

As of June 30, 2021, the Company was in compliance with all required financial covenants.

The Company believes that it will remain in compliance with all of its required financial covenants for at least the next twelve months following the date of filing this Quarterly Report on Form 10-Q with the SEC.

See Note 8, “Long-term Debt,” in the notes to our unaudited Consolidated Financial Statements for additional information of the Company's debt and other long-term obligations.

Common Stock Offering

On May 14, 2020, the Company completed a public offering of 16,666,667 shares of Penn Common Stock and on May 19, 2020, the underwriters exercised their right to purchase an additional 2,500,000 shares of Penn Common Stock, resulting in an aggregate public offering of 19,166,667 shares of Penn Common Stock.

All of the shares were issued at a public offering price of $18.00 per share, resulting in gross proceeds of $345.0 million, and net proceeds of $331.2 million after underwriter fees and discounts of $13.8 million.

Score Media and Gaming Inc.

The agreement is conditioned upon obtaining theScore shareholders’ approval and is subject to regulatory approval.

Triple Net Leases

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Total payments made to our REIT Landlords, GLPI and VICI, were as follows:

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

(in millions) 2021 2020 2021 2020

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Pinnacle Master Lease (1)

82.1 81.8 163.4 164.3

Meadows Lease (1)

6.2 6.7 12.4 13.5

Margaritaville Lease 5.9 5.9 11.7 11.7

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$ 229.1 $ 216.6 $ 455.1 $ 440.4

(1) During the three and six months ended June 30, 2020, we utilized rent credits to pay $72.1 million, $54.2 million and $4.5 million of rent under the Penn Master Lease, Pinnacle Master Lease and Meadows Lease, respectively.

(2) Rent payable under the Tropicana Lease is nominal.

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Based on our current level of operations, we believe that cash generated from operations and cash on hand, together with amounts available under our Senior Secured Credit Facilities, will be adequate to meet our anticipated obligations under our Triple Net Leases, debt service requirements, capital expenditures and working capital needs for the foreseeable future.

However, our ability to generate sufficient cash flow from operations will depend on a range of economic, competitive and business factors, many of which are outside our control, including the impact of the COVID-19 pandemic.

We cannot be certain:

(i) of the impact of the operating restrictions to accommodate social distancing and health and safety guidelines on our properties and financial results, including the cash generated from operations;

(ii) of the magnitude and duration of the impact of the COVID-19 pandemic (including reoccurrences) on general economic conditions, capital markets, unemployment and our liquidity, operations, supply chain and personnel, including the potential that some or all of our properties may be forced to close or cease operations for a certain period of time;

(i) of the impact of any continuing operating restrictions to accommodate social distancing and health and safety guidelines on our properties and financial results, including the cash generated from operations;

(ii) of the magnitude and duration of the impact of the COVID-19 pandemic (including reoccurrences) on general economic conditions, capital markets, unemployment and our liquidity, operations, supply chain and personnel, including the potential that some or all of our properties may again be forced to close or cease operations for a certain period of time;

(iii) that the U.S.

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and (vi) that future borrowings will be available under our Senior Secured Credit Facilities or otherwise will be available in the credit markets to enable us to service our indebtedness or to make anticipated capital expenditures.

We caution you that the trends seen at our reopened properties, such as higher spend per trip and increased visitation, may not continue.

We caution you that the trends seen at our reopened properties, such as strong visitation and increased length of play, may not continue.

In addition, while we anticipated that a significant amount of our future growth would come through the pursuit of opportunities within other distribution channels, such as retail and online sports betting, social gaming, retail gaming, and iGaming;

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Risk Factors" of this Form 10-Q and Part I, Item 1A.

“Risk Factors” of the Company’s Form 10-K for the year ended December 31, 2020 for a discussion of additional risks related to the Company’s capital structure.

“Risk Factors” of the

Company’s Form 10-K for the year ended December 31, 2020 for a discussion of additional risks related to the Company’s capital structure.

We have historically maintained a capital structure comprised of a mix of equity and debt financing.

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A complete discussion of our critical accounting estimates is included in our Form 10-K for the year ended December 31, 2020.

There have been no significant changes in our critical accounting estimates during the three months ended March 31, 2021.

