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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-22 · 192 added, 242 removed, 442 unchanged (50% of the section changed)

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EXECUTIVE 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.

PENN Entertainment, Inc., together with its subsidiaries (“PENN,” or the “Company”), is North America’s leading provider of integrated entertainment, sports content, and casino gaming experiences.

As of the issuance date of this report, PENN operated in 28 jurisdictions throughout North America, with a broadly diversified portfolio of casinos, racetracks, and online sports betting, and iCasino offerings under well-recognized brands including Hollywood Casino ® , L’Auberge ® , ESPN BET™, and theScore BET Sportsbook and Casino ® .

PENN’s ability to leverage its partnership 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.

(together, “ESPN”), the “worldwide leader in sports,” and its ownership of theScore™, the top digital sports media brand in Canada, is central to the Company’s highly differentiated strategy to expand its footprint and efficiently grow its customer ecosystem.

PENN’s focus on organic cross-sell opportunities is reinforced by its 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 Game Studios).

The Company’s portfolio is further bolstered by its industry-leading PENN Play™ customer loyalty program, offering its approximately 32 million members a unique set of rewards and experiences.

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

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GLPI) (“GLPI”), a real estate investment trust (“REIT”), 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 in Note 11, “Leases” in the notes to our Consolidated Financial Statements and collectively referred to as the “Master Leases”).

Recent Acquisitions, Development Projects and Other

Recent Acquisitions, Dispositions, Development Projects, and Other

On February 17, 2023, we acquired the remaining 64% of the outstanding shares of Barstool Sports, Inc.

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

At the closing of the Barstool Acquisition, we obtained 100% of the Barstool common stock and determined the fair value of Barstool to be $660.0 million based on market participant assumptions and Barstool became an indirect wholly owned subsidiary of PENN.

See Note 6, “Acquisitions and Dispositions,” Note 7, “Investments in and Advances to Unconsolidated Affiliates,” and Note 15, “Stockholders’ Equity” in the notes to our Consolidated Financial Statements for further discussion.

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 the existing Barstool Sportsbook across all online platforms in the United States as ESPN BET (the “Sportsbook”) and oversees daily operations of the Sportsbook.

The Sportsbook will be deeply integrated within the broader ESPN editorial, content, digital product, and sports programming ecosystem, with access to ESPN’s industry leading audience and database.

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.

In addition to the Sportsbook Agreement, on August 8, 2023, PENN and ESPN, Inc.

entered into an Investment Agreement (the “Investment Agreement”) providing for the issuance to ESPN, Inc.

of certain warrants to purchase shares of PENN common stock, and setting forth certain other governance rights of ESPN, Inc., as discussed in Note 13, “Commitments and Contingencies” in the notes to our Consolidated Financial Statements.

In connection with PENN’s decision to rebrand our online sports betting business from Barstool Sportsbook to ESPN BET pursuant to the Sportsbook Agreement 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.

In connection with 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) during the third quarter of 2023.

See Note 6, “Acquisitions and Dispositions” in the notes to our Consolidated Financial Statements.

of certain warrants to purchase shares of PENN common stock, and setting forth certain other governance rights of ESPN, Inc.

See Note 12, “Commitments and Contingencies” in the notes to our Consolidated Financial Statements for additional information.

On August 8, 2023, we entered into a stock purchase agreement with David Portnoy (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.

See Note 5, “Acquisitions and Dispositions” and Note 18, “ Fair Value M e asurements ” in the notes to our Consolidated Financial Statements.

For information on the tax-related impacts from the Barstool transaction, see Note 13, “Income Taxes” in the notes to our Consolidated Financial Statements.

On February 21, 2023, as described in Note 12, “Leases” in the notes to our Consolidated Financial Statements, 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.

On February 21, 2023, as described in Note 11, “Leases” in the notes to our Consolidated Financial Statements, the Company and GLPI entered into an agreement to amend and restate the triple net master lease dated November 1, 2013 (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).

The AR PENN Master Lease remains subject to annual rent escalators and a percentage rent reset every five years.

Concurrent with the execution of the AR PENN Master Lease, the Company and GLPI entered into a new master lease (the “2023 Master Lease”), effective January 1, 2023, specific to the properties 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 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 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 Master Development Agreement provides that PENN may elect not to proceed with a development project prior to GLPI’s commencement of any equity or debt offering or credit facility draw intended to fund such a project or after such time in certain instances, provided that GLPI will be reimbursed for all costs and expenses incurred in connection with such discontinued project.

The Aurora Project and the Other Development Projects are all subject to necessary regulatory and other government approvals.

We expect our new Joliet facility to open in the fourth quarter of 2025, and the new hotel tower at the M Resort, the new Aurora facility, and the Columbus hotel tower to open in 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 Score 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.

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.

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.

In addition, strategic acquisitions (e.g.

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 The Kroger Company, Ticketmaster Entertainment, LLC, Norwegian Cruise Line Holdings Ltd., Live Nation Entertainment, Inc., and Choice Hotels International, Inc.

In addition, our strategic acquisitions (e.g.

theScore) and strategic relationships (e.g.

our Sportsbook Agreement with ESPN), allow us to acquire new customers, expand our player database, and provide additional revenue streams, all in furtherance of our omnichannel strategy.

our Sportsbook Agreement with ESPN), are expected to allow us to acquire new customers, expand our player database, and provide additional revenue streams, all in furtherance of our omnichannel strategy.

The gaming, media, and entertainment industries are characterized by an increasingly high degree of competition among a large number of participants.

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However, based on our experience, we can generally offer some insight into the factors that we believe are likely to account for such changes and which factors may have a greater impact than others.

For example, decreases in discretionary consumer spending have historically been brought about by weakened general economic conditions, such as recessions, inflation, rising interest rate environments, high unemployment levels, higher income taxes, low levels of consumer confidence, weakness in the housing market, high fuel or other transportation costs, low consumer confidence, and the effects of pandemics.

For example, decreases in discretionary consumer spending have historically been brought about by actual or perceived weakened general economic conditions, such as recessions, inflation, rising interest rate environments, tight credit conditions, high unemployment levels, higher income taxes, low levels of consumer confidence, weakness in the housing market, high fuel or other transportation costs, low consumer confidence, global hostilities, political or social unrest, and the effects of pandemics.

In addition, visitation and the volume of play have historically been negatively impacted by significant construction surrounding our properties, adverse regional weather conditions, and natural disasters.

In all instances, such insights are based solely on our judgment and professional experience, and no assurance can be given as to the accuracy of our judgments.

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

The 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 86%, 85%, and 84% of our gaming revenue in 2024, 2023, and 2022, respectively) and, to a lesser extent, table games, online sports betting, and iCasino.

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The win or hold percentage is the net amount of gaming wins and losses, with liabilities recognized for accruals related to the anticipated payout of progressive jackpots.

Given the stability in our slot hold percentages on a historical basis, we have not experienced significant impacts to net income (loss) from changes in these percentages.

For table games, customers usually purchase chips at the gaming tables.

Given the stability in our slot hold percentages on a historical basis, we have not experienced significant impacts to net income from changes in these percentages.

For table games, customers usually purchase chips at the tables.

The cash and markers (extensions of credit granted to certain credit-worthy customers) are deposited in the gaming table’s drop box.

Table game hold is the amount of drop that is retained and recorded as gaming revenue, with liabilities recognized for funds deposited by customers before gaming play occurs and for unredeemed gaming chips.

As we are primarily focused on regional gaming markets, our table game hold percentages are fairly stable as the majority of these markets do not regularly experience high-end play, which can lead to volatility in hold percentages.

As we are primarily focused on regional gaming markets, our table game hold percentages are fairly stable as the majority of these markets do not regularly experience high-value play, which can lead to volatility in hold percentages.

