Item 1. Business
ITEM 1. BUSINESS
Overview
PENN Entertainment, Inc., together with its subsidiaries (“PENN,” the “Company,” “we,” “our,” or “us”), is North America’s leading provider of integrated entertainment, sports content, and casino gaming experiences. As of December 31, 2023, PENN operated 43 properties in 20 states, online sports betting in 18 jurisdictions and iCasino in five jurisdictions, under a portfolio of well-recognized brands including Hollywood Casino ® , L’Auberge ® , ESPN BET™, and theScore Bet Sportsbook and Casino ® . In August 2023, PENN entered into a transformative, exclusive long-term strategic alliance with ESPN, Inc. and ESPN Enterprises, Inc. (together, “ESPN”) relating to online sports betting within the United States. PENN’s ability to leverage the leading sports media brands in the United States (ESPN) and Canada (theScore) will position us to significantly expand our digital footprint and efficiently grow our customer ecosystem. This highly differentiated strategy, which is focused on organic cross-sell opportunities, is reinforced by our market-leading retail casinos, sports media assets, and technology, including a proprietary state-of-the-art, fully integrated digital sports and iCasino betting platform and an in-house iCasino content studio. PENN’s portfolio is further bolstered by our industry-leading PENN Play TM customer loyalty program, which offers our over 29 million members a unique set of rewards and experiences across business channels.
Reportable Segments
We have five reportable segments: Northeast, South, West, Midwest, and Interactive. Our gaming and racing properties are grouped by geographic location, and each is viewed as an operating segment with the exception of our two properties in Jackpot, Nevada, which are viewed as one operating segment. We consider our combined Video Gaming Terminal (“VGT”) operations, by state, to be separate operating segments. Interactive includes all of our online sports betting, online casino/iCasino, and social gaming (collectively referred to as “online gaming”) operations, management of retail sports betting, media, and the operating results of Barstool Sports, Inc. (“Barstool” or “Barstool Sports”) subsequent to the Barstool Acquisition on February 17, 2023 and prior to the Barstool divestiture on August 8, 2023 (as defined and discussed in Note 6, “Acquisitions and Dispositions” in the notes to our Consolidated Financial Statements). See Note 18, “Segment Information” and Note 12, “Leases” in the notes to our Consolidated Financial Statements for further segment and lease structure information, respectively.
Retail Operations
As of December 31, 2023, we owned, managed, or had ownership interests in 43 gaming and racing properties in 20 states. In addition, we offer live sports betting at our properties in 13 states.
Operating Properties
The table below summarizes certain features of the properties owned, operated, or managed by us as of December 31, 2023, by reportable segment (all area and capacity metrics are approximate):
Location Real Estate Assets Lease or Ownership Structure Type of Facility Gaming Square Footage Gaming Machines Table Games (1)
Hotel Rooms
Northeast segment
Ameristar East Chicago (2)
East Chicago, IN Pinnacle Master Lease Dockside gaming 64,000 1,101 43 288
Hollywood Casino Bangor
Bangor, ME AR PENN Master Lease Land-based gaming/racing 31,750 666 14 152
Hollywood Casino at Charles Town Races (2)
Charles Town, WV AR PENN Master Lease Land-based gaming/racing 115,000 1,913 64 153
Hollywood Casino Columbus (2)(3)
Columbus, OH 2023 Master Lease Land-based gaming 180,500 1,676 20 —
Hollywood Casino at Greektown (2)
Detroit, MI Greektown Lease Land-based gaming 100,000 2,162 63 400
Hollywood Casino Lawrenceburg (2)(4)
Lawrenceburg, IN AR PENN Master Lease Dockside gaming 149,500 1,295 47 463
Hollywood Casino Morgantown (2)(5)
Morgantown, PA Morgantown Lease Land-based gaming 81,000 717 26 —
Hollywood Casino at PENN National Race Course (2)
Grantville, PA AR PENN Master Lease Land-based gaming/racing 94,371 1,750 54 —
Hollywood Casino Perryville (2)(3)
Perryville, MD 2023 Master Lease Land-based gaming 34,500 754 17 —
Hollywood Casino at The Meadows (2)(3)
Washington, PA 2023 Master Lease Land-based gaming/racing 125,000 1,962 91 —
Hollywood Casino Toledo (2)(3)
Toledo, OH 2023 Master Lease Land-based gaming 135,000 1,760 46 —
Hollywood Casino York (2)
York, PA Operating Lease (not with REIT Landlord) Land-based gaming 80,000 608 33 —
Hollywood Gaming at Dayton Raceway (2)
Dayton, OH AR PENN Master Lease Land-based gaming/racing 40,700 1,033 — —
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Hollywood Gaming at Mahoning Valley Race Course (2)
Youngstown, OH AR PENN Master Lease Land-based gaming/racing 54,000 1,032 — —
Marquee by PENN (6)
Pennsylvania N/A Land-based gaming N/A 150 — —
Plainridge Park Casino (2)
Plainville, MA Pinnacle Master Lease Land-based gaming/racing 50,225 934 — —
South segment
1 st Jackpot Casino (2)
Tunica, MS AR PENN Master Lease Dockside gaming 46,535 687 9 —
Ameristar Vicksburg (2)
Vicksburg, MS Pinnacle Master Lease Dockside gaming 70,926 937 25 148
Boomtown Biloxi (2)
Biloxi, MS AR PENN Master Lease Dockside gaming 34,500 562 22 —
Boomtown Bossier City (2)
Bossier City, LA Pinnacle Master Lease Dockside gaming 30,000 644 12 187
Boomtown New Orleans (2)
New Orleans, LA Pinnacle Master Lease Dockside gaming 30,000 803 26 150
Hollywood Casino Gulf Coast (2)
Bay St. Louis, MS AR PENN Master Lease Land-based gaming 51,000 766 28 291
Hollywood Casino Tunica (2)
Tunica, MS AR PENN Master Lease Dockside gaming 54,000 781 10 494
L’Auberge Baton Rouge (2)
Baton Rouge, LA Pinnacle Master Lease Dockside gaming 71,500 962 54 205
L’Auberge Lake Charles (2)
Lake Charles, LA Pinnacle Master Lease Dockside gaming 71,200 1,250 85 995
Margaritaville Resort Casino (2)
Bossier City, LA Margaritaville Lease Dockside gaming 30,000 956 50 395
West segment
Ameristar Black Hawk (2)
Black Hawk, CO Pinnacle Master Lease Land-based gaming 56,000 883 39 536
Cactus Petes and Horseshu (2)
Jackpot, NV Pinnacle Master Lease Land-based gaming 29,000 642 14 416
M Resort Spa Casino (2)(3)
Henderson, NV 2023 Master Lease Land-based gaming 96,000 959 37 390
Zia Park Casino Hobbs, NM AR PENN Master Lease Land-based gaming/racing 18,000 713 — 154
Midwest segment
Ameristar Council Bluffs (2)(7)
Council Bluffs, IA Pinnacle Master Lease Dockside gaming 35,000 1,295 20 444
Argosy Casino Alton (2)(8)
Alton, IL AR PENN Master Lease Dockside gaming 23,000 503 9 —
Argosy Casino Riverside Riverside, MO AR PENN Master Lease Dockside gaming 56,000 1,098 37 258
Hollywood Casino Aurora (2)(3)
Aurora, IL 2023 Master Lease Dockside gaming 53,000 831 27 —
Hollywood Casino Joliet (2)(3)
Joliet, IL 2023 Master Lease Dockside gaming 50,000 952 26 100
Hollywood Casino at Kansas Speedway (2)(9)
Kansas City, KS Owned - joint venture Land-based gaming 95,000 1,553 35 —
Hollywood Casino St. Louis Maryland Heights, MO AR PENN Master Lease Dockside gaming 120,000 1,546 45 502
Prairie State Gaming (6)
Illinois N/A Land-based gaming N/A 2,338 — —
River City Casino St. Louis, MO Pinnacle Master Lease Dockside gaming 90,000 1,620 44 200
Other
Freehold Raceway (10)
Freehold, NJ Owned - joint venture Standardbred racing — — — —
Retama Park Racetrack (11)
Selma, TX None - Managed Thoroughbred racing — — — —
Sam Houston Race Park Houston, TX Owned Thoroughbred racing — — — —
Sanford-Orlando Kennel Club (12)
Longwood, FL Owned Simulcasting/restaurant — — — —
Valley Race Park (13)
Harlingen, TX Owned Greyhound racing — — — —
2,546,207 42,794 1,172 7,321
(1) Excludes poker tables.
(2) Property offers a sportsbook for live sports betting.
(3) Property transferred to 2023 Master Lease (as defined in Note 12, “Leases,” in the notes to our Consolidated Financial Statements), effective January 1, 2023.
(4) Includes 168 rooms at our hotel and event center located less than a mile from the gaming facility.
(5) Upon termination of the Morgantown Lease, ownership of the constructed building and all tenant improvements will transfer from the Company to Gaming & Leisure Properties, Inc.
(6) VGT route operations.
(7) Includes 284 rooms operated by a third-party and located on land leased by us and subleased to such third-party.
(8) The riverboat is owned by us and not subject to the AR PENN Master Lease.
(9) Pursuant to a joint venture with NASCAR Holdings LLC.
(10) Pursuant to a joint venture with Greenwood Limited Jersey, Inc., a subsidiary of Greenwood Racing, Inc.
(11) Pursuant to a management contract with Retama Development Corporation.
(12) Simulcast racing operations.
(13) In March 2020 Valley Race Park closed due to COVID-19 and remains non-operational.
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Northeast Segment
Ameristar East Chicago is located less than 25 miles from downtown Chicago, Illinois and offers guests a gaming and entertainment experience in the Chicago metropolitan area. In addition to gaming amenities, the property features a full-service hotel, a sportsbook for live sports betting, a fitness center, dining venues, and a lounge.
Hollywood Casino Bangor is located less than five miles from the Bangor airport in Maine. The property features slot machines, table games, a hotel with 5,100 square feet of meeting and multipurpose space, and dining and entertainment options. Bangor Raceway, which is adjacent to the property, is located at historic Bass Park and includes a one-half mile standardbred racetrack and a 12,000 square foot grandstand capable of seating 3,500 patrons.
Hollywood Casino at Charles Town Races is located within approximately an hour drive of the Baltimore, Maryland and Washington, D.C. markets. In addition to a hotel, slot machines, table games, and poker tables, the property includes a sportsbook for live sports betting, as well as a variety of dining options. The complex also features live thoroughbred racing at a three-quarters mile all-weather lighted thoroughbred racetrack with a 3,000-seat grandstand and simulcast wagering.
Hollywood Casino Columbus is a Hollywood-themed casino located in Columbus, Ohio. It features slot machines, table games, poker tables, and a sportsbook for live sports betting, as well as multiple food and beverage outlets, and an entertainment lounge.
Hollywood Casino at Greektown is located in the Greektown district of Detroit, Michigan, and is one of four casino hotels in the Detroit-Windsor area. In addition to slot machines, table games, poker tables, and a sportsbook for live sports betting, the property features a 30-story hotel, several food and beverage options from casual to fine dining, as well as 10,000 square feet of convention and banquet space.
Hollywood Casino Lawrenceburg is a Hollywood-themed casino riverboat located along the Ohio River in Lawrenceburg, Indiana, approximately 15 miles west of Cincinnati, Ohio. In addition to slot machines, table games, and poker tables, the riverboat features a sportsbook for live sports betting, as well as a variety of dining options. The hotel and event center, located within one mile from the casino, includes 18,000 square feet of multipurpose space and 19,500 square feet of ballroom and meeting space.
Hollywood Casino Morgantown is located less than an hour drive west of Philadelphia, Pennsylvania. The property features an outdoor gaming and entertainment area, a sportsbook for live sports betting, slot machines, table games, and multiple food and beverage outlets.
Hollywood Casino at PENN National Race Course is located 15 miles northeast of Harrisburg, Pennsylvania. This gaming facility also includes a variety of dining and entertainment options, as well as a sportsbook for live sports betting and a viewing area for live racing. The property includes a one-mile all-weather lighted thoroughbred racetrack and a seven-eighths mile turf track.
Hollywood Casino Perryville is a Hollywood-themed casino located near the Susquehanna River in Perryville, Maryland, approximately 45 miles east of Baltimore, Maryland. It features slot machines, table games, poker tables, and a sportsbook for live sports betting, as well as a variety of dining options.
Hollywood Casino at The Meadows is located in Washington, Pennsylvania, approximately 25 miles south of Pittsburgh, Pennsylvania. In addition to gaming amenities, the property offers a sportsbook for live sports betting, several dining options, as well as an event and banquet center, a simulcast betting parlor, a five-eighths mile harness racetrack and a bowling alley.
Hollywood Casino Toledo is a Hollywood-themed casino, located on the bank of the Maumee River in Toledo, Ohio. The property features slot machines, table games, poker tables, and a sportsbook for live sports betting, as well as multiple food and beverage outlets and an entertainment lounge.
Hollywood Casino York is a casino located within the York Galleria Mall, approximately an hour drive north of Baltimore, Maryland. It features slot machines, table games, and a sportsbook for live sports betting, as well as casual dining options.
Hollywood Gaming at Dayton Raceway is a Hollywood-themed casino and raceway located in Dayton, Ohio. It features video lottery terminals, a five-eighths mile standardbred racetrack, a sportsbook for live sports betting, as well as various restaurants and bars, amongst other amenities.
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Hollywood Gaming at Mahoning Valley Race Course is a Hollywood-themed casino and raceway located in Youngstown, Ohio featuring video lottery terminals and a one-mile thoroughbred racetrack. The property also includes a sportsbook for live sports betting, various restaurants, and bars amongst other amenities.
Marquee by PENN is our licensed VGT route operator with a network of 28 truck stop establishments in Pennsylvania.
Plainridge Park Casino is located 20 miles southwest of the Boston beltway just off interstate 95 in Plainville, Massachusetts. In addition to gaming offerings and a sportsbook for live sports betting, Plainridge Park Casino features various restaurants and bars along with a five-eighths mile live harness racing facility with a two-story clubhouse for simulcast operations, special events, and live racing viewing.
South Segment
1 st Jackpot Casino is the closest Tunica-area casino to downtown Memphis, Tennessee. It features slot machines, table games, a café, a sportsbook for live betting, and a live entertainment venue.
Ameristar Vicksburg, which is the largest dockside casino in central Mississippi, is located along the Mississippi River approximately 45 miles west of Mississippi’s largest city, Jackson. In addition to gaming amenities, the property features a hotel, multiple dining and bar facilities, 1,800 square feet of meeting and event space, a sportsbook for live sports betting, and an RV park.
Boomtown Biloxi, located in Biloxi Mississippi, offers slot machines, table games, poker tables, and a sportsbook for live sports betting, as well as two distinct dining options. The property also includes a recreational vehicle park and a 3,600 square foot event center and board room.
Boomtown Bossier City features a hotel adjoining a dockside riverboat casino located less than one mile from the Louisiana Boardwalk. The property offers a sportsbook for live sports betting, a variety of dining options from a high-end steakhouse to casual dining restaurants, and 1,500 square feet of meeting and conference space.
Boomtown New Orleans is located in the West Bank area across the Mississippi River, approximately 15 minutes from the French Quarter of New Orleans, Louisiana. In addition to gaming amenities and a sportsbook for live sports betting, the property also features a five-story hotel, several restaurants, and over 14,000 square feet of meeting and conference space.
Hollywood Casino Gulf Coast is located in Bay St. Louis, Mississippi and features slot machines, table games, poker tables, and a sportsbook for live sports betting. The property also features a golf course, various dining options, an RV park, and a marina amongst other amenities. The waterfront hotel includes a 10,000 square foot ballroom and six separate meeting rooms offering more than 13,000 square feet of meeting space.
Hollywood Casino Tunica is a Hollywood-themed casino located less than 10 miles from Tunica County River Park. In addition to gaming offerings, it features a sportsbook for live sports betting, a hotel, a 123-space recreational vehicle park, various dining and bar options, and banquet and meeting facilities.
L’Auberge Baton Rouge is located approximately ten miles southeast of downtown Baton Rouge, Louisiana. The property features a 12-story hotel, slots, table games, poker, a sportsbook for live sports betting, a variety of dining choices, and 13,000 square feet of meeting and event space.
L’Auberge Lake Charles offers one of the closest full-scale casino hotel facilities to Houston, Texas, as well as to the Austin, Texas and San Antonio, Texas metropolitan areas. The location is approximately 140 miles from Houston and approximately 300 miles and 335 miles from Austin and San Antonio, respectively. In addition to gaming amenities and a sportsbook for live sports betting, the property features several dining outlets, a golf course, a full-service spa, and more than 26,000 square feet of meeting and event space.
Margaritaville Resort Casino is one of the premier gaming, lodging, dining, and entertainment experiences in Northern Louisiana. The property provides an island-style theme and includes gaming amenities, a sportsbook for live sports betting, a 15,000 square foot 1,000-seat theater, and 9,500 square feet of meeting space.
West Segment
Ameristar Black Hawk is located in the center of the Black Hawk gaming district, approximately 40 miles west of Denver, Colorado. The resort features slot machines, table games, and a sportsbook for live sports betting. In addition to gaming
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amenities, the resort features a hotel, a full-service day spa, several dining outlets, a live entertainment bar, and 15,000 square feet of meeting and event space.
Cactus Petes and Horseshu (collectively, “the Jackpot Properties”) are located just south of the Idaho border in Jackpot, Nevada. The Jackpot Properties collectively feature two hotels, several dining options, a 4,000 seat amphitheater, a showroom, a live entertainment lounge, a sportsbook for live sports betting, and meeting and event facilities.
M Resort Spa Casino , located approximately ten miles from the Las Vegas strip in Henderson, Nevada, is situated at the southeast corner of Las Vegas Boulevard and St. Rose Parkway. The resort features slot machines, table games, and a sportsbook for live sports betting, as well as a hotel and a variety of dining and bar options. The property also features more than 60,000 square feet of meeting and conference space, a spa and fitness center, and a 100,000 square foot event center.
Zia Park Casino is located in Hobbs, New Mexico, and features slot machines, a hotel, restaurants, a one-mile quarter horse/thoroughbred racetrack with live racing from September to December, and a year-round simulcast parlor.
Midwest Segment
Ameristar Council Bluffs is located across the Missouri River from Omaha, Nebraska and includes the largest riverboat in Iowa. In addition to gaming amenities, the property also features a hotel, a fitness center, several dining facilities, a sports bar featuring a sportsbook with live sports betting, and 5,000 square feet of convention and meeting space.
Argosy Casino Alton is located on the Mississippi River in Alton, Illinois, approximately 20 miles northeast of downtown St. Louis, Missouri. Argosy Casino Alton is a three-deck riverboat featuring slot machines, table games, and a sportsbook for live betting. Argosy Casino Alton includes an entertainment pavilion and features a deli, a sportsbook viewing lounge and a 475-seat main showroom.
Argosy Casino Riverside is located on the Missouri River, approximately five miles from downtown Kansas City. In addition to gaming amenities, this Mediterranean-themed property features a nine-story hotel, a spa, an entertainment facility featuring various food and beverage areas, a VIP lounge and a sports/entertainment lounge and 19,000 square feet of banquet/conference facilities.
Hollywood Casino Aurora is located in Aurora, Illinois, the second largest city in Illinois, approximately 35 miles west of Chicago. This single-level dockside casino offers guests gaming amenities, including a poker room and a sportsbook for live sports betting, and features multiple dining and bar options.
Hollywood Casino Joliet is located on the Des Plaines River in Joliet, Illinois, approximately 40 miles southwest of Chicago. The complex includes a barge-based casino which provides guests with two levels of gaming experience, as well as a land-based pavilion with several dining and entertainment options. In addition, the property includes a sportsbook for live sports betting, a hotel, 4,600 square feet of meeting space, and an 80-space RV park.
Hollywood Casino at Kansas Speedway , our 50% joint venture with NASCAR, is located in Kansas City, Kansas. It features slot machines, table games, poker tables, and a sportsbook for live sports betting, and offers a variety of dining and entertainment facilities and a meeting room.
Hollywood Casino St. Louis is located adjacent to the Missouri River directly off I-70 and approximately 22 miles northwest of downtown St. Louis, Missouri. The facility features slot machines, table games, poker tables, a hotel, and a variety of dining and entertainment venues.
Prairie State Gaming is our licensed VGT route operator in Illinois across a network of over 423 bar and/or retail gaming establishments in seven distinct geographic areas throughout Illinois.
River City Casino is located in the St. Louis, Missouri metropolitan area, just south of the confluence of the Mississippi River and the River des Peres in the south St. Louis community of Lemay, Missouri. River City Casino features a hotel, multiple dining outlets, an entertainment lounge, and over 10,000 square feet of conference space.
Interactive Operations
PENN Interactive operates our online gaming portfolio which includes: (i) ESPN BET, an online sportsbook operating in select U.S. jurisdictions; (ii) Hollywood Casino, an iCasino operating in select U.S. jurisdictions within the ESPN BET website and mobile application; (iii) theScore Bet, an online sportsbook and iCasino operating in Ontario, Canada; and (iv) PENN Game Studios, our in-house iCasino and social gaming content studio. ESPN BET, Hollywood Casino, and theScore Bet
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leverage PENN’s proprietary, state-of-the-art player account management and online gaming platform. In addition, PENN Interactive also operates our digital sports media business, theScore (defined below). As of the issuance date of this report, PENN Interactive operates online sportsbooks in 18 jurisdictions and iCasino in five jurisdictions throughout the U.S. and Canada.
Previously, PENN Interactive’s online gaming business included Barstool Sportsbook & Casino (“Barstool Sportsbook”), an online sportsbook and casino. On November 14, 2023, the Barstool Sportsbook brand was discontinued with PENN Interactive re-launching its U.S. online sportsbook product as ESPN BET and its U.S. iCasino product as Hollywood Casino.
In addition, PENN Interactive supports operations for retail sportsbooks across the Company’s portfolio of casinos, including, as of December 31, 2023, 30 retail sportsbooks located at the Company’s properties in Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Ohio, Pennsylvania, and West Virginia. As of January 2023, PENN Interactive also began providing retail sportsbook management services to select casino operators outside our Company’s portfolio.
Further, through PENN’s portfolio of properties, PENN Interactive has entered into multi-year agreements with other gaming operators for online sports betting and iCasino market access in several states. Pursuant to these agreements, as of December 31, 2023, such online sports betting and online casino operators have operations in Indiana, Louisiana, Massachusetts, Ohio, Pennsylvania, and West Virginia.
theScore. On October 19, 2021, we completed the acquisition of Score Media and Gaming, Inc. (“theScore”) for a purchase price of approximately $2.1 billion. The acquisition provided us with the technology, resources, and audience reach to accelerate our media and sports betting strategy across North America.
Barstool . PENN Entertainment, Inc., through a wholly-owned subsidiary, held a 36% equity interest in Barstool. Under this strategic relationship, Barstool exclusively promoted the Company’s sports betting and iCasino products, including the Barstool Sportsbook website and mobile application, as well as our retail gaming and racing properties to its national audience, and granted us the sole right to utilize the Barstool brand for all of our online and retail sports betting and iCasino products. On February 17, 2023, we completed the acquisition of all of the outstanding shares of common stock of Barstool not already owned by us for a cash consideration of approximately $315.3 million and the issuance of 2,442,809 shares of our common stock to certain former stockholders of Barstool. Upon the completion of the Barstool Acquisition, Barstool became an indirect wholly owned subsidiary of PENN.
In connection with PENN’s decision to rebrand our online sports betting business from Barstool Sportsbook to ESPN BET, we entered into a stock purchase agreement with David Portnoy on August 8, 2023 (the “Barstool SPA”). Pursuant to the Barstool SPA, PENN sold 100% of the outstanding shares of Barstool to David Portnoy in exchange for nominal cash consideration (one dollar) and certain non-compete and other restrictive covenants.
Other
Freehold Raceway. Through our joint venture in Pennwood Racing, Inc. (“Pennwood”), we own 50% of Freehold Raceway. The property features a one-half mile standardbred racetrack and a 118,000 square foot grandstand. In addition, through our Pennwood joint venture, we own 50% of a leased off-track wagering (“OTW”) facility in Toms River, New Jersey, and operate another OTW facility, which we constructed, in Gloucester Township, New Jersey.
Retama Park Racetrack. We have a management contract with Retama Development Corporation, a local government corporation of the City of Selma, Texas, to manage the day-to-day operations of Retama Park Racetrack. In addition, we own 1.0% of the equity of Retama Nominal Holder, LLC, which holds a nominal interest in the racing license used to operate Retama Park Racetrack. Additionally, we own a 75.5% interest in Pinnacle Retama Partners, LLC, which owns the contingent gaming rights that may arise if gaming under the existing racing license becomes legal in Texas in the future.
Sam Houston Race Park and Valley Race Park. Sam Houston Race Park, which is located 15 miles northwest from downtown Houston, Texas along Beltway 8, hosts thoroughbred and quarter horse racing and offers daily simulcast operations, as well as hosts various special events, private parties, and meetings throughout the year. Valley Race Park is a 91,000 square foot property that previously conducted greyhound racing and simulcasting. Valley Race Park has not been open since March 2020. We acquired the remaining 50% of these properties, as well as a license for a racetrack in Manor, Texas, just outside of Austin, on August 1, 2021.
Sanford-Orlando Kennel Club. The facility and parking lot area is owned by the Company and operates a restaurant and offers year-round simulcast operations.
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Triple Net Leases
The majority of the real estate assets (i.e., land and buildings) used in our operations are subject to triple net master leases, the most significant of which are with Gaming and Leisure Properties, Inc. (Nasdaq: GLPI) (“GLPI”), a real estate investment trust (“REIT”), and include the AR PENN Master Lease, 2023 Master Lease, PENN Master Lease (prior to January 1, 2023), and Pinnacle Master Lease (as such terms are defined below and collectively referred to as the “Master Leases”). As of December 31, 2023 , in addition to the Master Leases, three individual gaming facilities used in our operations are subject to individual triple net leases. Under triple net leases, in addition to lease payments for the real estate assets, the Company is required to pay the following, among other things: (i) all facility maintenance; (ii) all insurance required in connection with the leased properties and the business conducted on the leased properties; (iii) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (iv) all tenant capital improvements; and (v) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
The following summaries of the Master Leases are qualified in their entirety by reference to either the AR PENN Master Lease, the 2023 Master Lease, PENN Master Lease (prior to January 1, 2023), or the Pinnacle Master Lease, as applicable, all of which are incorporated by reference in the exhibits to this Annual Report on Form 10-K.
AR PENN Master Lease
Prior to the effective date of the AR PENN Master Lease (as defined and discussed below), the Company leased real estate assets associated with 19 of the gaming facilities used in its operations via a triple net master lease with GLPI (the “PENN Master Lease”), which became effective November 1, 2013. The PENN Master Lease had an initial term of 15 years with four subsequent five-year renewal periods on the same terms and conditions, exercisable at the Company’s option.
On February 21, 2023, the Company and GLPI entered into an agreement to amend and restate the PENN Master Lease (the “AR PENN Master Lease”), effective January 1, 2023, to (i) remove the land and buildings for Hollywood Casino Aurora (“Aurora”), Hollywood Casino Joliet (“Joliet”), Hollywood Casino Columbus (“Columbus”), Hollywood Casino Toledo (“Toledo”) and the M Resort Spa Casino (“M Resort”), and (ii) make associated adjustments to the rent after which the initial rent in the AR PENN Master Lease was reset to $284.1 million, consisting of $208.2 million of building base rent, $43.0 million of land base rent and $32.9 million of percentage rent (as such terms are defined in the AR PENN Master Lease). Subsequent to the execution of the AR PENN Master Lease, the lease contains real estate assets associated with 14 of the Company’s gaming facilities used in its operations. The current term of the AR PENN Master Lease expires on October 31, 2033 and thereafter contains three renewal terms of five years each on the same terms and conditions, exercisable at the Company’s option. The AR PENN Master Lease along with the 2023 Master Lease (as defined and discussed below) are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee. S ee Note 12, “Leases” in the notes to our Consolidated Financial Statements for further discussion.
2023 Master Lease
Concurrent with the execution of the AR PENN Master Lease, the Company and GLPI entered into a new triple net master lease (the “2023 Master Lease”), effective January 1, 2023, specific to the property associated with Aurora, Joliet, Columbus, Toledo, M Resort, Hollywood Casino at The Meadows (“Meadows”), and Hollywood Casino Perryville (“Perryville”) and a master development agreement (the “Master Development Agreement”). The 2023 Master Lease has an initial term through October 31, 2033 with three subsequent five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. The 2023 Master Lease terminated the individual triple net leases associated with Meadows and Perryville. The 2023 Master Lease and AR PENN Master Lease are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee. S ee Note 12, “Leases” in the notes to our Consolidated Financial Statements for further discussion.
Pinnacle Master Lease
In connection with the acquisition of Pinnacle Entertainment, Inc. (“Pinnacle”), on October 15, 2018, the Company assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option. Furthermore, in conjunction with the acquisition of Pinnacle, GLPI acquired the real estate assets associated with Plainridge Park Casino and leased back such assets to the Company pursuant to an amendment to the Pinnacle Master Lease. S ee Note 12, “Leases” in the notes to our Consolidated Financial Statements for further discussion.
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Other triple net leases with REIT landlords
The Company has a triple net lease with GLPI for the land underlying the Hollywood Casino Morgantown property. Prior to the execution of the 2023 Master Lease, the Company also had triple net leases with GLPI for the real estate assets associated with the Meadows and Perryville properties. Prior to the sale of PENN’s outstanding equity interest in Tropicana Las Vegas Hotel and Casino, Inc. (“Tropicana”) on September 26, 2022, the Company had a triple net lease with GLPI for the real estate assets associated with the Tropicana property. S ee Note 12, “Leases” in the notes to our Consolidated Financial Statements for further discussion.
The Company has triple net leases with VICI Properties, Inc. (NYSE: VICI) (“VICI”) for the real estate assets associated with the Margaritaville Resort Casino and Hollywood Casino at Greektown properties. S ee Note 12, “Leases” in the notes to our Consolidated Financial Statements for further discussion.
Trademarks
We own a number of trademarks and service marks registered or pending registration with the U.S. Patent and Trademark Office (“USPTO”), the Canadian Intellectual Property Office (“CIPO”), and/or other intellectual property organizations in the European Union, the United Kingdom, and other countries around the world, including but not limited to, “Ameristar ® ,” “Argosy ® ,” “Boomtown ® ,” “Hollywood Casino ® ,” “Hollywood Gaming ® ,” “L’Auberge ® ,” “M Resort ® ,” and “PENN Play TM ” among other trademarks. Upon completion of the acquisition of theScore in October 2021, we acquired theScore’s registered trademarks and service marks, including but not limited to, “theScore ® ,” “theScore Bet ® ,” and “theScore esports ® ” among other trademarks. We believe that our rights to our trademarks are well-established and have competitive value to our properties and businesses. We also have a number of trademark applications pending with the USPTO, CIP, and the World Intellectual Property Organization.
Among others, we have a licensing agreement with a third-party to use the “Margaritaville” trademark in connection with the operations of Margaritaville in Bossier City, Louisiana. As of August 8, 2023, we have a licensing agreement with ESPN, Inc. to use the “ESPN BET™” and related trademarks in connection with the operations of our online sports betting products within the United States.
Competition
The gaming, media, and entertainment industries are characterized by an increasingly high degree of competition among a large number of participants. We compete with a variety of gaming operations, including casinos and hotel casinos of varying quality and size and other gaming options such as state and province-sponsored internet lotteries, sweepstakes, charitable gaming, video gaming terminals at bars, restaurants, taverns and truck stops, illegal slot machines and skill games, fantasy sports and third-party internet or mobile-based gaming platforms, including both legal and illegal iCasino and sports betting operations. More generally, both our retail and interactive gaming operations face competition from all manner of leisure and entertainment activities, including shopping, athletic events, television and movies, concerts, and travel. Competition is discussed in further detail within “Item 1A. Risk Factors” of this Annual Report on Form 10-K and a discussion of the impact of competition on our results of operations, and cash flows is included within “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.
Seasonality
Our operations are subject to seasonality, including seasonality based on the weather in the region in which the properties operate and the travel habits of visitors. Business at our properties can also fluctuate due to specific holidays or other significant events, particularly when a holiday falls in a different quarter than the prior year, city-wide conventions, large sporting events or concerts, or visits by our premium players. We also believe that any seasonality, holiday, or other significant event may affect our various properties or regions differently. We may also experience seasonality with retail and online sports betting which coincides with certain sporting events, as well as seasons of professional sports teams.
Government Regulation and Gaming Issues
The gaming and racing industries are highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. Our online gaming operations and each of our properties are subject to extensive regulation under the laws, rules, and regulations of the jurisdictions where we operate. These laws, rules, and regulations generally concern the responsibility, financial stability, and character of the owners, managers, and persons with financial interests in the gaming operations. Violations of laws or regulations in one jurisdiction could result in disciplinary action in other jurisdictions. For a
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more detailed description of the statutes and regulations to which we are subject, see Exhibit 99.1, “Description of Government Regulations” to this Annual Report on Form 10-K, which is incorporated herein by reference.
Our businesses are subject to various international, federal, state, provincial, and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, health care, currency transactions, taxation, zoning and building codes, data privacy, anti-money laundering, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our financial condition, results of operations and cash flows.
Employees and Human Capital Resources
The Company’s key human capital management objectives are to attract, retain, and develop diverse and high-quality talent. Our commitment to an equal-opportunity and respectful workplace characterized by both diversity and inclusion, in which everyone feels valued, respected, and supported, is a factor driving our success. Our talent and development programs are designed to develop, support and maintain talent succession pipelines in preparation for key roles and leadership positions; recognize, reward and support our team members through competitive pay and wellness programs; enhance the Company’s philanthropic culture by encouraging participation and championing programs in the communities in which we work and live; and invest in technology and resources to provide our team members with the most efficient tools to perform their jobs.
Some of the key programs and initiatives developed to attract, develop, engage, and retain diverse and high-quality talent include:
• Executive and High Potential Talent Review Process to include team members who completed an internal development program
• LEAP Program (Leadership Excellence at PENN, intern program)
• Emerging Leader Program
• Early Career Leadership Academy (0 to 2 years experience leading others) and Mid-Career Leadership Academy (over 3 years experience leading others)
• Cohort Programs (Gaming, Hospitality, Human Resources)
• PENN Women
• Learning Central, a catalog of self-paced development opportunities covering a wide range of topics
• Diversity and Veteran Recruitment Initiatives
• AwardCo Recognition Program and Property Engagement Committees
Through the dedicated efforts of our corporate, interactive, and property leadership teams, our charitable Foundation and the PENN Diversity Council, we launched or expanded a number of initiatives in 2023 focused on improving the lives of our team members, their families, and those in need in our communities.
In 2023, our diversity training initiatives continued with the roll out of Level Two for all leaders of people, approximately 3,700 people across the Company. The training was broken into two separate sessions:
• Session I: Building and Developing a Diverse Workforce
• Session II: Sexual Harassment and Respectful Workplace
The Board of Directors and Senior Leadership Team set a goal of 90% participation by December 31, 2023. As of December 31, 2023, 99% completed Session I and 97% completed Session II. Survey results were strong with an average of 97% replying favorably to applying new knowledge and 9.3/10 would recommend the training.
Highlights from last year’s efforts include the expansion of our $4 million STEM Scholarship Fund and internship program which now has six Historically Black Colleges and Universities (HBCUs) in the program. Our commitment continued in dedicating more than $4 million to fund STEM scholarships with HBCUs in states where we operate, as well as creating internship opportunities at the Company. This year, 31% of our LEAP interns were from an HBCU and 72% were diverse and/or female.
In addition, we piloted a structured mentoring program in October for approximately 200 team members. Participants include Emerging Leader graduates, high potential talent, new leaders, and executives. As of December 31, 2023, there are 154 established partnerships logging just over 300 hours of mentoring activities. In 2024, we aim to scale the program. We also continued our annual $1 Million Diversity Scholarship Program for the children of team members. In 2023, there were 52
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recipients with 57% of them being first generation college bound students. The application process for the 2024-2025 school year will kick-off in early 2024.
As of December 31, 2023, we had approximately 23,333 full-time and part-time employees. We had 35 collective bargaining agreements covering approximately 4,180 active employees. Twelve collective bargaining agreements are scheduled to expire in 2024. Although we believe that we have good employee relations, there can be no assurance that we will be able to extend or enter into replacement agreements. If we are able to extend or enter into replacement agreements, there can be no assurance as to whether the terms will be on comparable terms to the existing agreements.