There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2021.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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Specifically, forward-looking statements include, but are not limited to, statements regarding:

continued demand for the gaming properties that have opened and the possibility that the Company’s gaming properties may be required to close again in the future due to COVID-19;

continued demand for the gaming properties that have reopened and the possibility that the Company’s gaming properties may be required to close again in the future due to COVID-19;

the impact of COVID-19 on general economic conditions, capital markets, unemployment, and the Company’s liquidity, operations, supply chain and personnel;

the potential benefits and expected timing of the Perryville transaction with Gaming and Leisure Properties, Inc.;

the potential benefits of the Perryville transaction with Gaming and Leisure Properties, Inc.;

the potential benefits of the Hitpoint transaction;

the Company’s estimated cash burn and future liquidity, future revenue and Adjusted EBITDAR, including from the Company’s iGaming business in Pennsylvania and Michigan;

the continued success of Barstool Sports in Pennsylvania, Michigan, Illinois and in additional states in the future;

the expected benefits and potential challenges of the investment in Barstool Sports, including the anticipated benefits for the Company’s online and retail sports betting, iGaming and social casino products;

the expected financial returns from the transaction with Barstool Sports;

the expected benefits and potential challenges of the investment in Barstool Sports;

the expected launch of the Barstool-branded mobile sports betting product in future states and its future revenue and profit contributions;

the Company’s expectations of future results of operations and financial condition, including margins;

the Company’s expectations for its properties and the potential benefits of the cashless, cardless and contactless (“3Cs”) technology;

the Company’s development projects or its iGaming initiatives;

the timing, cost and expected impact of planned capital expenditures on the Company’s results of operations;

the Company’s expectations with regard to the impact of competition;

the anticipated opening dates of the Company’s retail sportsbooks in future states and its proposed Pennsylvania Category 4 casinos in York and Berks counties;

the anticipated opening dates of the Company’s retail sportsbooks in future states;

the Company’s expectations with regard to acquisitions, potential divestitures and development opportunities, as well as the integration of and synergies related to any companies the Company have acquired or may acquire;

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the Company’s expectations with regard to the impact of competition in online sports betting, iGaming and retail/mobile sportsbooks as well as the potential impact of this business line on the Company’s existing businesses;

the performance of the Company’s partners in online sports betting, iGaming and retail/mobile sportsbooks, including the risks associated with any new business, the actions of regulatory, legislative, executive or judicial decisions at the federal, state or local level with regard to online sports betting, iGaming and retail/mobile sportsbooks and the impact of any such actions;

and the Company’s expectations regarding economic and consumer conditions.

and the performance of the Company’s partners in online sports betting, iGaming and retail/mobile sportsbooks, including the risks associated with any new business, the actions of regulatory, legislative, executive or judicial decisions with regard to online sports betting, iGaming and retail/mobile sportsbooks and the impact of any such actions.

Such statements are all subject to risks, uncertainties and changes in circumstances that could significantly affect the Company’s future financial results and business.

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(b) industry, market, economic, political, regulatory and health conditions;

(c) disruptions in operations from data protection breaches, cyberattacks, extreme weather conditions, medical epidemics or pandemics such as the COVID-19 (and reoccurrences), and other natural or man-made disasters or catastrophic events;

(c) disruptions in operations from data protection breaches, cyberattacks, extreme weather conditions, medical epidemics or pandemics such as the COVID-19, and other natural or man-made disasters or catastrophic events;

(d) the Company’s ability to access additional capital on favorable terms or at all;

(e) the Company’s ability to remain in compliance with the financial covenants of its debt obligations;

(f) the consummation of the Perryville transaction with GLPI is subject to various conditions, including third-party agreements and approvals, and accordingly may be delayed or may not occur at all;

(g) actions to reduce costs and improve efficiencies to mitigate losses as a result of the COVID-19 pandemic that could negatively impact guest loyalty and the Company’s ability to attract and retain employees;

(h) the outcome of any legal proceedings that may be instituted against the Company or its directors, officers or employees;

(i) the impact of new or changes in current laws, regulations, rules or other industry standards;

(j) the ability of the Company’s operating teams to drive revenue and margins;

(k) the impact of significant competition from other gaming and entertainment operations (including from Native American casinos, historic racing machines, state sponsored i-lottery products and VGTs in or adjacent to states in which we operate);

(l) the Company’s ability to obtain timely regulatory approvals required to own, develop and/or operate its properties, or other delays, approvals or impediments to completing its planned acquisitions or projects, construction factors, including delays, and increased costs;

(m) the passage of state, federal or local legislation (including referenda) that would expand, restrict, further tax, prevent or

negatively impact operations in or adjacent to the jurisdictions in which the Company does or seek to do business (such as a smoking ban at any of its properties or the award of additional gaming licenses proximate to its properties, as recently occurred with legislation in Illinois and Pennsylvania);