Therefore, changes in table game hold percentages do not typically have a material impact to our results of operations and cash flows.

Key performance indicators related to online gaming revenue, including online sports betting and iCasino, are handle, which is a volume indicator, and “win” or “hold” percentage.

Our online sports betting win percentage is in the range of approximately 4.6% to 9.2% of online handle, online slot win percentage is in the range of approximately 4.5% to 4.9% of online slot handle, and our online table game hold percentage is in the range of approximately 1.6% to 2.2% of online table game handle.

For online gaming, customers deposit cash into their online accounts for use in online sports betting and iCasino play.

Liabilities are recognized for online player account funds that have not been withdrawn and for wagers that have been placed on events that have not yet occurred.

Online sportsbook handle is the gross amount wagered during a given period.

The win or hold percentage is the net amount of gaming wins and losses, with liabilities recognized for any bonus funds deposited into player accounts.

Given that online sports betting wagers are made based on the outcomes of future sporting events, the win or hold percentage can vary based on the bet type (i.e.

straight wagers vs.

parlay wagers).

Online slot handle is the gross amount wagered during a given period.

The win or hold percentage is the net amount of gaming wins and losses, with liabilities recognized for accruals related to the anticipated payout of online progressive jackpots.

Given the stability in our online slot hold percentages on a historical basis, we have not experienced significant impacts to the results of our operations or cash flows from changes in these percentages.

Online table game hold is the amount of handle that is retained and recorded as gaming revenue.

Our online table game hold percentages are fairly stable as we do not regularly experience high-value online play, which can lead to volatility in hold percentages.

Given the stability in our online table game hold percentages on a historical basis, we have not experienced significant impacts to the results of our operations or cash flows from changes in these percentages.

Under normal operating conditions, our properties generate significant operating cash flow since most of our revenue is cash-based from slot machines and table games.

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Reportable Segments

We have aggregated our operating segments into five reportable segments.

Retail operating segments are based on the similar characteristics within the regions in which they operate:

Northeast, South, West, and Midwest.

The Interactive segment 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 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” ).

We view each of our gaming and racing properties as an operating segment with the exception of our two properties in Jackpot, Nevada, which we view as one operating segment.

We have five reportable segments:

Northeast, South, West, Midwest, and Interactive.

The Northeast, South, West, and Midwest segments (referred to as our “retail segments”) primarily generate revenue from gaming operations (such as slot machines and table games), food and beverage offerings and hotel visitation.

The Interactive segment 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 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 5, “Acquisitions and Dispositions” in the notes to our Consolidated Financial Statements ).

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.

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 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 Consolidated Financial Statements.

RESULTS OF OPERATIONS

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Adjusted EBITDA margin 10.2 % 14.5 % 28.0 %

(1) The Other category consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Parks (the remaining 50% was acquired by PENN on August 1, 2021), the Company’s joint venture interests in Freehold Raceway;

and our management contract for Retama Park Racetrack.

(1) The Other category, included in the tables to reconcile the segment information to the consolidated information, 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 (which ceased operations on December 28, 2024), and our management contract for Retama Park Racetrack.

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

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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 $106.7 million, $98.5 million, and $103.3 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Corporate overhead costs were $104.8 million, $106.7 million, and $98.5 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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

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

(4) For the year ended December 31, 2023, pertains to the following operating leases:

(4) For the years ended December 31, 2024 and 2023, pertains to the following operating leases:

(i) AR PENN Master Lease;

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and (iv) Greektown Lease.

For the year ended December 31, 2022, pertains to the operating lease components contained within the (i) PENN Master Lease (specific to the land and building components associated with the operations of Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley

Race Course);

(ii) Meadows Lease;

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and (v) Tropicana Lease (which terminated on September 26, 2022).

For the year ended December 31, 2021, pertains to the operating lease components contained within the (i) PENN Master Lease (specific to the land, inclusive of the variable expense associated with Columbus and Toledo) ;

(ii) Pinnacle Master Lease (specific to the land);

(iii) Meadows Lease;

(iv) Margaritaville Lease;

(v) Greektown Lease;

and (vi) Tropicana Lease.

Consolidated comparison of the years ended December 31, 2024 and 2023

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Total revenues $ 6,578.1 $ 6,362.9 $ 6,401.7 $ 215.2 $ (38.8) 3.4 % (0.6) %

Gaming revenues for the year ended December 31, 2023 decreased by $295.9 million compared to the prior year primarily due to a decrease in visitation in the South segment, decreases in online gaming revenues in our Interactive segment due to elevated promotional expense related to customer acquisitions through the launch of ESPN BET , and the sale of the Tropicana Las Vegas Hotel and Casino, Inc.

(“Tropicana”) operations in September 2022.

The prior year included Tropicana revenues through the sale on September 26, 2022, compared to none in the current year.

Food, beverage, hotel, and other revenues for the year ended December 31, 2023 increased by $257.1 million compared to the prior year, primarily due to increases in gaming tax reimbursement amounts charged to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access, as well as the inclusion of 100% of the operating results of Barstool subsequent to the Barstool Acquisition on February 17, 2023 until the disposition on August 8, 2023.

Gaming revenues for the year ended December 31, 2024 increased by $263.7 million compared to the prior year, primarily due to an increase in gaming revenues at our Interactive segment, partially offset by a decrease in gaming revenues within our South segment.

In addition to severe weather events negatively impacting our South segment operations during the third quarter , severe weather affected weekends and holidays across all our regional property segments during the first quarter, negatively impacting our operations.

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

Food, beverage, hotel, and other revenues for the year ended December 31, 2024 decreased by $48.5 million compared to the prior year, primarily due to the inclusion of 100% of the operating results of Barstool subsequent to the Barstool Acquisition on February 17, 2023 and prior to the Barstool disposal on August 8, 2023 in the prior year.

Due to the Barstool disposal, the current year does not include any Barstool revenues.

T his 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 $45.2 million compared to the prior year.

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

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Food, beverage, hotel, and other

985.5 1,011.4 767.2 (25.9) 244.2 (2.6) % 31.8 %

General and administrative 1,568.4 1,563.4 1,110.4 5.0 453.0 0.3 % 40.8 %

Depreciation and amortization 433.6 435.1 567.5 (1.5) (132.4) (0.3) % (23.3) %

Impairment losses 130.6 118.2 — 12.4 118.2 10.5 % N/M

Impairment losses 89.1 130.6 118.2 (41.5) 12.4 (31.8) % 10.5 %

Loss on disposal of Barstool — 923.2 — (923.2) 923.2 N/M N/M

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N/M - Not meaningful

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

Gaming expenses for the year ended December 31, 2023 increased by $125.0 million compared to the prior year primarily due to increased payroll and marketing costs, partially offset by a decrease in gaming taxes due to the decrease in gaming revenues as described above .

Also included in gaming expenses are certain non-recurring transaction costs of $16.8 million and $26.0 million for the years ended December 31, 2023 and 2022, respectively , related to third-party contract termination fees as we executed on our strategy to deploy our internally built technology stack, consisting of a player account management system and proprietary risk and trading platform, specific to the Interactive segment.

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

Gaming expenses for the year ended December 31, 2024 increased by $439.6 million compared to the prior year, primarily due to costs related to the Sportsbook Agreement and Investment Agreement with ESPN which commenced on August 8, 2023 (see Note 12, “Commitments and Contingencies” in the notes to our Consolidated Financial Statements) and increased gaming costs driven by increased ESPN BET volumes.

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

Food, beverage, hotel and other expenses for the year ended December 31, 2023 increased $244.2 million compared to the prior year, primarily due to increases in gaming tax reimbursement amounts charged to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access , as well as the inclusion of operating expenses related to Barstool subsequent to the Barstool Acquisition on February 17, 2023 until the disposition on August 8, 2023.

Food, beverage, hotel, and other expenses for the year ended December 31, 2024 decreased $25.9 million compared to the prior year, primarily due to the inclusion of

Barstool operating expenses in the prior year subsequent to the Barstool Acquisition on February 17, 2023 and prior to the Ba rstool disposal on August 8, 2023.

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

The decrease for the year ended December 31, 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.

General and administrative expenses for the year ended December 31, 2023 increased by $453.0 million compared to the prior year primarily due to an increase in rent expense associated with triple net operating leases of $441.5 million stemming from the execution on February 21, 2023 of both the AR PENN Master Lease and 2023 Master Lease.

The impact of those aforementioned lease transactions resulted in the classification of all land components and building components to be operating leases of which the associated rent expense is recorded to “General and administrative” as described in Note 12, “Leases” to our Consolidated Financial Statements.

Depreciation and amortization for the year ended December 31, 2023 decreased year over year primarily due to a decrease in depreciation and amortization costs stemming from the execution on February 21, 2023 of both the AR PENN Master Lease and 2023 Master Lease.

Prior to the execution of the aforementioned lease transactions, primarily all of the building components of the PENN Master Lease were classified as financing obligations of which depreciation of the associated property and equipment assets were previously recorded to “Depreciation and amortization” expense.

Additionally, primarily all of the land components contained within the PENN Master Lease and the land and building components contained within the Perryville Lease were classified as finance leases of which amortization of the lease right-of-use assets (“ROU”) were recorded to “Depreciation and amortization” expense.

The impact of these aforementioned lease transactions resulted in the classification of all land components and building components associated with the AR PENN Master Lease and 2023 Master Lease to be operating leases with the associated rent expense recorded to “General and administrative” as described in Note 12, “Leases” to our Consolidated Financial Statements.

General and administrative expenses for the year ended December 31, 2024 increased by $5.0 million compared to the corresponding prior year, primarily due to an increase in rent expense associated with triple net operating leases of $29.0 million stemming primarily from annual escalators on our triple net operating leases.

The increase was offset by a decrease in stock-based compensation.

Depreciation and amortization for the year ended December 31, 2024 decreased $1.5 million compared to the corresponding prior year.

Impair ment losses for the year ended December 31, 2024 relate to impairment charges taken on our goodwill and other intangible assets of $12.3 million and $76.8 million, respectively, as a result of our annual impairment assessment during the fourth quarter of 2024.

The impairment of goodwill was specific to our Hollywood Casino at Greektown (“Greektown”) reporting unit and is due to continued economic challenges in the region in which it operates.

As a result, we revised the cash flow projections for the reporting unit to be reflective of the current operating results and related economic environment.

The impairment of gaming licenses related to (i) Greektown due to the reasons discussed above;

(ii) Hollywood Casino at PENN National Race Course (“PNRC”) and was largely due to the former expansion of gaming legislation in the market and increased supply, particularly from our recent openings of Hollywood Casino York and Hollywood Casino Morgantown, which continues to reduce the long-term projections of the property;

and (iii) Ameristar East Chicago and was largely due to increased supply in the region.

See Note 9, “Goodwill and Other Intangible Assets” to our Consolidated Financial Statements for further discussion.

Impairment losses for the year ended December 31, 2022 primarily relate to impairment charges at our Greektown property for goodwill and other intangible assets of $37.4 million and $65.4 million, respectively, as a result of an interim impairment assessment during the third quarter of 2022 as well as an impairment charge at our PNRC property for other intangible assets of $13.6 million as a result of our annual impairment assessment during the fourth quarter of 2022.

The impairment charges recorded in 2022 at Greektown were due to revised cash flow projections as the majority of the hotel was out of service for longer than anticipated during renovations caused by water damage.

The impairment charge at PNRC was largely due to the expansion of gaming legislation in the market and increased supply, particularly from our recent openings of Hollywood Casino York and Hollywood Casino Morgantown, which reduced long-term projections of the property.

Loss on disposal of Barstool relates to the loss on the sale of 100% of the outstanding shares of Barstool to David Portnoy in exchange for nominal cash consideration (one dollar) as described in Note 6, “Acquisitions and Dispositions” in the notes to our Consolidated Financial Statements.

Increased competition in our South and Midwest segments led to slight reductions in long-term projections at some of our properties which resulted in goodwill impairment charges in 2024.

Increased supply has led to reductions in long-term projections for certain of our properties in our Northeast and South segments, resulting in gaming license and trademark impairment charges at certain reporting units in both of those segments in 2024.

Refer to Note 8 , “ Goodwill and Other Intangible Assets ” in the notes to our Consolidated Financial Statements for further discussion of impairment charges.

Loss on disposal of Barstool relates to the loss on the sale of 100% of the outstanding shares of Barstool to David Portnoy in exchange for nominal cash consideration as described in Note 5, “Acquisitions and Dispositions” in the notes to our Consolidated Financial Statements.

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

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Loss on early extinguishment of debt $ (0.3) $ — $ (10.4) $ (0.3) $ 10.4 N/M N/M

Other $ 5.5 $ (72.1) $ 2.5 $ 77.6 $ (74.6) N/M N/M

Income tax benefit (expense) $ 8.2 $ 46.4 $ (118.6) $ (38.2) $ 165.0 (82.3) % N/M

Other $ 5.3 $ 5.5 $ (72.1) $ (0.2) $ 77.6 (3.6) % N/M

Income tax benefit $ 28.0 $ 8.2 $ 46.4 $ 19.8 $ (38.2) 241.5 % (82.3) %

N/M - Not meaningful

Interest expense, net decreased for the year ended December 31, 2023, as compared to the prior year, primarily due to a net decrease in Master Lease interest costs of $348.2 million due to changes in lease classifications as a result of the amendment of the PENN Master Lease, as described in Note 12, “Leases” to our Consolidated Financial Statements, partially offset by an increase in interest expense on our Senior Secured Credit Facilities related to an overall increase in interest rates.

Interest income increased for the year ended December 31, 2023, as compared to the prior year, primarily due to executing on our short term investing strategy utilizing money market funds which commenced during the year ended December 31, 2022.

Income from unconsolidated affiliates relates principally to our investment in Kansas Entertainment and Freehold Raceway joint ventures, as well as Barstool (prior to the Barstool Acquisition on February 17, 2023).

The change in income from the prior year is due fluctuations in earnings from our investments in these unconsolidated affiliates.

Interest expense, net increased for the year ended December 31, 2024, as compared to the prior year, due to overall increase in interest rates on our Senior Secured Credit Facilities as well as the Pinnacle Master Lease rent escalator effective May 1, 2024.

Interest income decreased for the year ended December 31, 2024, as compared to the prior year, 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 the Kansas Entertainment and Freehold Raceway joint venture.

Operations at Freehold Raceway ceased on December 28, 2024.

The increase of $2.8 million for the year ended December 31, 2024, compared to the corresponding prior year, is due to the year ended December 31, 2023 including a $4.1 million loss for Barstool prior to the Barstool Acquisition on February 17, 2023.

Gain on Barstool Acquisition, net 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” to our Consolidated Financial Statements.

The gain consists 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 relates to the amendment and restatement of the PENN Master Lease 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 the Meadows Lease and the Perryville Lease were terminated which resulted in a $6.5 million loss from the derecognition of ROU assets and lease liabilities.

Gain on REIT transactions, net relates to the execution of both the AR PENN Master Lease and 2023 Master Lease on February 21, 2023, effective January 1, 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.

See Note 11, “Leases” to our Consolidated Financial Statements for additional details on both of these transactions.

Loss on early extinguishment of debt relates to the refinancing of the previous Senior Secured Credit Facilities in the prior year.

Loss on early extinguishment of debt relates to the repricing of the Senior Secured Credit Facilities on December 4, 2024.

See Note 10, “Long-term Debt” to our Consolidated Financial Statements for further discussion.

Other primarily relates to realized and unrealized gains and losses on equity securities held by PENN Interactive, as well as miscellaneous income and expense items.

Other primarily relates to realized and unrealized gains and losses on equity securities held by PENN Interactive, unrealized gains and losses related to certain Barstool shares (prior to the Barstool Acquisition on February 17, 2023), as well as miscellaneous income and expense items.

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 year ended December 31, 2023, other income primarily consisted of dividend income of $10.8 million, offset by unrealized holding losses of $6.4 million on equity shares.

For the year ended December 31, 2022, other income primarily related to unrealized holding losses of $69.9 million on equity shares.

Income tax benefit (expense) fo r the year ended December 31, 2023, was an $8.2 million benefit, as compared to a $46.4 million benefit for the year ended December 31, 2022.

Our effective tax rate (income taxes as a percentage of income from operations before income taxes) was 1.7% for the year ended December 31, 2023, as compared to (26.5)% for the ye ar ended

December 31, 2022.

The effective tax rates for both 2023 and 2022 are not correlated to the amount of our income or loss before income taxes due to the impact of the significant nondeductible losses sustained from the Barstool divestiture and releasing the federal valuation allowance, respectively.

The Company’s effective tax rate in the current year is lower than the federal statutory rate of 21% due to the effect of nondeductible officers’ compensation, increase in the valuation allowance and the nondeductible loss sustained from the Barstool divestiture as discussed in Note 6, “Acquisitions and Dispositions” and Note 14, “Income Taxes.”

Accordingly, the valuation allowance was reduced by $113.4 million resulting in a substantial decrease in income tax expense for the year ended De cember 31, 2022.

During 2023, the Company increased the valuation allowance by $179.0 million for the capital loss carryforward generated from the Barstool divestiture transaction and for certain foreign and state deferred tax assets that are not more likely than not to be realized, resulting in an increase to income tax expense for the year ended December 31, 2023.

For the year ended December 31, 2024 , other income primarily consisted of dividend income of $4.4 million, offset by an unrealized holding loss of $0.1 million.

For the year e nded December 31, 2023 other income primarily consisted of dividend income of $10.8 million, offset by an unrealized holding loss of $6.4 million.

Income tax benefit fo r the year ended December 31, 2024, was $28.0 million, as compared to $8.2 million for the year ended December 31, 2023.

Our effective tax rate (income taxes as a percentage of income from operations before income taxes) was 8.2% for the year ended December 31, 2024, as compared to 1.7% for the ye ar ended December 31, 2023.The effective tax rates for both 2024 and 2023 are not correlated to the amount of our loss before income taxes due to the foreign losses for which no benefit was recognized and the impact of the significant nondeductible losses sustained from the Barstool divestiture, respectively.

The Company’s effective tax rate in the current year is lower than the federal statutory rate of 21%, primarily because of nondeductible compensation and an increase in the valuation allowances on both foreign and certain state losses that are more likely than not to be utilized before expiring, as discussed in Note 5 , “ Acquisition s and Dispositions ” and Note 13, “Income Taxes.”

Accordingly, the Company increased the valuation allowance by $61.1 million during 2024 on foreign and certain state and deferred tax assets and $179.0 million in 2023 for the capital loss carryforward generated from the Barstool divestiture transaction and for certain foreign and state deferred tax assets that are not more likely than not to be realized, resulting in an increase to income tax expense.

See Note 13, “Income Taxes” to our Consolidated Financial Statements for further discussion.

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Adjusted EBITDAR margin 29.1 % 30.3 % 31.3 % (120) bps (100) bps

The Northeast segment’s revenues for the year ended December 31, 2023 increased by $42.5 million over the prior year, primarily due to increases in gaming and non-gaming revenues at our Greektown, Plainridge Park Casino, and Columbus properties, as well as increased visitation to our food and beverage outlets, offset by a reduction in gaming revenues, primarily at our Hollywood Casino Lawrenceburg and Ameristar East Chicago properties due to increased competition.

For the year ended December 31, 2023 the Northeast segment’s Adjusted EBITDAR decreased by $11.5 million as compared to the prior year, and Adjusted EBITDAR margin decreased to 30.3%, due to increased payroll costs and the negative impact of the union strike at Greektown in November 2023.

The Northeast segment’s revenues for the year ended December 31, 2024 increased by $17.3 million over the prior year, primarily due to increases in gaming and non-gaming revenues at several of our properties, as well as increased visitation to our food and beverage outlets, offset by a reduction in gaming revenues at several of our properties due to increased competition.

For the year ended December 31, 2024 the Northeast segment’s Adjusted EBITDAR decreased by $30.0 million as compared to the prior year, and Adjusted EBITDAR margin decreased to 29.1%, primarily due to the reversal of certain accrued gaming taxes in the prior year and increased labor costs in the current year .

South Segment

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Adjusted EBITDAR margin 37.1 % 40.6 % 41.7 % (350) bps (110) bps

The South segment’s revenues for the year ended December 31, 2023 decreased by $97.8 million over the prior year, primarily due to a decrease in visitation at many properties, partially due to increased competition that affected our L’Auberge

Lake Charles and Margaritaville properties and inclement weather during the first half of the year.

During the prior year period, particularly in the first quarter, there were COVID restrictions in place in downtown New Orleans which increased visitation to our Hollywood Casino Gulf Coast, Boomtown New Orleans, and L’Auberge Baton Rouge properties .

For the year ended December 31, 2023 , the South segment’s Adjusted EBITDAR decreased by $54.0 million and Adjusted EBITDAR margin decreased to 40.6%, primarily due to the decrease in gaming revenues as described above.

The South segment’s revenues for the year ended December 31, 2024 decreased by $47.4 million over the prior year, 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 and third quarter of 2024 negatively impacted our operations.

Food, beverage, hotel, and other revenues decreased primarily due to the acceleration of hotel remodeling in the third quarter of 2024, and the negative weather impact on operations, as discussed above.

For the year ended December 31, 2024 , the South segment’s Adjusted EBITDAR decreased by $60.9 million as compared to the prior year, and Adjusted EBITDAR margin decreased to 37.1%, primarily due to the decrease in gaming revenues as described above.

Additionally, the year ended December 31, 2023 was positively i mpacted by the receipt of $19.6 million in business interruption proceeds related to the loss experienced in 2020 due to Hurricane Laura.

For the year ended December 31, $ Change % / bps Change

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Adjusted EBITDAR margin 35.7 % 38.6 % 37.8 % (290) bps 80 bps

The West segment’s revenues for the year ended December 31, 2023 decreased by $53.4 million over the prior year, primarily due to the sale of the Tropicana operations in September 2022 and a decrease in gaming revenues at Ameristar Black Hawk, partially offset by an increase in revenues at Zia Park Casino.

The corresponding prior year included Tropicana revenues through the sale on September 26, 2022, compared to none in the current year .

For the year ended December 31, 2023, the West segment’s Adjusted EBITDAR decreased by $15.9 million primarily d ue to the decrease in revenues at Ameristar Black Hawk and the sale of Tropicana, as discussed above.

Additionally, Adjusted EBITDAR margin increased to 38.6% primarily due to the sale of Tropicana which had a negative impact on margins in the prior year period .

The West segment’s revenues for the year ended December 31, 2024 decreased by $3.2 million over the prior year, primarily due to road construction and increased competition negatively impacting visitation at our West segment properties, partially offset by an increase in food, beverage, hotel, and other revenues.

For the year ended December 31, 2024, the West segment’s Adjusted EBITDAR decreased by $16.7 million as compared to the prior year, and Adjusted EBITDAR margin decreased to 35.7%, primarily due to the decreases in gaming revenues discussed above and increased labor costs.

Midwest Segment

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Adjusted EBITDAR margin 41.5 % 42.4 % 43.2 % (90) bps (80) bps

The Midwest segment’s revenues for the year ended December 31, 2023 increased by $13.0 million over the prior year, primarily due to increased visitation at our hotels and food and beverage outlets.

For the year ended December 31, 2023, the Midwest segment’s Adjusted EBITDAR decreased by $4.6 million primarily due to an increase in payroll costs, partially offset by increased non-gaming revenues.

The increase in payroll costs also affected A djusted EBITDAR margin, which decreased to 42.4%.

The Midwest segment’s revenues for the year ended December 31, 2024 decreased by $0.4 million over the prior year , primarily due to a decrease in gaming revenues as severe weather events in the first quarter of 2024 negatively impacted visitation.

The decrease was partially offset by an increase in food and beverage revenues.

For the year ended December 31, 2024, the Midwest segment’s Adjusted EBITDAR decreased by $9.8 million as compared to the prior year, and Adjusted EBITDAR margin decreased to 41.5%, primarily due to the decreases in gaming revenues discussed above and increased labor costs.

Interactive Segment

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N/M - Not meaningful

The Interactive segment’s revenues for the year ended December 31, 2023 increased by $55.7 million, compared to the prior year, primarily due to an increase in food, beverage, hotel, and other revenue, partially offset by a decrease in gaming revenue.

Food, beverage, hotel, and other revenue increased primarily due to the inclusion of 100% of the operating results of Barstool until its disposition on August 8, 2023 and the inclusion of a tax gross-up of $390.4 million for the year ended December 31, 2023, compared to $251.6 million for year ended December 31, 2022.

Online gaming revenue decreased due to elevated promotional expense resulting from the high volume of customers acquired through the launch of ESPN BET and unfavorable hold from sports results.

For the year ended December 31, 2023, the Interactive segment’s Adjusted EBITDAR decreased primarily due to increases in promotional incentives and marketing expense upon the launch of ESPN BET in November 2023.

This also caused a decrease in Adjusted EBITDAR margin .

The Interactive segment’s revenues for the year ended December 31, 2024 increased by $241.1 million, compared to the prior year, primarily due to an increase in gaming revenues.

Gaming revenues were positively impacted by an increase in gaming volume compared to the prior year, as 2024 contains a full year of ESPN BET operating results and lower promotional expenses.

The increase was partially offset by a decrease in other revenues, of which $99.2 million relates to Barstool revenues subsequent to the Barstool Acquisition on February 17, 2023 and prior to the Barstool disposal on August 8, 2023 being included in the year ended December 31, 2023.

Due to the Barstool disposal, the current year does not i nclude any Barstool operating results.

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 $435.6 million, $390.4 million, and $251.6 million for the years ended December 31, 2024, 2023, and 2022, respectively.

For the year ended December 31, 2024, the Interactive segment’s Adjusted EBITDAR decreased by $97.0 million as compared to the prior year, primarily due to the decrease in other revenues as discussed above, as well as costs related to the Sportsbook Agreement and Investment Agreement with ESPN, which commenced on August 8, 2023.

Adjusted EBITDAR margin increased primarily due to the increase in gaming revenues as discussed above.

For the year ended December 31, $ Change % / bps Change

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Revenues have decreased slightly compared to the prior ye ar, primarily due to fluctuations in racing revenues.

Changes in Adjusted EBITDAR for the year ended December 31, 2023 primarily relate to an increase in payroll costs.

Changes in Adjusted EBITDAR for the year ended December 31, 2024 primarily relate to increased labor costs, slightly offset by a decrease in general and administrative costs.

Non-GAAP Financial Measures

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Each of these non-GAAP financial measures is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure of comparing performance among different companies.

We define Adjusted EBITDA as earnings before interest expense, net;

interest income;

income taxes;

depreciation and amortization;

stock-based compensation;

debt extinguishment charges;

impairment losses;

insurance recoveries, net of

deductible charges;

changes in the estimated fair value of our contingent purchase price obligations;

gain or loss on disposal of assets;

the difference between budget and actual expense for cash-settled stock-based awards;

pre-opening expenses;

loss on disposal of a business;

non-cash gains/losses associated with REIT transactions as described in Note 12, “Leases” to our Consolidated Financial Statements;

non-cash gains/losses associated with partial and step acquisitions as measured in accordance with ASC 805 “Business Combinations”;

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

income taxes;

depreciation and amortization;

and stock-based compensation expense) added back for Barstool (prior to our acquisition of the remaining 64% of Barstool common stock on February 17, 2023) and our Kansas Entertainment, LLC joint venture.

We define Adjusted EBITDA as earnings before interest expense, net, interest income, income taxes, depreciation and amortization, stock-based compensation, debt extinguishment charges, impairment losses, insurance recoveries, net of deductible charges, changes in the estimated fair value of our contingent purchase price obligations, gain or loss on disposal of assets, the difference between budget and actual expense for cash-settled stock-based awards, pre-opening expenses, loss on disposal of business, non-cash gains/losses associated with REIT transactions as described in Note 11, “Leases” to our Consolidated Financial Statements, non-cash gains/losses associated with partial and step acquisitions as measured in accordance with ASC Topic 805, “Business Combinations,” and other.

Adjusted EBITDA is inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as interest expense, net, income taxes, depreciation and amortization, and stock-based compensation expense) added back for Barstool Sports (prior to our acquisition of the remaining 64% of Barstool common stock on February 17, 2023) and our Kansas Entertainment, LLC joint venture.

Adjusted EBITDA is inclusive of rent expense associated with our triple net operating leases with our REIT landlords.

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Net income (loss) $ (313.3) $ (491.4) $ 221.7

Income tax (benefit) expense (8.2) (46.4) 118.6

Income tax benefit (28.0) (8.2) (46.4)

Interest expense, net 470.5 464.7 758.2

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

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

Beginning with the quarter ended June 30, 2021, acquisition costs are presented as part of other expenses.

(4) For the years ended December 31, 2023 and 2022, amounts relate to impairment charges in our Northeast segment of $130.6 million and $116.4 million, respectively.

See Note 9, “ Goodwill and Other Intangible Assets .

(3) For the year ended December 31, 2024, impairment charges relate to the Northeast, South, and Midwest segments.

For the years ended December 31, 2023 and 2022, impairment charges relate to the Northeast segment.

(4) Consists principally of interest expense, net, income taxes, depreciation and amortization, and stock-based compensation expense associated with Barstool prior to us acquiring the remaining 64% of Barstool common stock (see Note 5, “Acquisitions and Dispositions” ) and our Kansas Entertainment joint venture.

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LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity and capital resources have been and will continue to be cash flow from operations, borrowings from banks and proceeds from the issuance of debt and equity securities.

Our primary sources of liquidity and capital resources have been and are expected to be cash flow from operations, borrowings from banks, and proceeds from the issuance of debt and equity securities.

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.

We currently believe that our operating cash flow and other sources of liquidity, as described herein, will be sufficient to meet our liquidity needs on a short and long-term basis.

For the year ended December 31, $ Change % Change

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Net cash used in investing activities $ (541.2) $ (742.6) $ (258.6) $ 201.4 $ (484.0) (27.1) % 187.2 %

Net cash provided by (used in) financing activities $ (262.6) $ (853.0) $ 339.9 $ 590.4 $ (1,192.9) (69.2) % N/M

N/M - Not meaningful

Net cash used in financing activities $ (186.5) $ (262.6) $ (853.0) $ 76.1 $ 590.4 (29.0) % (69.2) %

Operating Cash Flow

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 operating activities decreased by $422.3 million for the year ended December 31, 2023 primarily due to a decrease in income before taxes and an increase in payments associated with the operating components contained within our Triple Net Leases (as defined below).

Net cash provided by operating activities decreased by $96.6 million for the year ended December 31, 2024 primarily due to a decrease in our reportable segments’ Adjusted EBITDAR, partially offset by changes in working capital primarily related to gaming receivables, accrued gaming taxes, and advanced payments and deposits.

Additionally, cash paid for interest and income taxes decreased compared to the prior year.

Investing Cash Flow

Cash used in investing activities for the year ended December 31, 2023 of $742.6 million is primarily due to consideration paid for the Barstool Acquisition, net of cash acquired, of $314.6 million and capital expenditures of $360.0 million.

For the year ended December 31, 2022, cash used in investing activities was primarily related to capital expenditures and the acquisition of a cost method investment, offset by insurance proceeds received for losses incurred due to Hurricane Laura in 2020 .

Cash used in investing activities for the year ended December 31, 2024 of $541.2 million, primarily relates to capital expenditures of $482.7 million.

For the year ended December 31, 2023, cash used in investing activities was primarily related to consideration paid for the Barstool Acquisition, net of cash acquired, of $314.6 million and capital expenditures of $360.0 million .

Capital Expenditures

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Cash provided by operating activities, as well as cash available under our Amended Revolving Credit Facility and Revolving Facility, was available to fund our capital expenditures for the years ended December 31, 2024, 2023, and 2022, as applicable.

Capital expenditures for the year ended December 31, 2023 and 2022 were $360.0 million and $263.4 million, respectively.

For the year ending December 31, 2024, our anticipated capital maintenance expenditures are approximately $225.0 million, which include capital expenditures under our Triple Net Leases, which require us to spend a specified percentage of 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 12, “Leases” in the notes to our Consolidated Financial Statements).

Capital expenditures for the year ended December 31, 2024 were $482.7 million, inclusive of $229.4 million of capital maintenance expenditures and $253.3 million of capital project expenditures .

For the year ending December 31, 2025, our anticipated capital expenditures are approximately $244.9 million, which includes 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, 2025, we anticipate capital project expenditures of $490.9 million, the majority of which is in connection with the PENN Development Projects pursuant to our Master Development Agreement with GLPI (as described in Note 11, “Leases” in the notes to our Consolidated Financial Statements).

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.

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For the year ended December 31, 2024, net cash used in financing activities totaled $186.5 million compared to $262.6 million in net cash used in financing activities in the prior year.

During the year ended December 31, 2023, net cash used in financing activities primarily related to $149.8 million of common stock repurchases, $47.1 million in principal payments on our finance leases, $39.2 million in principal payments on our financing obligations, and $37.5 million in principal debt repayments.

During the year ended December 31, 2022, cash used in financing activities of $853.0 million primarily related to $601.1 million of common stock repurchases, net debt repayments of $37.5 million, $18.2 million in debt issuance costs, and $173.7

million in principal payments on our finance leases and finance obligations.

During the year ended December 31, 2024, net cash used in financing activities primarily related to $50.3 million in principal payments on our finance leases, $40.8 million in principal payments on our financing obligations, $37.5 million in principal debt repayments, $35.4 million in payments on insurance financing, as well as $30.5 million in indemnification payments .

During the year ended December 31, 2023, net cash used in financing activities of $262.6 million primarily related to $149.8 million of common stock repurchases, $47.1 million in principal payments on our finance leases, $39.2 million in principal payments on our financing obligations, and $37.5 million in principal debt repayments.

Debt Issuance and Other long-term Obligations

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The proceeds from the Amended Credit Facilities were used to repay the existing Term Loan A Facility and Term Loan B-1 Facility balances.

On December 4, 2024, PENN entered into a Second Amendment with its various lenders to reduce the interest rate margins applicable to the Company’s approximately $978 million in existing Term B Facility loans from 2.75% to 2.50% for Term SOFR loans, and from 1.75% to 1.50% for base rate loans.

At December 31, 2024, we had $2.8 billion in aggregate principal amount of indebtedness, including $1.5 billion outstanding under our Amended Credit Facilities, $330.5 million outstanding under our 2.75% unsecured convertible notes due 2026 (the “Convertible Notes”), $400.0 million outstanding under our 5.625% senior unsecured notes due 2027 (the “5.625% Notes”), $400.0 million outstanding under our 4.125% senior unsecured notes due 2029 (the “4.125% Notes”), and $210.5 million outstanding in other long-term obligations.

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As of December 31, 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.

As of the date of this filing, the Company had $40.0 million in outstanding borrowings under its Amended Revolving Credit Facility, resulting in $939.1 million of available borrowing capacity.

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

On February 15, 2024 (the “Amendment Effective Date”), PENN entered into a First Amendment (the “Amendment Agreement”) with its various lenders amending its Amended Credit Facilities (as amended, amended and restated, supplemented, or otherwise modified from time to time prior to the Amendment Effective Date, the “Existing Credit Agreement”).

The Amendment Agreement amends the Existing Credit Agreement to provide that during the period beginning on the Amendment Effective Date and ending on the earlier of (i) the date that is two business days after the date on which the Company delivers a covenant relief period termination notice to the administrative agent and (ii) the date on which the administrative agent receives a compliance certificate for the quarter ending December 31, 2024 (the “Covenant Relief Period”), the Company will make an adjustment to exclude specified amounts of Interactive segment Adjusted EBITDAR (as defined in Note 18, “Segment Information” in the notes to our Consolidated Financial Statements ) in its calculations to comply with the maximum total net leverage ratio or minimum interest coverage ratio (as such terms are defined in the Second Amended and Restated Credit Agreement).

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 December 31, 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 Annual Report on Form 10-K with the SEC.

The Company believes that it will remain in compliance with all of its required financial covenants for at least the next 12 months following the date of filing this Annual Report on Form 10-K with the SEC.

See Note 10, “Long-term Debt” in the notes to our Consolidated Financial Statements for additional information of the Company ’ s debt and other long-term obligations.

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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.

During the years ended December 31, 2023 and 2022, respectively, the Company repurchased 5,438,221 and 17,561,288 shares of its common stock in open market transactions for $149.8 million and $601.1 million at an average price of $27.54 and $34.23 per share under the February 2022 and December 2022 Authorizations.

The cost of all repurchased shares is recorded as “Treasury stock” in the Consolidated Balance Sheets.

No shares of the Company’s common stock were repurchased during the year ended December 31, 2024.

During the year ended December 31, 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 to “Treasury stock” within the Consolidated Balance Sheets.

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

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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.

In November 2023, the existing Barstool Sportsbook was rebranded and launched across all online platforms in the United States as ESPN BET, which included our Hollywood Casino-branded integrated iCasino offering within the sportsbook app in select U.S jurisdictions.

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 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 GLPI, 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 in Note 12, “Leases” in the notes to our Consolidated Financial Statements, and collectively referred to as the “Master Leases”).

The Company’s Triple Net Leases are accounted for as either operating leases, finance leases, or financing obligations.

On February 21, 2023, the Company and GLPI entered into an agreement to amend and restate the PENN Master Lease, effective January 1, 2023, to (i) remove the land and buildings for Aurora, Joliet, Columbus, Toledo and the 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.

Concurrent with the execution of the AR PENN Master Lease, the Company and GLPI entered into the 2023 Master Lease, effective January 1, 2023, specific to the property associated with Aurora, Joliet, Columbus, Toledo, M Resort, Meadows, and Perryville and 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 most significant of which are 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 in Note 11, “Leases” in the notes to our Consolidated Financial Statements, and collectively referred to as the “Master Leases”) with GLPI.

We refer to the Master Leases, Perryville Lease (where applicable), the Meadows Lease (where applicable), the Margaritaville Lease, the Greektown Lease, the Tropicana Lease (terminated September 26, 2022) and the Morgantown Lease, collectively, as our “Triple Net Leases.” The Company’s Triple Net Leases are accounted for as either operating leases, finance leases, or financing obligations.

On February 21, 2023, the Company and GLPI entered into the AR PENN Master Lease, effective January 1, 2023, which amended and restated the PENN Master Lease to (i) remove the land and buildings for Aurora, Joliet, Columbus, Toledo, and the 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).

The AR PENN Master Lease remains subject to annual rent escalators and a percentage rent reset every five years.

Concurrent with the execution of the AR PENN Master Lease, the Company and GLPI entered into the 2023 Master Lease, effective January 1, 2023, specific to the properties associated with Aurora, Joliet, Columbus, Toledo, M Resort, Meadows, and Perryville and the Master Development Agreement.

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.

The 2023 Master Lease includes the 2023 Master Lease Base Rent equal to $232.2 million and the Master Development Agreement contains additional 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.

accordance with certain terms and conditions set forth in the Master Development Agreement.

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.

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

The 2023 Master Lease Rent will be subject to a one-time increase of $1.4 million, effective November 1, 2027.

The 2023 Master Lease Rent was subject to a fixed escalator of 1.5% on November 1, 2023 and will be annually thereafter.

The Aurora Project and the Other Development Projects are all subject to necessary regulatory and other government approvals.

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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(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.

and (v) all utilities and other services necessary or appropriate for

the leased properties and the business conducted on the leased properties.

As of December 31, 2024 , we are required to make total annual minimum rent payments of $969.7 million , of which $953.2 million relates to our Triple Net Leases.

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

ability to generate sufficient cash flow from operations will depend on a range of economic, competitive and business factors, many of which are outside our control.

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

We cannot be certain:

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there can be no assurance that this will be the case.

If we consummate significant acquisitions in the future or undertake any significant property expansions, our cash requirements may increase significantly, and we may need to make additional borrowings or complete equity or debt financings to meet these requirements.

requirements.

See “Risk Factors—Risks Related to Our Capital Structure” within “Item 1A.

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However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our Consolidated Financial Statements, the resulting changes could have a material adverse effect on our financial condition, results of operations, and cash flows.

The assessment of lease classifications of land and building components contained within each of the AR PENN Master Lease and the 2023 Master Lease (as described in Note 12, “Leases” in the notes to our Consolidated Financial Statements) required management to make significant estimates and assumptions.

These included estimates for the (i) fair value of the land and building assets;

(ii) the term of the lease, including whether any renewal terms are reasonably certain of being exercised;

and (iii) the discount rate (collateralized incremental borrowing rate) over the lease term.

Additionally, management assessed whether the agreements should be accounted for as a separate or combined contract and whether the AR PENN Master Lease should be considered a lease modification or a new lease.

Business Combination

In connection with the Company’s acquisition of Barstool (as described in Note 6, “Acquisitions and Dispositions” in the notes to our Consolidated Financial Statements), valuations were completed to determine the allocation of the purchase price.

The factors considered in the valuation include data gathered as a result of the Company’s due diligence in connection with the acquisition, projections for future operations, and data obtained from third-party valuation specialists, as deemed appropriate.

We allocated the business combination purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values.

The excess of the purchase price over those fair values was recorded as goodwill.

Accounting for this business combination required management to make significant estimates and assumptions, including our estimate of intangible assets, such as the Barstool trade name, advertising relationships, other tradenames and brands, and customer relationships.

Although we believe the estimates and assumptions made have been reasonable and appropriate, they are inherently uncertain.

The most significant of the assumptions used in the valuations included:

(1) revenue growth;

discount rates;

(3) effective income tax rates;

(4) future terminal values;

and (5) gaming royalties for the use of the Barstool tradename assumptions.

These assumptions were developed based on historical trends in the current competitive markets in which Barstool and PENN operate as well as projections of future performance.

Significant assumptions with respect to our trade names and customer relationships involved selecting the appropriate royalty rates and cost estimates for replacement cost analyses.

Advertising relationships were valued utilizing a with-and-without method.

Where a relief-from-royalty method was utilized, significant assumptions included projecting revenues attributable to the asset, royalty rates, obsolescence factors, estimated synergies and discount rates.

Where a replacement cost method was utilized, significant assumptions included estimating cost and time required to replace, determining the opportunity cost over the replacement period, and estimating a mark-up on development costs.

Where a with-and-without method was utilized, significant assumptions included projecting revenues with direct advertising relationships and projecting revenues without direct advertising relationships and determining discount rates.

Goodwill and other intangible assets

As of December 31, 2023, the Company had $2.7 billion in goodwill and $1.6 billion in other intangible assets within its Consolidated Balance Sheet, represen ting 16.8% and 10.1% of total assets, respectively.

As of December 31, 2024, the Company had $2.6 billion in goodwill and $1.5 billion in other intangible assets, net within its Consolidated Balance Sheets, represen ting 16.8% and 10.0% of total assets, respectively.

These intangible assets require significant management estimates and judgment pertaining to:

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Our annual goodwill and other indefinite-lived intangible assets impairment test is performed on October 1st of each year, or more frequently if indicators of impairment exist.

As a result of our annual test completed during the fourth quarter of 2023, we recognized $30.0 million in impairment charges on our goodwill, which related to our Hollywood Casino at Greektown reporting unit, and $100.6 million in impairment charges on our gaming licenses, which related to our Hollywood Casino at Greektown, Hollywood Casino at PENN National Race Course, and Ameristar East Chicago properties.

As a result of our annual test completed during the fourth quarter of 2024, we recognized $12.3 million in impairment charges on goodwill in our South and Midwest segments, $69.3 million in impairment charges on our gaming licenses in our Northeast and South segments, and $7.5 million in impairment charges on our trademarks in our Northeast and South segments.

For further discussion, see Note 8, “Goodwill and Other Intangible Assets” to our Consolidated Financial Statements.

For quantitative goodwill impairment tests, an income approach, in which a discounted cash flow (“DCF”) model is utilized, and a market-based approach using guideline public company multiples of earnings before interest, taxes, depreciation, and amortization from the Company’s peer group are utilized in order to estimate the fair market value of the Company’s reporting units.

In determining the carrying amount of each reporting unit that utilizes real estate assets subject to the Triple Net Leases, if and as applicable, (i) the Company allocates each reporting unit their pro-rata portion of the ROU assets, lease liabilities, and/or financing obligations, and (ii) pushes down the carrying amount of the property and equipment subject to such leases.

In general, as it pertains to the Master Leases, such amounts are allocated based on the reporting unit’s projected Adjusted EBITDA as a percentage of the aggregate estimated Adjusted EBITDA of all reporting units subject to each of the Master Leases, as applicable.

The Company compares the fair value of its reporting units to the carrying amounts.

If the carrying amount of the reporting unit exceeds the fair value, an impairment is recorded equal to the amount of the excess (not to exceed the amount of goodwill allocated to the reporting unit).

We consider our gaming licenses, trademarks, and certain other intangible assets as indefinite-lived intangible assets that do not require amortization based on our future expectations to operate our gaming properties indefinitely as well as our historical experience in renewing these intangible assets at minimal cost with various jurisdictional commissions.

Rather, these intangible assets are tested annually for impairment, or more frequently if indicators of impairment exist, by comparing the fair value of the recorded assets to their carrying amount.

If the carrying amounts of the indefinite-lived intangible assets exceed their fair value, an impairment loss is recognized.

Once an impairment of goodwill or other intangible asset has been recorded, it cannot be reversed.

Since the Company’s goodwill and other indefinite-lived intangible assets are not amortized, there may be volatility in reported net income or loss because impairment losses, if any, are likely to occur irregularly and in varying amounts.

Intangible assets that have a definite life are amortized on a straight-line basis over their estimated useful lives or related service contract.

The Company reviews the carrying amount of its amortizing intangible assets for possible impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

If the carrying amount of the amortizing intangible assets exceed their fair value, an impairment loss is recognized.

Revenue and earnings streams within our industry can vary significantly based on various circumstances, which in many cases, are outside of the Company’s control, and as such are difficult to predict and quantify.

We have disclosed several of these circumstances in “Item 1A.

Risk Factors” of this Annual Report on Form 10-K.

Interactive goodwill

Goodwill at our Interactive segment comprises $1.5 billion of the total $2.6 billion balance as of December 31, 2024.

For our quantitative goodwill impairment test for the Interactive goodwill, an income approach, in which a discounted cash flow (“DCF”) model is utilized, and a market-based approach using guideline public company multiples of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) from Interactive’s peer group are utilized in order to estimate the fair market value of the Interactive reporting unit.

The Company compares the fair value of the Interactive reporting unit to its carrying amount.

If the carrying amount of the Interactive reporting unit exceeds the fair value, an impairment is recorded equal to the amount of the excess (not to exceed the amount of goodwill allocated to the Interactive reporting unit).

The evaluation of goodwill requires the use of estimates about future operating results of the Interactive reporting unit to determine the estimated fair value of the reporting unit.

The Company must make various assumptions and estimates in performing its impairment testing.

The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions which represent the Company’s best estimates of the cash flows expected to result from the use of

the assets including their eventual disposition.

Significant assumptions utilized in the estimation of future cash flows for the Interactive reporting unit include forecasted revenues, forecasted operating expenses, the discount rate used in the valuation, and the terminal year EBITDA exit multiple.

These significant assumptions are complex and subjective.

They are sensitive to changes in underlying assumptions and can be affected by a variety of factors, including external factors, such as industry, geopolitical and economic trends, and internal factors, such as changes in the Company’s business strategy, which may re-allocate capital and resources to different or new opportunities which management believes will enhance its overall value but may be to the detriment of the Interactive reporting unit.

Changes in estimates, increases in the Company’s cost of capital, reductions in transaction multiples, changes in operating and capital expenditure assumptions, or application of alternative assumptions and definitions could produce significantly different results.

Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the Company’s estimates.

If our ongoing estimates of future cash flows are not met, we may have to record impairment charges in future periods.

Our estimates of cash flows are based on the current regulatory and economic climates, recent operating information, and budgets of the Interactive reporting unit.

These estimates could be negatively impacted by changes in federal, state, provincial, or local regulations, economic downturns, or other events affecting our Interactive segment.

Forecasted cash flows (based on our annual operating plan as determined in the fourth quarter) can be significantly impacted by the local economies in which our Interactive reporting unit operates.

Increases in unemployment rates, inflation and/or interest rates can also result in decreased customer activity and/or lower customer spend.

Additionally, increases in gaming taxes approved by state and provincial regulatory bodies can negatively impact forecasted cash flows.

Gaming licenses

We consider our gaming licenses as indefinite-lived intangible assets that do not require amortization based on our future expectations to operate our gaming properties indefinitely as well as our historical experience in renewing these intangible assets at minimal cost with various jurisdictional commissions.

Rather, these gaming licenses are tested annually for impairment, or more frequently if indicators of impairment exist, by comparing the fair value of the recorded assets to their carrying amount.

If the carrying amounts of the gaming licenses exceed their fair value, an impairment loss is recognized.

We assess the fair value of our gaming licenses using the Greenfield Method under the income approach, which estimates the fair value of the gaming license using a DCF model assuming we built a new casino with similar utility to that of the existing casino.

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• Estimated construction costs and duration;

• Pre-opening expenses;

• Estimated pre-opening expenses;

• Discounting that reflects the level of risk associated with receiving future cash flows attributable to the license.

We assess the fair value of our trademarks using the relief-from-royalty method under the income approach.

The principle behind this method is that the value of the trademark is equal to the present value of the after-tax royalty savings attributable to the owned trademark.

As such, the value of the trademark is a function of the following assumptions:

• Projected revenues;

• Selection of an appropriate royalty rate to apply to projected revenues;

• Discounting that reflects the level of risk associated with the after-tax revenue stream associated with the trademark.

The evaluation of goodwill and indefinite-lived intangible assets requires the use of estimates about future operating results of each reporting unit to determine the estimated fair value of the reporting unit and the indefinite-lived intangible assets.

In general, as it pertains to the Triple Net Leases, such amounts are allocated based on the reporting unit’s projected Adjusted EBITDAR as a percentage of the aggregate estimated Adjusted EBITDAR of all reporting units subject to each of the Triple Net Leases, as applicable.

The evaluation of gaming license intangible assets requires the use of estimates about future operating results of each reporting unit to determine the estimated fair value of the gaming license indefinite-lived intangible assets.

The Company must make various assumptions and estimates in performing its impairment testing.

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These estimates could be negatively impacted by changes in federal, state, or local regulations, economic downturns, or other events affecting our properties.

Forecasted cash flows (based on our annual operating plan as determined in the fourth quarter) can be significantly impacted by the local economy in which our reporting units operate, as illustrated by the COVID-19 pandemic which caused temporary suspension of our operations pursuant to various orders from state gaming regulatory bodies or governmental authorities.

Increases in unemployment rates, inflation and/or interest rates can also result in decreased customer visitation and/or lower customer spend per visit.

In addition, the impact of new legislation which approves gaming in nearby jurisdictions or further expands gaming in jurisdictions where our reporting units currently operate can result in opportunities for us to expand our operations.

However, it also has the impact of increasing competition for our established properties which generally will have a negative effect on those locations’ profitability once competitors become established as a certain level of cannibalization occurs absent an overall increase in customer visitation.

Forecasted cash flows (based on our annual operating plan as determined in the fourth quarter) can be significantly impacted by the local economy in which our reporting units operate.

Increases in unemployment rates, inflation and/or interest

rates can also result in decreased customer visitation and/or lower customer spend per visit.

Additionally, increases in gaming taxes approved by state regulatory bodies can negatively impact forecasted cash flows.

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Once an impairment of goodwill or other intangible asset has been recorded, it cannot be reversed.

Intangible assets that have a definite life are amortized on a straight-line basis over their estimated useful lives or related service contract.

If the carrying amount of the amortizing intangible assets exceed their fair value, an impairment loss is recognized.

Revenue and earnings streams within our industry can vary significantly based on various circumstances, which in many cases are outside of the Company’s control, and as such are difficult to predict and quantify.

We have disclosed several of these circumstances in “Item 1A.

Risk Factors” of this Annual Report on Form 10-K.

Reporting units with goodwill, gaming licenses or trademarks which were identified during our 2023 annual impairment assessment as having less than a substantial passing margin were subject to a sensitivity analysis to determine the potential impairment losses:

Reporting units with gaming licenses which were identified during our 2024 annual impairment assessment, performed as of October 1, 2024, as having less than a substantial passing margin, in addition to goodwill at our Interactive reporting unit, were subject to a sensitivity analysis to determine the potential impairment losses:

Amount of impairment loss as a result of:

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+100 bps Terminal Growth Rate -50 bps

Argosy Casino Riverside $161.2 19.0 % $— $—

Gaming License

Ameristar East Chicago $24.0 — % $5.5 $0.5

Boomtown Bossier City $7.0 — % $2.0 $0.5

Boomtown New Orleans $63.3 4.3 % $6.0 $—

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L’Auberge Lake Charles $221.3 6.4 % $17.0 $—

Ameristar East Chicago $16.0 12.5 % $— $—

L’Auberge Lake Charles $47.5 16.8 % $— $—

theScore $91.2 2.5 % $7.2 $0.2

Amount of impairment loss as a result of:

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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-K

Item 7. Management’s Discussion and Analysis