What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-02 · 140 added, 112 removed, 392 unchanged (39% of the section changed)

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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 March 31, 2024, PENN operated 43 properties in 20 states, online sports betting in 19 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®.

As of June 30, 2024, PENN operated 43 properties in 20 states, online sports betting in 19 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.

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The Company’s focus 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 30 million members a unique set of rewards and experiences across business channels.

PENN’s portfolio is further bolstered by our industry-leading PENN Play customer loyalty program, which offers our approximately 31 million members a unique set of rewards and experiences across business channels.

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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(“Barstool”) common stock not already owned by us for a consideration of approximately $405.5 million, which is inclusive of cash and common stock issuance, repayment of Barstool indebtedness of $23.8 million, transaction expenses and other purchase price adjustments in accordance with GAAP (the “Barstool Acquisition”).

Prior to the acquisition, we held a 36% ownership interest, which was accounted for under the equity method.

Prior to the Barstool Acquisition, we held a 36% ownership interest, which was accounted for under the equity method.

On August 8, 2023, PENN entered into a Sportsbook Agreement (the “Sportsbook Agreement”) with ESPN, which provides for a long-term strategic relationship between PENN and ESPN relating to online sports betting in the United States.

Pursuant to the Sportsbook Agreement, PENN rebranded its existing Barstool Sportsbook across all online platforms in the United States as ESPN BET (the “Sportsbook”) and oversees daily operations of the Sportsbook (see Note 11, “Commitments and Contingencies” in the notes to our unaudited Consolidated Financial Statements for additional information).

In connection with PENN’s decision to rebrand to ESPN BET as discussed above, PENN concurrently entered into a stock purchase agreement with David Portnoy (the “Barstool SPA”) pursuant to which 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.

Pursuant to the Barstool SPA, PENN has the right to receive 50% of the gross proceeds received by David Portnoy in any subsequent sale or other monetization event of Barstool.

On August 8, 2023, we entered into the Barstool SPA, and we sold 100% of the outstanding shares of Barstool common stock.

As a result of the Barstool SPA, we recognized a pre-tax loss on disposal of $923.2 million (inclusive of $714.8 million in goodwill and intangible assets write offs and a $70.0 million indemnification liability) incurred in the third quarter of 2023.

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The 2023 Master Lease terminated the individual triple net leases associated with Meadows and Perryville.

The 2023 Master Lease incurs a 1.5% fixed escalator on November 1 each year, and is also subject to a one-time increase of $1.4 million effective November 1, 2027.

The 2023 Master Lease incurs a 1.5% fixed escalator on November 1 of each year, and is also subject to a one-time increase of $1.4 million effective November 1, 2027.

The 2023 Master Lease and AR PENN Master Lease are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee.

The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) equal to $232.2 million and the Master Development Agreement contains additional rent (together with the 2023 Master Lease Base Rent, the “2023 Master Lease Rent”) equal to (i) 7.75% of any project funding received by PENN from GLPI for an anticipated relocation of PENN’s riverboat casino and related developments with respect to Aurora (the “Aurora Project”) and (ii) a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for certain anticipated development projects with respect to Joliet, Columbus, and M Resort (the “Other Development Projects”).

The Master Development Agreement provides that GLPI will fund up to $225 million for the Aurora Project and, upon PENN’s request, up to $350 million in the aggregate for the Other Development Projects, in accordance with certain terms and conditions set forth in the Master Development Agreement.

The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) equal to $232.2 million and the Master Development Agreement contains additional rent (together with the 2023 Master Lease Base Rent, the “2023 Master Lease Rent”) equal to (i) 7.75% of any project funding received by PENN from GLPI for an anticipated relocation of our riverboat casino and related developments with respect to Aurora (the “Aurora Project”) and (ii) a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for certain anticipated development projects with respect to Joliet, Columbus, and M Resort (the “Other Development Projects” and together with the Aurora Project, the “PENN Development Projects”).

The Master Development Agreement provides that GLPI will fund up to $225 million for the Aurora Project and, upon our request, up to $350 million in the aggregate for the Other Development Projects, in accordance with certain terms and conditions set forth in the Master Development Agreement.

These funding obligations of GLPI expire on January 1, 2026.

The Aurora Project and the Other Development Projects have all commenced and are anticipated to open in late 2025 to early 2026.

The PENN Development Projects have all commenced and are anticipated to open by the first half of 2026.

We believe that our portfolio of assets provides us with the benefit of geographically-diversified cash flow from operations.

We expect to continue to expand our gaming operations through the implementation and execution of a disciplined capital expenditure program at our existing properties, the pursuit of strategic acquisitions and investments, and the development of new gaming properties.

In addition, the acquisition of theScore and our Sportsbook Agreement with ESPN reflects our strategy to continue evolving from the nation’s largest regional gaming operator to a best-in-class omni-channel provider of retail gaming, iCasino, and sports betting entertainment.

In addition, the acquisition of theScore Media and Gaming, Inc.

(“theScore”) and our Sportsbook Agreement with ESPN reflects our strategy to continue evolving from the nation’s largest regional gaming operator to a best-in-class omni-channel provider of retail gaming, iCasino, and sports betting entertainment.

Operating and Competitive Environment

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expansions of gaming in existing jurisdictions;

and strategic investments and acquisitions;

strategic investments and acquisitions;

and cross-sell opportunities between our retail gaming, online sports betting, and iCasino businesses.

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We also continue to focus on revenue and cost synergies from recent acquisitions, technology enhancements, and providing customers with additional gaming and entertainment experiences through our differentiated omni-channel strategy.

We seek to grow our customer database and PENN Play TM loyalty program through our online sports betting and iCasino businesses, the development of new properties, the expansion of existing properties and other business lines, and through partnerships with third-party partners, such as Norwegian Cruise Line Holdings Ltd., Live Nation Entertainment, Inc., and Choice Hotels International, Inc.

We seek to grow our customer database and PENN Play loyalty program through our online sports betting and iCasino businesses, the development of new properties, the expansion of existing properties and other business lines, and through partnerships with third-party partners, such as Ticketmaster Entertainment, LLC, Norwegian Cruise Line Holdings Ltd., Live Nation Entertainment, Inc., and Choice Hotels International, Inc.

In addition, strategic acquisitions (e.g.

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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.

See the “Segment comparison of the three months ended March 31, 2024 and 2023” section below for discussions on our results of operations by reportable segment.

See the “Segment comparison of the three and six months ended June 30, 2024 and 2023” section below for discussions on our results of operations by reportable segment.

Key Performance Indicators

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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 84% of our gaming revenue for the three months ended March 31, 2024 and 2023, respectively) and, to a lesser extent, table games, online sports betting, and iCasino.

Our gaming revenue is derived primarily from slot machines (which represented approximately 85% of our gaming revenue for each of the six months ended June 30, 2024 and 2023) and, to a lesser extent, table games, online sports betting, and iCasino.

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.

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We consider our combined Video Gaming Terminal (“VGT”) operations, by state, to be separate operating segments.

For a listing of our gaming properties and VGT operations included in each reportable segment, see Note 2, “Significant Accounting Policies” in the notes to our unaudited Consolidated Financial Statements.

For a listing of our gaming properties and VGT operations included in each reportable segment, see Note 2, “Significant Accounting Policies and Basis of Presentation” in the notes to our unaudited Consolidated Financial Statements.

RESULTS OF OPERATIONS

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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) 2024 2023 2024 2023

Northeast segment $ 696.3 $ 688.0 $ 1,381.0 $ 1,388.5

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Interactive segment 232.6 257.5 440.3 491.0

5.9 6.2 11.9 12.0

Intersegment eliminations (2)

(3.4) (8.5) (13.4) (14.8)

Total $ 1,663.0 $ 1,674.8 $ 3,269.9 $ 3,348.1

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(26.8) (25.3) (53.6) (52.6)

367.0 476.8 623.2 955.0

Rent expense associated with triple net operating leases (4)

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Adjusted EBITDA margin

12.8 % 19.7 % 9.6 % 19.8 %

(1) The Other category consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Park, the Company’s joint venture interests in Freehold Raceway, and our management contract for Retama Park Racetrack.

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payroll, professional fees, travel expenses, and other general and administrative expenses that do not directly relate or have not otherwise been allocated.

Corporate overhead costs were $24.9 million and $26.3 million for the three months ended March 31, 2024 and 2023, respectively.

Corporate overhead costs were $24.5 million and $24.8 million for the three months ended June 30, 2024 and 2023, respectively, and $49.4 million and $51.1 million for the six months ended June 30, 2024 and 2023, respectively.

(2) Primarily represents the elimination of intersegment revenues associated with our retail sportsbooks, which are operated by PENN Interactive.

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and (iv) Greektown Lease.

Consolidated comparison of the three months ended March 31, 2024 and 2023

Consolidated comparison of the three and six months ended June 30, 2024 and 2023

The following table presents our consolidated revenues:

For the three months ended March 31, Change

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Total revenues $ 1,663.0 $ 1,674.8 $ (11.8) (0.7) % $ 3,269.9 $ 3,348.1 $ (78.2) (2.3) %

Gaming revenues for the three months ended March 31, 2024 decreased by $66.3 million compared to the corresponding prior year period, primarily due to a decrease in slots and table games revenues within our South and Northeast segments and a decrease in online gaming revenue at our Interactive segment.

In the current year quarter, severe weather affected weekends and holidays across all our regional property segments negatively impacting our operations.

Gaming revenues for the three months ended June 30, 2024 increased by $39.5 million compared to the corresponding prior year period, primarily due to an increase in gaming revenues at our Interactive segment, an increase in slot revenues at our Northeast, Midwest, and West segments, partially offset by a decrease in gaming revenues at our South segment.

In our Interactive segment, top-of-funnel growth, improved risk and trading execution, refined promotional strategies, and a favorable sportsbook hold contributed to the increase in gaming revenues.

Gaming revenues for the six months ended June 30, 2024 decreased by $26.8 million compared to the corresponding prior year period, primarily due to a decrease in slots and table games revenues within our South segment partially offset by an increase in gaming revenues at our Interactive segment.

In the first quarter of 2024, severe weather affected weekends and holidays across all our regional property segments negatively impacting our operations.

Additionally, retail gaming revenues decreased as new supply continues to impact visitation in certain retail property segments .

The decrease in online gaming revenues within our Interactive segment was due to unfavorable sports betting hold rates and increased promotional expense related to ESPN BET.

Food, beverage, hotel, and other revenues for the three months ended March 31, 2024 remained flat compared to the corresponding prior year period.

Increases in hotel and other revenue were offset by decreases in advertising and retail revenue.

See “Segment comparison of the three months ended March 31, 2024 and 2023” below for more detailed explanations of the fluctuations in revenues.

Food, beverage, hotel, and other revenues for the three and six months ended June 30, 2024 decreased by $51.3 million and $51.4 million , respectively, compared to the corresponding prior year periods.

The decrease for both periods primarily relates to the inclusion of 100% of the operating results of Barstool subsequent to the Barstool Acquisition on February 17, 2023 in the prior year periods.

Due to the August 2023 Barstool disposal, the current year periods do not include any Barstool revenues.

For the six months ended June 30, 2024, this was offset by an increase in gaming tax amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access of $17.9 million compared to the prior year period.

See “Segment comparison of the three and six months ended June 30, 2024 and 2023” 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

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Gaming expenses consist primarily of gaming taxes, payroll, marketing and promotional, and other expenses associated with our gaming operations.

Gaming expenses for the three months ended March 31, 2024 increased $150.0 million compared to the corresponding prior year period, primarily due to increased marketing expense within our Interactive segment related to ESPN and higher labor and other gaming costs driven by increased ESPN BET volumes.

Gaming expenses at our retail properties decreased due to the decrease in gaming revenues described above.

Gaming expenses for the three and six months ended June 30, 2024 increased by $160.5 million and $310.5 million, respectively, compared to the corresponding prior year periods, primarily due to increased marketing expense within our Interactive segment related to ESPN and increased gaming costs driven by increased ESPN BET volumes.

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

Fo od, beverage, hotel, and other expenses for the three months ended March 31, 2024 increased $6.9 million , compared to the corresponding prior year period, primarily due to increases in gaming tax reimbursement amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access, partially offset by the inclusion of Barstool operating expenses in the prior year quarter subsequent to the Barstool Acquisition on February 17, 2023.

Due to the August 2023 Barstool disposal, the current year quarter does not include any Barstool operating expenses.

Fo od, beverage, hotel, and other expenses for the three and six months ended June 30, 2024 decreased $48.2 million and $41.3 million , respectively, compared to the corresponding prior year periods, primarily due to the inclusion of Barstool operating expenses in the prior year periods subsequent to the Barstool Acquisition on February 17, 2023.

Due to the August 2023 Barstool disposal, the current year periods do not include any Barstool operating expenses.

The decrease for the six months ended June 30, 2024 was partially offset by an increase in gaming tax reimbursement amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access.

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

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and rent expense associated with our triple net operating leases.

For the three months ended March 31, 2024, general and administrative expenses decreased by $4.0 million, compared to the corresponding prior year period, primarily due to decreases in stock-based compensation, cash-settled stock-based awards, and legal settlements, partially offset by an increase in payroll expense and an increase in rent expense associated with triple net operating leases of $8.8 million, stemming, primarily, from annual escalators on our triple net operating leases.

Depreciation and amortization for the three months ended March 31, 2024 increased $1.2 million compared to the corresponding prior year period.

For the three and six months ended June 30, 2024, general and administrative expenses increased by $8.4 million and $4.4 million, respectively, compared to the corresponding prior year periods, primarily due to increases in rent expense associated with triple net operating leases of $8.5 million and $17.3 million, respectively, stemming primarily from annual escalators on our triple net operating leases.

For the six months ended June 30, 2024, the increase was offset by a decrease in stock-based compensation .

Depreciation and amortization for the three and six months ended June 30, 2024 decreased $1.5 million and $0.3 million, respectively, compared to the corresponding prior year periods.

Other income (expenses)

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

For the three months ended March 31, Change

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Gain on REIT transactions, net $ — $ — $ — — % $ — $ 500.8 $ (500.8) N/M

Other $ (1.3) $ (1.0) $ (0.3) 30.0 %

Other $ 1.0 $ 5.8 $ (4.8) (82.8) % $ (0.3) $ 4.8 $ (5.1) N/M

Income tax benefit (expense) $ 3.2 $ (34.7) $ 37.9 (109.2) % $ 15.8 $ (202.6) $ 218.4 (107.8) %

N/M - Not meaningful

Interest expense, net increased by $6.1 million for the three months ended March 31, 2024, compared to the corresponding prior year period, primarily due to an increase in interest expense on our Senior Secured Credit Facilities related to an overall increase in interest rates.

Interest income decreased by $3.3 million for the three months ended March 31, 2024, compared to the corresponding prior year period, primarily due to a decrease in the amount invested in money market funds, which we use for short term investing.

Interest expense, net increased by $3.8 million and $9.9 million for the three and six months ended June 30, 2024, respectively, compared to the corresponding prior year periods, primarily due to an increase in interest expense on our Senior Secured Credit Facilities related to an overall increase in interest rates.

Interest income decreased by $4.1 million and $7.4 million for the three and six months ended June 30, 2024, respectively, compared to the corresponding prior year periods, primarily due to a decrease in the amount invested in money market funds, which we use for short term investing.

Income from unconsolidated affiliates relates principally to our investment in Kansas Entertainment and Freehold Raceway joint ventures.

The increase of $4.6 million for the three months ended March 31, 2024, compared to the corresponding prior year period, is due to the three months ended March 31, 2023 including a $5.1 million loss for Barstool prior to the Barstool Acquisition on February 17, 2023.

Gain on Barstool Acquisition, net for the three months ended March 31, 2023 relates to the gain on our acquisition of all the outstanding shares of Barstool common stock not already owned by us on February 17, 2023 as described in Note 5, “Acquisitions and Dispositions” in the notes to our unaudited Consolidated Financial Statements.

The increase of $0.6 million for the three months ended June 30, 2024, compared to the corresponding prior year period, is due to higher income earned from our investments in unconsolidated affiliates.

The increase of $5.2 million for the six months ended June 30, 2024, compared to the corresponding prior year period, is due to the six months ended June 30, 2023 including a $5.1 million loss for Barstool prior to the Barstool Acquisition on February 17, 2023.

Gain on Barstool Acquisition, net for the six months ended June 30, 2023 relates to the gain on our acquisition of all the outstanding shares of Barstool common stock not already owned by us on February 17, 2023 as described in Note 5, “Acquisitions and Dispositions” in the notes to our unaudited Consolidated Financial Statements.

The gain consisted of $66.5 million related to the remeasurement of our equity investment immediately prior to the acquisition date and $16.9 million related to the acquisition of the remaining 64% of Barstool common stock.

Gain on REIT transactions, net for the three months ended March 31, 2023 relates to the execution of both the AR PENN Master Lease and 2023 Master Lease on February 21, 2023, which resulted in the (i) derecognition of $1.6 billion of financing obligations and (ii) derecognition of $1.1 billion of Property and Equipment, net.

Gain on REIT transactions, net for the six months ended June 30, 2023 relates to the execution of both the AR PENN Master Lease and 2023 Master Lease on February 21, 2023, which resulted in the (i) derecognition of $1.6 billion of financing obligations and (ii) derecognition of $1.1 billion of Property and Equipment, net.

In conjunction with entering into the 2023 Master Lease, the individual triple net leases associated with Meadows and Perryville were terminated which resulted in a $6.5 million loss from the derecognition of right-of-use assets and lease liabilities.

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Equity securities were provided to the Company in conjunction with entering into multi-year agreements with sports betting operators for online sports betting and iCasino market access across our portfolio.

For the three m onths ended March 31, 2024, other income primarily consisted of an unrealized holding loss of $1.5 million, compared to an unrealized holding loss of $3.2 million for the three m onths ended March 31, 2023.

The prior year quarter included a $3.1 million gain related to remeasurement and settlement of Barstool put/call options prior to the Barstool Acquisition .

Income tax benefit was $12.6 million for the three months ended March 31, 2024, compared to income tax expense of $167.9 million for the three months ended March 31, 2023.

Our effective tax rate (income taxes as a percentage of income or loss from operations before income taxes) including discrete items was 14.8% for the three months ended March 31, 2024, as compared to 23.8% for the three months ended March 31, 2023 .

The effective tax rate for the three months ended March 31, 2024, was lower than the statutory federal tax rate of 21%, primarily due to non-deductible executive compensation, tax credit utilization, and the decrease in our valuation allowance.

For the three and six months ended June 30, 2024, other income primarily consisted of dividend income received, partially offset by unrealized holding losses of $3.9 million and $5.4 million, respectively.

For the three and six months ended June 30, 2023, other income primarily consisted of unrealized holding gains of $6.3 million and $3.1 million, respectively.

Additionally, the six months ended June 30, 2023 included a $3.1 million gain related to remeasurement and settlement of Barstool put/call options prior to the Barstool Acquisition .

Income tax benefit (expense) was a benefit of $3.2 million as compared to an expense of $34.7 million for the three months ended June 30, 2024 and 2023, respectively, and a benefit of $15.8 million as compared to an expense of $202.6 million for the six months ended June 30, 2024 and 2023, respectively.

The effective tax rate (income taxes as a percentage of income from operations before income taxes) including discrete items was (91.0)% and 19.4% for the three and six months ended June 30, 2024.

We excluded certain foreign losses from our worldwide effective tax rate calculation due to a year-to-date ordinary loss for which no benefit may be recognized.

The effective tax rate for the three and six months ended June 30, 2024, was lower than the corresponding prior year period and the statutory federal tax rate of 21%, primarily due to (i) non-deductible permanent items offset against tax credit utilization, (ii) excluding certain foreign losses from our worldwide effective tax rate calculation for which no tax benefit may be recognized, (iii) state taxes, and (iv) changes to certain state valuation allowances.

See Note 10, “Income Taxes” to our unaudited Consolidated Financial Statements for additional details.

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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.

Segment comparison of the three months ended March 31, 2024 and 2023

Segment comparison of the three and six months ended June 30, 2024 and 2023

Northeast Segment

For the three months ended March 31, Change

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Adjusted EBITDAR $ 204.7 $ 217.3 $ (12.6) (5.8) % $ 407.3 $ 430.2 $ (22.9) (5.3) %

Adjusted EBITDAR margin 29.6 % 30.4 % -80 bps

The Northeast segment’s revenues for the three months ended March 31, 2024 decreased $15.8 million, primarily due to severe weather events negatively impacting our operations and decreases in gaming revenues at several of our properties due to increased competition.

Food and beverage revenues for the three months ended March 31, 2024 decreased as weather events resulted in a decline in visitation compared to the prior year period.

For the three months ended March 31, 2024, the Northeast segment’s Adjusted EBITDAR decreased $10.3 million, primarily due to decreased gaming and non-gaming revenues.

Ad justed EBITDAR margin decreased to 29.6% primarily due to higher labor costs.

Adjusted EBITDAR margin 29.4 % 31.6 % -220 bps 29.5 % 31.0 % -150 bps

The Northeast segment’s revenues for the three months ended June 30, 2024 increased $8.3 million, primarily due to an increase in gaming revenues, particularly slot revenues.

The Northeast segment’s revenues for the six months ended June 30, 2024 decreased $7.5 million, primarily due to severe weather events during the first quarter negatively impacting our operations as well as decreases in gaming revenues at several of our properties due to increased competition, partially offset by increased slot revenues in the second quarter.

Food and beverage revenues for the six months ended June 30, 2024 decreased as weather events during the first quarter resulted in a decline in visitation compared to the prior year period.

For the three months ended June 30, 2024, the Northeast segment’s Adjusted EBITDAR decreased $12.6 million, and Ad justed EBITDAR margin decreased to 29.4%, primarily due to the reversal of certain accrued gaming taxes in the prior year quarter and increased labor and marketing costs in the current year quarter.

For the six months ended June 30, 2024, the Northeast segment’s Adjusted EBITDAR decreased $22.9 million, primarily due to decreased gaming and non-gaming revenues.

Ad justed EBITDAR margin decreased to 29.5% primarily due to the reversal of certain accrued gaming taxes in the prior year period and increased labor and marketing costs in the current year period.

South Segment

For the three months ended March 31, Change

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Adjusted EBITDAR $ 111.4 $ 120.9 $ (9.5) (7.9) % $ 224.9 $ 244.5 $ (19.6) (8.0) %

Adjusted EBITDAR margin 38.0 % 39.3 % -130 bps

The South segment’s revenues for the three months ended March 31, 2024 decreased by $16.3 million, compared to the prior year period, primarily due to a decrease in gaming revenues as severe weather events negatively impacted our operations and increased competition negatively impacted visitation at several of our properties.

For the three months ended March 31, 2024, the South segment’s Adjusted EBITDAR decreased $10.1 million, and Adjusted EBITDAR margin decreased to 38.0%, primarily due to the decrease in revenues as described above.

For the three months ended March 31, Change

Adjusted EBITDAR margin 37.4 % 39.2 % -180 bps 37.7 % 39.2 % -150 bps

The South segment’s revenues for the three and six months ended June 30, 2024 decreased by $10.1 million and $26.4 million, respectively, compared to the corresponding prior year periods, primarily due to a decrease in gaming revenues as increased competition negatively impacted visitation at several of our properties and severe weather events in the first quarter of 2024 negatively impacted our operations.

For the three and six months ended June 30, 2024, the South segment’s Adjusted EBITDAR decreased $9.5 million and $19.6 million, respectively, and Adjusted EBITDAR margin decreased to 37.4% and 37.7%, respectively, primarily due to the decrease in revenues as described above.

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Adjusted EBITDAR $ 50.6 $ 49.6 $ 1.0 2.0 % $ 96.5 $ 98.7 $ (2.2) (2.2) %

Adjusted EBITDAR margin 35.6 % 37.9 % -230 bps

The West segment’s revenues for the three months ended March 31, 2024 decreased by $0.9 million, compared to the prior year period, primarily due to a decrease in gaming revenues as isolated weather events negatively impacted visitation , partially offset by an increase in hotel and food and beverage revenues.

For the three months ended March 31, 2024, the West segment’s Adjusted EBITDAR decreased $3.2 million and Adjusted EBITDAR margin decreased to 35.6%, primarily due to the decrease in gaming revenues discussed above and higher labor costs.

Adjusted EBITDAR margin 37.4 % 38.2 % -80 bps 36.5 % 38.0 % -150 bps

The West segment’s revenues for the three months ended June 30, 2024 increased by $5.3 million, compared to the prior year period, primarily due to increased visitation at our West segment properties.

The West segment’s revenues for the six months ended June 30, 2024 increased by $4.4 million, compared to the prior year period, primarily due to an increase in hotel and food and beverage revenues, partially offset by a decrease in gaming revenues as isolated weather events negatively impacted visitation during the first quarter of 2024 .

For the three months ended June 30, 2024, the West segment’s Adjusted EBITDAR increased $1.0 million due to the increase in hotel and food and beverage revenues, while Adjusted EBITDAR margin decreased to 37.4%, primarily due to increased labor costs.

For the six months ended June 30, 2024, the West segment’s Adjusted EBITDAR decreased $2.2 million and Adjusted EBITDAR margin decreased to 36.5%, primarily due to the decrease in gaming revenues discussed above and increased labor costs.

Midwest Segment

For the three months ended March 31, Change

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Adjusted EBITDAR $ 129.9 $ 127.1 $ 2.8 2.2 % $ 246.9 $ 252.7 $ (5.8) (2.3) %

Adjusted EBITDAR margin 40.2 % 42.5 % -230 bps

The Midwest segment’s revenues for the three months ended March 31, 2024 decreased by $4.1 million, compared to the prior year period, where severe weather events negatively impacted visitation at our Midwest segment properties.

For the three months ended March 31, 2024, the Midwest segment’s Adjusted EBITDAR decreased $8.6 million and A djusted EBITDAR margin decreased to 40.2%, primarily due to the decrease in gaming revenues discussed above, higher labor costs, and an increase in general and administrative costs.

Adjusted EBITDAR margin 43.6 % 43.3 % 30 bps 41.9 % 42.9 % -100 bps

The Midwest segment’s revenues for the three months ended June 30, 2024 increased by $4.8 million, compared to the prior year period, due to increased visitation at our Midwest segment properties.

The Midwest segment’s revenues for the six months ended June 30, 2024 increased by $0.7 million, compared to the prior year period, primarily due to an increase in hotel and food and beverage revenues in the current year period, partially offset by a decrease in gaming revenues during the first quarter of 2024 as severe weather events negatively impacted visitation .

For the three months ended June 30, 2024, the Midwest segment’s Adjusted EBITDAR increased $2.8 million and A djusted EBITDAR margin increased to 43.6% , primarily due to the increase in revenues discussed above.

For the six months ended June 30, 2024, the Midwest segment’s Adjusted EBITDAR decreased $5.8 million and A djusted EBITDAR margin decreased to 41.9%, primarily due to the decrease in gaming revenues discussed above, increased labor costs and an increase in general and administrative costs.

Interactive Segment

For the three months ended March 31, Change

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Total revenues $ 232.6 $ 257.5 $ (24.9) (9.7) % $ 440.3 $ 491.0 $ (50.7) (10.3) %

Adjusted EBITDAR $ (196.0) $ (5.7) $ (190.3) N/M

Adjusted EBITDAR margin (94.4) % (2.4) % N/M

The Interactive segment’s revenues for the three months ended March 31, 2024 decreased by $25.8 million, compared to the prior year period, primarily due to a decrease in online gaming revenue, driven by increased promotional expense related to customer acquisitions for ESPN BET and lower sportsbook hold rates.

Food, beverage, hotel, and other revenues are inclusive of a tax gross-up of $116.6 million for the three months ended March 31, 2024, compared to $92.3 million for the three months ended March 31, 2023.

Additionally, in the prior year quarter f ood, beverage, hotel, and other revenues included $28.2 million of Barstool revenues subsequent to the Barstool Acquisition on February 17, 2023.

Due to the August 2023 Barstool disposal, the current year quarter does not include any Barstool operating results.

For the three months ended March 31, 2024, the Interactive segment’s Adjusted EBITDAR and Adjusted EBITDAR margin decreased primarily due to the decrease in gaming revenues as discussed above as well as an increase in marketing expense due to the continued promotion of ESPN BET.

For the three months ended March 31, Change

Adjusted EBITDAR $ (102.8) $ (12.8) $ (90.0) N/M $ (298.8) $ (18.5) $ (280.3) N/M

Adjusted EBITDAR margin (44.2) % (5.0) % N/M (67.9) % (3.8) % N/M

N/M - Not meaningful

The Interactive segment’s revenues for the three and six months ended June 30, 2024 decreased by $24.9 million and $50.7 million, respectively, compared to the corresponding prior year periods, primarily due to decreases in food, beverage, hotel, and other revenues, partially offset by increases in gaming revenues.

Gaming revenues, particularly during the three months ended June 30, 2024, were positively impacted by top-of-funnel growth, improved risk and trading execution, refined promotional strategies, and favorable sports betting hold rates.

The decreases in food, beverage, hotel, and other revenues, primarily relate to $52.7 million and $80.9 million of Barstool revenues subsequent to the Barstool Acquisition on February 17, 2023 being included in the three and six months ended June 30, 2023, respectively.

Due to the August 2023 Barstool disposal, the current year periods do not include any Barstool operating results.

Furthermore, food, beverage, hotel, and other revenues are inclusive of gaming tax amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access of $82.1 million and $88.5 million for the three months ended June 30, 2024 and 2023, respectively, and $198.7 million and $180.8 million for the six months ended June 30, 2024 and 2023, respectively.

For the three and six months ended June 30, 2024, the Interactive segment’s Adjusted EBITDAR and Adjusted EBITDAR margin decreased primarily due to the decrease in food, beverage, hotel, and other revenues as discussed above as well as an increase in marketing expense due to the continued promotion of ESPN BET.

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

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Other consists of the Company’s stand-alone racing operations, as well as corporate overhead costs, which primarily includes certain expenses such as payroll, professional fees, travel expenses, and other general and administrative expenses that do not directly relate to or have not otherwise been allocated.

Revenues for the three months ended March 31, 2024 have increased compared to the prior ye ar period, primarily due to fluctuations in racing revenues.

Corporate overhead costs were $24.9 million and $26.3 million for the three months ended March 31, 2024 and 2023, respectively.

Changes in Adjusted EBITDAR for the three months ended March 31, 2024 primarily relate to a decrease in general and administrative costs, slightly offset by higher labor costs.

Revenues for the three and six months ended June 30, 2024 decreased slightly compared to the prior ye ar periods, primarily due to fluctuations in racing revenues.

Corporate overhead costs were $24.5 million and $24.8 million for the three months ended June 30, 2024 and 2023, respectively, as compared to $49.4 million and $51.1 million for the six months ended June 30, 2024 and 2023, respectively.

Changes in Adjusted EBITDAR for the three and six months ended June 30, 2024 primarily relate to higher labor costs, slightly offset by a decrease in general and administrative costs.

Non-GAAP Financial Measures

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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) 2024 2023 2024 2023

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Income tax (benefit) expense

(3.2) 34.7 (15.8) 202.6

Interest expense, net 119.4 115.6 238.5 228.6

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Other (1.0) (5.8) 0.3 (4.8)

Operating income (loss) (21.4) 199.1

Operating income 74.5 205.5 53.1 404.6

Stock-based compensation (1)

14.2 19.7 26.1 36.2

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

Gain on disposal of assets (1)

(3.1) (6.2) (11.1) (9.1)

Loss on disposal of assets (1)

Contingent purchase price (1)

Depreciation and amortization 109.1 110.6 217.8 218.1

Insurance recoveries, net of deductible charges (1)

(2.7) (13.6) (2.7) (13.6)

Income from unconsolidated affiliates 7.8 7.2 15.0 9.8

Non-operating items of equity method investments (3)

1.0 0.9 2.1 5.4

Other expenses (1)(4)

2.2 6.1 4.3 10.7

Adjusted EBITDA 212.1 330.4 313.5 662.6

Rent expense associated with triple net operating leases (1)

154.9 146.4 309.7 292.4

Adjusted EBITDAR $ 367.0 $ 476.8 $ 623.2 $ 955.0

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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

For the six months ended June 30, Change

(dollars in millions) 2024 2023 $ %

Net cash provided by (used in) operating activities $ (68.7) $ 147.7 $ (216.4) N/M

Net cash provided by operating activities $ 81.7 $ 323.7 $ (242.0) (74.8) %

Net cash used in investing activities $ (146.1) $ (462.9) $ 316.8 (68.4) %

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Trends in our operating cash flows tend to follow trends in operating income, excluding non-cash charges, but can be affected by changes in working capital, the timing of significant interest payments, tax payments or refunds, and distributions from unconsolidated affiliates.

Net cash provided by (used in) operating activities decreased by $216.4 million for the three months ended March 31, 2024, primarily due to a decrease in earnings and a negative impact in changes in working capital related to the timing of advanced deposits.

Net cash provided by operating activities decreased by $242.0 million for the six months ended June 30, 2024, primarily due to a decrease in earnings.

Investing Cash Flow

Cash used in investing activities for the three months ended March 31, 2024, of $47.3 million, primarily relates to capital expenditures of $41.4 million.

For the three months ended March 31, 2023, cash used in investing activities of $378.2 million was primarily related to consideration paid for the Barstool Acquisition, net of cash acquired, of $314.6 million and capital expenditures of $63.2 million.

Cash used in investing activities for the six months ended June 30, 2024, of $146.1 million, primarily relates to capital expenditures of $129.6 million.

For the six months ended June 30, 2023, cash used in investing activities of $462.9 million was primarily related to consideration paid for the Barstool Acquisition, net of cash acquired, of $314.6 million and capital expenditures of $132.8 million.

Capital Expenditures

Capital expenditures are accounted for as either project capital (new facilities or expansions) or maintenance (replacement) which is inclusive of projects such as our retail sportsbooks, our cashless, cardless and contactless technology and hotel renovations.

Cash provided by operating activities, as well as cash available under our Amended Revolving Credit Facility, was available to fund our capital expenditures for the three months ended March 31, 2024 and 2023, as applicable.

Capital expenditures for the three months ended March 31, 2024 and 2023, were $41.4 million and $63.2 million, respectively.

For the year ending December 31, 2024 , our anticipated capital expenditures, inclusive of insurance proceeds, are approximately $225.0 million, which include capital expenditures of $22.8 million, incurred for the three months ended March 31, 2024 and capital expenditures required under our Triple Net Leases, which require us to spend a specified percentage of total revenues.

Additionally f or the year ending December 31, 2024 , we anticipate capital project expenditures of $275.6 million in connection with the Aurora Project and Other Development Projects as a result of our Master Development Agreement with GLPI (as described in Note 8, “Leases” in the notes to our unaudited Consolidated Financial Statements), which include capital expenditures of $18.6 million for the three months ended March 31, 2024.

Cash provided by operating activities, as well as cash available under our Amended Revolving Credit Facility, was available to fund our capital expenditures for the six months ended June 30, 2024 and 2023, as applicable.

Capital expenditures for the six months ended June 30, 2024 and 2023, were $129.6 million and $132.8 million, respectively.

For the year ending December 31, 2024 , our anticipated capital expenditures, inclusive of insurance proceeds, are approximately $225.0 million, which include capital expenditures of $67.7 million, incurred for the six months ended June 30, 2024 and capital expenditures required under our Triple Net Leases, which require us to spend a specified percentage of total revenues.

Additionally f or the year ending December 31, 2024 , we anticipate capital project expenditures of $275.6 million in connection with the PENN Development Projects as a result of our Master Development Agreement with GLPI (as described in Note 8, “Leases” in the notes to our unaudited Consolidated Financial Statements), which include capital expenditures of $61.9 million for the six months ended June 30, 2024.

The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon PENN’s request, up to $350.0 million in the aggregate for the Other Development Projects, in accordance with certain terms and conditions set forth in the Master Development Agreement.

Financing Cash Flow

For the three months ended March 31, 2024, net cash used in financing activities totaled $50.1 million, primarily related to principal payments of $22.2 million on our finance leases and finance obligations, $12.2 million in payments on insurance financing, as well as $9.4 million in principal payments on long-term debt.

For the three months ended March 31, 2023, net cash used in financing activities totaled $83.0 million, primarily related to repurchases of our common stock of $50.0 million.

As of March 31, 2024, we had $2.8 billion in aggregate principal amount of indebtedness, including $1.5 billion outstanding under our Amended Credit Facilities (as defined in Note 7, “Long-term Debt” in the notes to our unaudited Consolidated Financial Statements), $400.0 million outstanding under our 5.625% Notes due 2027 (the “5.625% Notes”), $400.0 million outstanding under our 4.125% Notes due 2029 (the “4.125% Notes”), $330.5 million outstanding under our 2.75% Convertible Notes due 2026, and $183.4 million outstanding in other long-term obligations.

For the six months ended June 30, 2024, net cash used in financing activities totaled $128.6 million, primarily related to principal payments of $45.0 million on our finance leases and financing obligations, $17.5 million in payments on insurance financing, as well as $18.8 million in principal payments on long-term debt.

For the six months ended June 30, 2023, net cash used in financing activities totaled $214.1 million, primarily related to repurchases of our common stock of $149.8 million, as well as $42.7 million in principal payments on our finance leases and financing obligations and debt repayments of $18.8 million.

As of June 30, 2024, we had $2.8 billion in aggregate principal amount of indebtedness, including $1.5 billion outstanding under our Amended Credit Facilities (as defined in Note 7, “Long-term Debt” in the notes to our unaudited Consolidated Financial Statements), $400.0 million outstanding under our 5.625% Notes due 2027 (the “5.625% Notes”), $400.0 million outstanding under our 4.125% Notes due 2029 (the “4.125% Notes”), $330.5 million outstanding under our 2.75% Convertible Notes due 2026, and $185.4 million outstanding in other long-term obligations.

No amounts were drawn on our Amended Revolving Credit Facility (as defined in Note 7, “Long-term Debt” in the notes to our unaudited Consolidated Financial Statements).

We have no debt maturing prior to 2026.

As of March 31, 2024 we had conditional obligations under letters of credit issued pursuant to the Amended Credit Facilities with face amounts aggregating to $20.7 million resulting in $979.3 million available borrowing capacity under our Amended Revolving Credit Facility.

As of June 30, 2024, we had conditional obligations under letters of credit issued pursuant to the Amended Credit Facilities with face amounts aggregating to $20.9 million resulting in $979.1 million available borrowing capacity under our Amended Revolving Credit Facility.

Our Amended 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.

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We will continue to be required to maintain specified financial ratios and to satisfy certain financial tests when our Covenant Relief Period terminates after December 31, 2024.

As of March 31, 2024, the Company was in compliance with all required financial covenants.

As of June 30, 2024, 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.

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There is no minimum number of shares that the Company is required to repurchase and the repurchase authorization may be suspended or discontinued at any time without prior notice.

No shares of the Company’s common stock were repurchased during the three months ended March 31, 2024.

During the three months ended March 31, 2023, the Company repurchased 1,646,963 shares of its common stock in open market transactions for $50.0 million, at an average price of $30.36 per share under the previous $750.0 million February 2022 authorization.

No shares of the Company’s common stock were repurchased during the six months ended June 30, 2024.

During the six months ended June 30, 2023, the Company repurchased 5,438,221 shares of its common stock in open market transactions for $149.8 million, at an average price of $27.54 per share under the February 2022 and December 2022 Authorizations.

The cost of all repurchased shares is recorded as “Treasury stock” within our unaudited Consolidated Balance Sheets.

No shares of the Company’s common stock were repurchased subsequent to the quarter ended March 31, 2024.

As of May 1, 2024, the remaining availability under our December 2022 Authorization was $749.5 million.

No shares of the Company’s common stock were repurchased subsequent to the quarter ended June 30, 2024.

As of August 7, 2024, the remaining availability under our December 2022 Authorization was $749.5 million.

Other Factors Affecting Liquidity

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On August 8, 2023, PENN entered into the Sportsbook Agreement with ESPN which provides for a long-term strategic relationship between PENN and ESPN relating to online sports betting in the United States.

In November 2023, the existing Barstool Sportsbook was rebranded and launched across all online platforms in the United States as ESPN BET, and our online product includes a Hollywood-branded integrated iCasino where permitted.

The Sportsbook Agreement has an initial 10-year term and may be extended for an additional ten years upon mutual agreement of PENN and ESPN.

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The 2023 Master Lease terminated the individual triple net leases associated with Meadows and Perryville.

The 2023 Master Lease incurs a 1.5% fixed escalator on November 1 each year, and is also subject to a one-time increase of $1.4 million effective November 1, 2027.

The 2023 Master Lease and AR PENN Master Lease are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee.

The 2023 Master Lease incurs a 1.5% fixed escalator on November 1 of each year, and is also subject to a one-time increase of $1.4 million effective November 1, 2027.

The 2023 Master Lease and AR PENN Master Lease are cross-defaulted, cross-collateralized, coterminous, and subject to a parent guarantee.

The 2023 Master Lease includes the 2023 Master Lease Base Rent equal to $232.2 million and the Master Development Agreement contains additional rent (together with the 2023 Master Lease Base Rent, the “2023 Master Lease Rent”) equal to (i) 7.75% of any project funding received by PENN from GLPI for the Aurora Project and (ii) a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for the Other Development Projects.

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These funding obligations of GLPI expire on January 1, 2026.

The Aurora Project and the Other Development Projects have all commenced and are anticipated to open in late 2025 to early 2026.

The PENN Development Projects have all commenced and are anticipated to open by the first half of 2026.

Under our Triple Net Leases, in addition to lease payments for the real estate assets, we are required to pay the following, among other things:

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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) 2024 2023 2024 2023

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(iii) that we will achieve the expected synergies from our acquisitions;

(iv) that we will achieve the anticipated financial returns from our Sportsbook Agreement with ESPN;

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

(iv) that we will achieve the anticipated financial returns from our strategic initiatives, including, but not limited to, our Sportsbook Agreement with ESPN and the PENN Development Projects;

(v) and that future borrowings will be available under our Amended 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 that the performance and trends seen across our portfolio may not continue.

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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, 2023.

There have been no significant changes in our critical accounting estimates during the three months ended March 31, 2024.

There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2024.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements can be identified by the use of forward-looking terminology such as “expects,” “believes,” “estimates,” “projects,” “intends,” “plans,” “goal,” “seeks,” “may,” “will,” “should,” or “anticipates” or the negative or other variations of these or similar words, or by discussions of future events, strategies or risks and uncertainties.

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

the Company’s expectations of future results of operations and financial condition, the assumptions provided regarding the guidance, including the scale and timing of the Company’s product and technology investments;

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

the assumptions provided regarding the guidance, including the scale and timing of the Company’s product and technology investments;

the Company’s expectations regarding results and customer growth and the impact of competition in retail/mobile/online sportsbooks, iCasino, social gaming, and retail operations;

the Company’s development and launch of its Interactive segment’s products in new jurisdictions and enhancements to existing Interactive segment products, including the content for the ESPN BET and theScore BET Sportsbook and Casino apps and the further development of ESPN BET and theScore BET on our proprietary player account management system and risk and trading platforms;

the Company’s development and launch of its Interactive segment’s products in new jurisdictions and enhancements to existing Interactive segment products, including the content for the ESPN BET and theScore BET and the further development of ESPN BET and theScore BET on our proprietary player account management system and risk and trading platforms;

the benefits of the Sportsbook Agreement between the Company and ESPN;

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the Company’s expectations that its portfolio of assets provides a benefit of geographically-diversified cash flows from operations;

the Company’s expectations with respect to the ongoing introduction and the potential benefits of the cashless, cardless and contactless (3C’s) technology;

the Company’s plan to expand gaming operations through the implementation and execution of a disciplined capital expenditure program at our existing properties, the pursuit of strategic acquisitions and investments, and the development of new gaming properties, including the anticipated opening in 2026 of development projects at Hollywood Casinos Aurora, Joliet, Columbus, and the M Resort Spa Casino;

improvements, expansions, or relocations of our existing properties;

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the anticipated impact of accounting pronouncements;

and the Company’s expected payment of $30.5 million in settlement costs in the second quarter of 2024 relating to Barstool SPA indemnification obligations.

settlement costs relating to Barstool SPA indemnification obligations.

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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the effects of economic and market conditions in the markets in which the Company operates or otherwise, including the impact of global supply chain disruptions, price inflation, rising interest rates, slowing economic growth, and geopolitical uncertainty;

competition with other entertainment, sports content, and casino gaming experiences;

competition with other entertainment, sports content, and gaming experiences;

the timing, cost and expected impact of product and technology investments;

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

Considering these risks, uncertainties and assumptions, the forward-looking events discussed in this Form 10-Q may not occur.

Considering these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q may not occur.

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