(n) the effects of local and national economic, credit, capital market, housing, and energy conditions on the economy in general and on the gaming and lodging industries in particular;

(o) the activities of our competitors (commercial and tribal) and the rapid emergence of new competitors (traditional, internet, social, sweepstakes based and VGTs in bars and truck stops);

(p) increases in the effective rate of taxation for any of our operations or at the corporate level;

(q) our ability to identify attractive acquisition and development opportunities (especially in new business lines) and to agree to terms with, and maintain good relationships with partners and municipalities for such transactions;

(r) the costs and risks involved in the pursuit of such opportunities and our ability to complete the acquisition or development of, and achieve the expected returns from, such opportunities;

(s) the impact of weather, including flooding, hurricanes and tornadoes;

(t) changes in accounting standards;

(u) the risk of failing to maintain the integrity of our information technology infrastructure and safeguard our business, employee and customer data (particularly as our iGaming division grows);

(v) with respect to our iGaming and sports betting endeavors, the impact of significant competition from other companies for online sports betting, iGaming and sportsbooks, the Company’s ability to achieve the expected financial returns related to its investment in Barstool Sports, the Company’s ability to retain key talent, its ability to obtain timely regulatory approvals required to own, develop and/or operate sportsbooks may be delayed and there may be impediments and increased costs to launching the online betting, iGaming and sportsbooks, including delays, and increased costs, intellectual property and legal and regulatory challenges, as well as the Company’s ability to successfully develop innovative products that attract and retain a significant number of players in order to grow its revenues and earnings, its ability to establish key partnerships, its ability to generate meaningful returns and the risks inherent in any new business;

(w) with respect to the Company’s proposed Pennsylvania Category 4 casinos in York and Berks counties, risks relating to construction, and its ability to achieve its expected budgets, timelines and investment returns, including the ultimate location of other gaming properties in the Commonwealth of Pennsylvania;

and (x) other factors as discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and Current Reports on Form 8-K, each as filed with the U.S.

(f) actions to reduce costs and improve efficiencies to mitigate losses as a result of the COVID-19 pandemic that could negatively impact

guest loyalty and the Company’s ability to attract and retain employees;

(g) the outcome of any legal proceedings that may be instituted against the Company or its directors, officers or employees;

(h) the impact of new or changes in current laws, regulations, rules or other industry standards;

(i) the ability of the Company’s operating teams to drive revenue and margins;

(j) the impact of significant competition from other gaming and entertainment operations;

(k) the Company’s ability to obtain timely regulatory approvals required to own, develop and/or operate its properties, or other delays, approvals or impediments to completing its planned acquisitions or projects, construction factors, including delays, and increased costs;

(l) the passage of state, federal or local legislation that would expand, restrict, further tax, prevent or negatively impact operations in or adjacent to the jurisdictions in which the Company does or seek to do business;

(m) the effects of local and national economic, credit, capital market, housing, and energy conditions on the economy in general and on the gaming and lodging industries in particular;

(n) our ability to identify attractive acquisition and development opportunities (especially in new business lines) and to agree to terms with, and maintain good relationships with partners and municipalities for such transactions;

(o) the costs and risks involved in the pursuit of such opportunities and our ability to complete the acquisition or development of, and achieve the expected returns from, such opportunities;

(p) the risk of failing to maintain the integrity of our information technology infrastructure and safeguard our business, employee and customer data (particularly as our iGaming division grows);

(q) with respect to new casinos, risks relating to construction, and its ability to achieve its expected budgets, timelines and investment returns;

(r) the Company may not be able to achieve the anticipated financial returns from the acquisition of Score Media & Gaming, Inc.

(“theScore”), including due to fees, costs and taxes in connection with the integration of theScore and expansion of its betting and content platform;

(s) the closing of the acquisition of theScore may be delayed or may not occur at all, for reasons beyond the Company’s control;

(t) the requirement to satisfy the closing conditions in the agreement with theScore, including receipt of regulatory approvals and the approval of shareholders of theScore;

(u) there is significant competition in the interactive gaming market;

(v) potential adverse reactions or changes to business or regulatory relationships resulting from the announcement or completion of the acquisition of theScore;

(w) the ability of the Company or theScore to retain and hire key personnel;

(x) the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the Company and theScore to terminate the agreement between the companies;

(y) the outcome of any legal proceedings that may be instituted against the Company, theScore or their respective directors, officers or employees;

and (z) other factors as discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the U.S.

Securities and Exchange Commission.

The Company does not intend to update publicly any forward-looking statements except as required by law.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis