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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-22 · 570 added, 628 removed, 1505 unchanged (44% of the section changed)

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of PENN Entertainment, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of PENN Entertainment, Inc.

and its subsidiaries (the “Company”) as of December 31, 2024, and the related consolidated statements of operations, of comprehensive income (loss), of changes in stockholders’ equity and of cash flows for the year then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Test - Interactive Reporting Unit

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s goodwill balance was $2,563.1 million as of December 31, 2024, and the goodwill associated with the Interactive reporting unit was $1,544.3 million.

Goodwill is tested for impairment annually on October 1 of each year, or more frequently if indicators of impairment exist.

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

Management compares the fair value of the reporting unit to the carrying amount.

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).

As disclosed by management, significant assumptions utilized in the estimation of future cash flows for the Interactive reporting unit include forecasted revenues, forecasted operating expenses, the discount rate, and the terminal year EBITDA exit multiple.

The principal considerations for our determination that performing procedures relating to goodwill impairment test of the Interactive reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Interactive reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to forecasted revenues, forecasted operating expenses, discount rate and terminal year EBITDA exit multiple used in the discounted cash flow model;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment tests, including controls over the valuation of the Interactive reporting unit.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimate;

(ii) evaluating the appropriateness of the discounted cash flow model used by management;

(iii) testing the completeness and accuracy of the underlying data used in the discounted cash flow model;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to forecasted revenues, forecasted operating expenses, discount rate and terminal year EBITDA exit multiple.

Evaluating management’s assumptions relating to forecasted revenues and forecasted operating expenses involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Interactive reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the discount rate and terminal year EBITDA exit multiple assumptions.

/s/ PricewaterhouseCoopers LLP

Las Vegas, Nevada

February 27, 2025

We have served as the Company’s auditor since 2024.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of PENN Entertainment, Inc.

and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have audited the accompanying consolidated balance sheet of PENN Entertainment, Inc.

and subsidiaries (the “Company”) as of December 31, 2023, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows, for the years ended December 31, 2023 and 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the 2023 and 2022 financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the years ended December 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill – Refer to Notes 2 and 9 to the financial statements

Critical Audit Matter Description

The Company’s goodwill is tested annually for impairment, or more frequently if indicators of impairment exist, by comparing the fair value of each reporting unit to their carrying amount.

The Company determines the fair value of its reporting units using a combination of income-based and market-based approaches.

The key inputs in determining the fair value of its reporting units include projected operating cash flows discounted to reflect the level of risk associated with receiving future cash flows.

As of December 31, 2023, the book value of goodwill was $2,695.1 million of which $1,663.9 million was allocated to the Interactive reporting unit (“Interactive”).

The fair value of the Interactive reporting unit exceeded its carrying value by 9.7% as of the measurement date, therefore, no impairment was recognized.

Auditing the fair value of the Interactive reporting unit involved a high degree of subjectivity in evaluating whether management’s estimates and assumptions of projected revenue and operating cash flows and the selection of the discount rate used to derive the fair value were reasonable, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to forecasts of revenue and operating cash flows and the determination of the discount rates used by management to estimate the fair value of the reporting unit included the following, among others:

• We tested the effectiveness of controls over determining the fair value, including those over the forecasts of revenue and operating cash flows and the selection of the discount rates.

• We evaluated management’s ability to accurately forecast revenues and operating cash flows by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s operating cash flow forecasts by comparing the forecasts to:

◦ Historical results

◦ Internal communications to management and the Board of Directors;

◦ Forecasted information included in the Company’s press release as well as in analyst and industry reports for the Company and certain of its peer companies

• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by:

◦ Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculations;

◦ Developing a range of independent estimates and comparing those to the discount rate selected by management.

Lease Amendments – Refer to Notes 2 and 12 to the financial statements

Critical Audit Matter Description

The Company amended the PENN Master Lease between the Company and Gaming and Leisure Properties, Inc.

(“GLPI”) on February 21, 2023 (the “AR PENN Master Lease”) and concurrently entered into a new triple net master lease (the “2023 Master Lease”) with GLPI.

The Company concluded the AR PENN Master Lease amendment constituted a modification event under Accounting Standards Codification Topic 842, (“ASC 842”).

The Company determined that it is not reasonably certain it will exercise any of the renewal options under the AR PENN Master Lease and 2023 Master Lease and therefore determined the lease terms should not extend through the optional three renewal terms of five years each.

The Company performed a lease classification test to apply ASC 842 to the 2023 Master Lease and AR Penn Master Lease modification to determine if the lease will be accounted for as an operating, sales-type lease, or direct financing lease.

The lease classification tests and the resulting calculations require subjective judgments, such as determining the likelihood the Company will exercise all renewal options, in order to determine the lease term.

A change in this judgment can result in a material difference in the financial statement presentation.

Given the significant judgments made by management to determine the expected lease term, we performed audit procedures to assess the reasonableness of such judgments, which required a high degree of auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the judgments surrounding the determination of the lease term for the new and modified lease included the following, among others:

• We tested the effectiveness of the controls over management’s assessment of the likelihood the Company would exercise all renewal options.

• We evaluated the significant judgments made by management to determine the expected lease term by:

◦ Obtaining lease agreements to examine material lease provisions considered by management in their analysis;

◦ Evaluating the Company’s historical pattern of lease modifications by examining both confirming and contradictory evidence;

◦ Assessing the significance of the leased assets to the Company’s operations by examining financial information.

Barstool Acquisition – Refer to Notes 2 and 6 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of Barstool Sports, Inc.

(“Barstool”) on February 17, 2023, by purchasing the remaining 64% of the outstanding shares of Barstool common stock for $405.5 million (“Barstool Acquisition”) and at the closing date of the acquisition, determined the fair value of Barstool to be $660.0 million, which resulted in a gain of $83.4 million.

The Company allocated the fair value of Barstool to the underlying tangible and identifiable intangible assets acquired and liabilities assumed and any noncontrolling interests assumed based on their estimated fair values, including tradename, with any excess recorded as goodwill.

The fair value determination of the fair value of Barstool and the tradename required management to make significant estimates and assumptions around expected cash flows and projected financial results, including forecasted revenues (collectively the “forecast”) and the selection of a discount rate.

Changes to these assumptions and estimates could have a significant impact on the value of the tradename and recognition of goodwill.

Therefore, auditing the forecast and the selection of the discount rate involved a higher degree of auditor judgement and subjectivity, including the involvement of fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts and selection of discount rate used in the determining the fair value of Barstool and the tradename included the following, among others:

• We tested the effectiveness of controls over the valuation of Barstool and the tradename, including management's controls over forecasted revenue growth rates, forecasted cash flows and selection of the discount rate.

• We evaluated the reasonableness of management's forecasts by:

▪ Comparing the forecasts to information included in the company’s communications to the Board of Directors;

▪ Comparing the forecast to historical financial results and industry reports;

▪ Conducting inquiries with management.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by:

▪ Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculations;

▪ Developing a range of independent estimates and comparing those to the discount rate selected by management.

Barstool Disposition and Indemnification Liability – Refer to Notes 6 and 19 to the financial statements

Critical Audit Matter Description

On August 8, 2023, the Company entered into a stock purchase agreement (the “Barstool SPA”) and 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 (the “Barstool Disposition”).

Under the Barstool SPA, the Company has the right to receive 50% of the gross proceeds received by David Portnoy in any subsequent sale or other monetization event of Barstool and the Company will indemnify Barstool and its subsidiaries and David Portnoy for certain tax matters.

As of December 31, 2023, the Company recorded a $70.0 million indemnification liability associated with this obligation.

Additional audit effort was required to assess whether the Barstool Disposition and indemnification liability were properly accounted for and disclosed in the financial statements.

The indemnification liability required management to make significant

estimates and assumptions, including the fair value of the shares of Barstool at the time of the disposition and the probability of potential outcomes.

Auditing the fair value of the shares of Barstool and the probability of potential outcomes involved a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value and tax specialists, in evaluating whether management’s estimates and assumptions, including the valuation methodology and key inputs in determining the fair value of the shares of Barstool (revenue multiples and revenue forecasts) and the probability of potential outcomes, were reasonable.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to evaluating whether the Barstool Disposition and indemnification liability were accounted for and disclosed properly in the financial statements included the following, among others:

• We tested the effectiveness of controls over the Company’s determination of the accounting and disclosure of the Barstool Disposition, including the determination of key inputs in the determination of the indemnification liability.

• We evaluated the form and substance of the transaction by:

◦ Examining the terms and provisions included in the Barstool SPA;

◦ Conducting inquiries with management and the audit committee and examining board of director meeting minutes to corroborate discussions;

◦ Examining analyses provided to the board of directors to be considered in their approval of the disposition.

• We evaluated the reasonableness of the indemnification liability, including the valuation methodology, key inputs, and potential outcomes by:

◦ Comparing the forecasted revenue to actual financial results and industry reports;

◦ With the assistance of our tax specialist, evaluating the reasonableness of the probability of potential outcomes by:

▪ Assessing the tax position taken, including reviewing opinions provided to the Company from outside tax specialists.

◦ With the assistance of our fair value specialists, evaluating the reasonableness of the valuation methodology and revenue multiples by:

• Testing the source information underlying the determination of the business valuation and testing the mathematical accuracy of the calculations;

• Developing a range of independent estimates and comparing those to the revenue multiples selected by management.

▪ Evaluating whether the value of Barstool was reasonable in consideration of evidence obtained in other areas of the audit.

• We evaluated whether the financial statement disclosures were consistent with the terms and purpose of the disposition.

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania

February 22, 2024

We have served as the Company’s auditor since 2017.

February 22, 2024 (February 27, 2025 as to the modified presentation of operating and finance leases discussed in Note 2 and as to Note 17)

We began serving as the Company’s auditor in 2017.

In 2024 we became the predecessor auditor.

PENN ENTERTAINMENT, INC.

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Other intangible assets, net 1,529.9 1,618.2

Lease right-of-use assets 6,305.7 6,103.3

Operating lease right-of-use assets 3,976.8 4,264.7

Finance lease right-of-use assets 2,014.3 2,041.0

Other assets 232.0 187.3

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Current portion of financing obligations 43.5 41.3

Current portion of lease liabilities 342.6 194.3

Current portion of operating lease liabilities 322.1 302.3

Current portion of finance lease liabilities 53.2 40.3

Accrued expenses and other current liabilities 907.3 1,021.9

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Long-term portion of financing obligations 2,343.1 2,386.1

Long-term portion of lease liabilities 6,006.6 5,903.0

Long-term portion of operating lease liabilities 3,654.3 3,944.1

Long-term portion of finance lease liabilities 2,062.3 2,062.5

Deferred income taxes 61.0 117.6

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Series C preferred stock ($ 0.01 par value, 18,500 shares authorized, no shares issued and outstanding)

Series D Preferred stock ($ 0.01 par value, 5,000 shares authorized, 969 shares issued for both periods, and no shares and 581 shares outstanding)

Series D preferred stock ($ 0.01 par value, 5,000 shares authorized, no shares issued and outstanding)

Common stock ($ 0.01 par value, 400,000,000 shares authorized, 177,396,073 and 176,719,596 shares issued, and 152,229,171 and 151,552,694 shares outstanding)

Exchangeable shares ($ 0.01 par value, 768,441 shares authorized in both periods, 700,393 and 697,539 issued, and 560,267 and 620,019 shares outstanding)

Treasury stock, at cost, ( 25,166,902 and 19,728,681 shares)

Exchangeable shares ($ 0.01 par value, 768,441 shares authorized in both periods, 768,441 and 700,393 shares issued, and 466,534 and 560,267 shares outstanding)

Treasury stock, at cost, ( 25,166,902 shares repurchased as of both periods)

( 779.5 ) ( 779.5 )

Additional paid-in capital 4,542.4 4,436.6

Retained earnings (accumulated deficit) ( 335.5 ) 154.5

Accumulated deficit ( 647.0 ) ( 335.5 )

Accumulated other comprehensive loss ( 255.0 ) ( 121.3 )

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Income (loss) before income taxes ( 341.3 ) ( 499.6 ) 175.3

Income tax benefit (expense) 8.2 46.4 ( 118.6 )

Income tax benefit 28.0 8.2 46.4

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

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

Other comprehensive income (loss):

Unrealized gain on debt securities, net of tax expense of $ 1.0

Other comprehensive income (loss), net of tax:

Unrealized gain on debt securities

Foreign currency translation adjustment during the period ( 139.1 ) 44.1 ( 114.2 )

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Stock-holders’ Equity

(in millions, except share data) Shares Amount PENN Entertainment Shares Amount Exchangeable Shares Amount

(in millions, except share data) Shares Amount PENN Entertainment, Inc.

Shares Amount Exchangeable Shares Amount

Balance as of January 1, 2022 775 $ 25.8 169,561,883 $ 1.7 653,059 $ — $ ( 28.4 ) $ 4,239.6 $ ( 86.5 ) $ ( 54.4 ) $ 4,097.8 $ ( 0.7 ) $ 4,097.1

Share-based compensation arrangements — — 607,818 — — — — 58.1 — — 58.1 — 58.1

Share issuance in connection with acquisitions — — 12,561,127 0.1 697,539 — — 1,039.5 — — 1,039.6 — 1,039.6

Preferred stock issuance 86 8.1 — — — — — — — — 8.1 — 8.1

Share repurchases — — ( 17,561,288 ) — — — ( 601.1 ) — — — ( 601.1 ) — ( 601.1 )

Preferred stock conversions ( 194 ) ( 6.4 ) 194,200 — — — — 6.4 — — — — —

Exchangeable shares conversions — — 44,480 — ( 44,480 ) — — — — — — — —

Common stock issuance — — 68,055 — — — — 2.2 — — 2.2 — 2.2

Exchangeable share conversions — — 33,040 — ( 33,040 ) — — — — — — — —

Currency translation adjustment — — — — — — — — — ( 114.2 ) ( 114.2 ) — ( 114.2 )

Cumulative-effect adjustment upon adoption of ASU 2020-06 — — — — — — — ( 88.2 ) 18.9 — ( 69.3 ) — ( 69.3 )

Net income (loss) — — — — — — — — 222.1 — 222.1 ( 0.4 ) 221.7

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Share-based compensation arrangements — — 997,137 — — — — 85.9 — — 85.9 — 85.9

Share issuance in connection with acquisitions — — 2,442,809 — — — — 80.8 — — 80.8 — 80.8

Share repurchases — — ( 5,438,221 ) — — — ( 149.8 ) — — — ( 149.8 ) — ( 149.8 )

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Common stock issuance — — 4,055 — — — — 0.1 — — 0.1 — 0.1

Exchangeable shares conversions — — 33,040 — ( 33,040 ) — — — — — — — —

Exchangeable share issuance — — — — 2,854 — — — — — — — —

Exchangeable share conversions — — 62,606 — ( 62,606 ) — — — — — — — —

Investment Agreement warrants (Note 12) — — — — — — — 22.8 — — 22.8 — 22.8

Unrealized gain on debt securities — — — — — — — — — 3.2 3.2 — 3.2

Currency translation adjustment — — — — — — — — — 44.1 44.1 — 44.1

Cumulative-effect adjustment upon adoption of ASU 2020-06 — — — — — — — ( 88.2 ) 18.9 — ( 69.3 ) — ( 69.3 )

Net income (loss) — — — — — — — — 222.1 — 222.1 ( 0.4 ) 221.7

Net loss — — — — — — — — ( 490.0 ) — ( 490.0 ) ( 1.4 ) ( 491.4 )

Other — — — 0.1 — — ( 0.2 ) 7.4 — — 7.3 — 7.3

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Share-based compensation arrangements — — 510,641 — — — — 52.9 — — 52.9 — 52.9

Share issuance in connection with acquisitions — — 2,442,809 — — — — 80.8 — — 80.8 — 80.8

Share repurchases — — ( 5,438,221 ) — — — ( 149.8 ) — — — ( 149.8 ) — ( 149.8 )

Preferred stock conversions ( 581 ) ( 19.4 ) 580,600 — — — — 19.4 — — — — —

Common stock issuance — — 4,055 — — — — 0.1 — — 0.1 — 0.1

Exchangeable share issuance — — — — 68,048 — — — — — — — —

Exchangeable shares conversions — — 62,606 — ( 62,606 ) — — — — — — — —

Exchangeable share conversions — — 161,781 — ( 161,781 ) — — — — — — — —

Investment Agreement warrants (Note 12) — — — — — — — 57.6 — — 57.6 — 57.6

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Noncash operating lease expense 316.6 305.5 87.5

Gain on acquisition of Sam Houston — — ( 29.9 )

Gain on Barstool Acquisition, net — ( 83.4 ) —

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Consideration paid for acquisitions of businesses, net of cash acquired — ( 314.6 ) —

Consideration paid for remaining interest of Sam Houston — — ( 42.0 )

Consideration paid for gaming licenses and other intangible assets ( 57.9 ) ( 21.9 ) ( 9.0 )

Acquisition of equity securities — — ( 26.0 )

Cost method investment proceeds received (consideration paid) 0.5 8.0 ( 15.0 )

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Debt and equity issuance costs ( 3.4 ) — ( 18.2 )

Proceeds from other long-term obligations — — 72.5

Payments of other long-term obligations ( 10.1 ) ( 18.7 ) ( 17.8 )

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Payments on insurance financing ( 35.4 ) — —

Indemnification payments ( 30.5 ) — —

Other ( 9.3 ) ( 10.0 ) ( 11.6 )

Net cash provided by (used in) financing activities ( 262.6 ) ( 853.0 ) 339.9

Net cash used in financing activities ( 186.5 ) ( 262.6 ) ( 853.0 )

Effect of currency rate changes on cash, cash equivalents, and restricted cash ( 2.3 ) ( 0.4 ) ( 2.5 )

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Cash paid for interest, net of amounts capitalized $ 415.5 $ 420.1 $ 721.7

Cash payments related to income taxes, net $ 73.9 $ 72.8 $ 108.3

Cash payments (refunds) related to income taxes, net $ ( 3.8 ) $ 73.9 $ 72.8

Non-cash activities:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Organization and Basis of Presentation

Note 1—Organization

Organization:

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,” and collectively referred to as the “Master Leases”).

Note 2—Significant Accounting Policies and Basis of Presentation

Basis of Presentation:

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Securities and Exchange Commission (the “SEC”).

Note 2—Significant Accounting Policies

Principles of Consolidation:

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Reclassifications:

Certain reclassifications have been made to conform the prior period presentation.

Certain reclassifications have been made to conform the prior period presentation with current year presentation.

Subsequent to the issuance of the Company’s Consolidated Financial Statements for the year ended December 31, 2023, we modified the presentation of our December 31, 2023 Consolidated Balance Sheets to separately reflect assets and liabilities associated with our operating and finance leases to conform to the current year presentation and the requirements of ASC 842, “Leases” (“ASC 842”).

This presentation modification within our Consolidated Balance Sheets had no impact on the Company’s Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Changes in Stockholders’ Equity, and Consolidated Statements of Cash Flows for the year ended December 31, 2023.

Use of Estimates:

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, and (iii) the reported amounts of revenues and expenses during the reporting period.

Estimates used by us include, among other things, the useful lives for depreciable and amortizable assets, the provision for credit losses, income tax provisions, the evaluation of the future realization of deferred tax assets, indemnification liabilities associated with certain tax matters, determining the adequacy of reserves for self-insured liabilities, the liabilities associated with our PENN Play TM program, the initial measurements of financing obligations and lease liabilities associated with our Master Leases, projected cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and other intangible assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with acquisitions, contingencies, and litigation inclusive of financing arrangements in which the Company receives up-front cash proceeds, and stock-based compensation expense.

We applied estimation methods consistently for all periods presented within our Consolidated Financial Statements.

Estimates used by us may include, among other things, the useful lives for depreciable and amortizable assets, the provision for credit losses, income tax provisions, the evaluation of the future realization of deferred tax assets, indemnification liabilities associated with certain tax matters, determining the adequacy of reserves for self-insured liabilities, the liabilities associated with our PENN Play program, the initial measurements of financing obligations and lease liabilities associated with our Master Leases, the initial selection of useful lives for depreciable and amortizable assets related to acquisitions, contingencies, and litigation inclusive of financing arrangements in which the Company receives up-front cash proceeds, and stock-based compensation expense.

Additionally, we use estimates for projected cash flows when assessing the recoverability of long lived assets, asset impairments, goodwill, and other intangible assets.

Estimates of projected cash flows are also used in assessing the initial valuation of intangible assets in conjunction with acquisitions.

We applied estimation methods consistently for the periods presented within our Consolidated Financial Statements.

Actual results may differ from those estimates.

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

Interactive includes all of our online sports betting, online casino/iCasino, and social gaming (collectively referred to as “online gaming”) operations, management of retail sports betting, media, and the operating results of Barstool.

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 in prior years, the operating results of Barstool Sports, Inc.

(“Barstool” or “Barstool Sports”).

We owned 36 % of Barstool common stock prior to the February 17, 2023 Barstool Acquisition (as defined in Note 5, “Acquisitions and Dispositions” ) pursuant to which we acquired the remaining 64 % of Barstool common stock.

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.

See Note 18, “Segment Information” and Note

12, “ Leases ” for further segment and lease structure information, respectively.

See Note 17, “Segment Information” and Note 11, “Leases” for further segment and lease structure information, respectively.

For financial reporting purposes, we aggregate our operating segments into the following reportable segments:

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See Note 8, “Goodwill and Other Intangible Assets.”

Equity Securities:

The Company’s equity securities (including warrants) are measured at fair value each reporting period with unrealized gains and losses included in current period earnings.

The Company records realized and unrealized gains and losses in “Other” within our Consolidated Statements of Operations.

Convertible Debt:

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Financing Obligations:

In accordance with ASC 842, “ Leases” (“ASC 842”), for transactions in which the Company enters into a contract to sell an asset and leases it back from the seller under a sale and leaseback transaction, the Company must

determine whether control of the asset has transferred from the Company.

In accordance with ASC 842, for transactions in which the Company enters into a contract to sell an asset and leases it back from the seller under a sale and leaseback transaction, the Company must determine whether control of the asset has transferred from the Company.

In cases whereby control has not transferred from the Company, we continue to recognize the underlying asset as “Property and equipment, net” within the Consolidated Balance Sheets, which is then depreciated over the shorter of the remaining useful life or lease term.

Additionally, a financial liability is recognized and referred to as a financing obligation, in accordance with ASC 470, “Debt” (“ASC 470”).

The accounting for financing obligations under ASC 470 is materially consistent with the accounting for finance leases under ASC 842.

The accounting for financing

obligations under ASC 470 is materially consistent with the accounting for finance leases under ASC 842.

The Company recognizes interest expense on the minimum lease payments related to a financing obligation under the effective yield method.

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Principal payments associated with finance leases are presented as financing cash outflows and interest payments associated with finance leases are presented as operating cash outflows within our Consolidated Statements of Cash Flows.

ROU assets are monitored for potential impairment similar to the Company’s property and equipment, using the impairment model in ASC 360, “Property, Plant and Equipment”.

If the Company determines the carrying amount of a ROU asset is not recoverable, it would recognize an impairment charge equivalent to the amount required to reduce the carrying value of the asset to its estimated fair value.

ROU assets are monitored for potential impairment similar to the Company’s property and equipment, using the impairment model in ASC 360, “Property, Plant and Equipment.” If the Company determines the carrying amount of a ROU asset is not recoverable, it would recognize an impairment charge equivalent to the amount required to reduce the carrying value of the asset to its estimated fair value.

Debt Discount and Debt Issuance Costs:

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Under ASC 740, “Income Taxes” (“ASC 740”), deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and are measured at the prevailing enacted tax rates that will be in effect when these differences are settled or realized.

ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more-likely-than-not (a greater than 50% probability) that some portion or all of the deferred tax assets will not be realized.

requires that deferred tax assets be reduced by a valuation allowance if it is more-likely-than-not (a greater than 50% probability) that some portion or all of the deferred tax assets will not be realized.

The realizability of the net deferred tax assets is evaluated quarterly by assessing the valuation allowance and by adjusting the amount of the allowance, if necessary.

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The transaction price for our management service contracts is the amount collected for services rendered in accordance with the contractual terms.

Gaming revenue contracts involve two performance obligations for those customers earning points under our PENN Play TM program and a single performance obligation for customers that do not participate in the PENN Play TM program.

Gaming revenue contracts involve two performance obligations for those customers earning points under our PENN Play program and a single performance obligation for customers that do not participate in the PENN Play program.

The Company applies a practical expedient by accounting for its gaming contracts on a portfolio basis as opposed to an individual wagering contract.

For purposes of allocating the transaction price in a gaming contract between the wagering performance obligation and the obligation associated with the loyalty points earned, we allocate an amount to the loyalty point contract liability based on the standalone selling price (“SSP”) of the points earned, which is determined by the value of a point that can be redeemed for slot play and complimentaries such as, food and beverage at our restaurants, lodging at our hotels and products offered at our PENN Play TM mall and retail stores, less estimated breakage.

The allocated revenue for gaming wagers is recognized when the wagering occurs as all such wagers settle immediately.

For purposes of allocating the transaction price in a gaming contract between the wagering performance obligation and the obligation associated with the loyalty points earned, we allocate an amount to the loyalty point contract liability based on the standalone selling price (“SSP”) of the points earned, which is determined by the value of a point that can be redeemed for slot play and complimentaries such as, food and beverage at our restaurants, Choice Privilege points, Ticketmaster tickets, lodging at our hotels, and products offered at our PENN Play mall and retail stores, less estimated breakage.

The allocated revenue for gaming wagers is recognized at the conclusion of each wager or wagering game hand.

The liability associated with the loyalty points is deferred and recognized as revenue when the customer redeems the loyalty points for slot play and complimentaries and such goods and services are delivered to the customer.

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The Company has three general types of liabilities related to contracts with customers:

(i) the obligation associated with its PENN Play TM program (loyalty points and tier status benefits), (ii) advance payments on goods and services yet to be provided and for unpaid wagers, and (iii) deferred revenue associated with third-party online sports betting and/or iCasino for online sports betting and iCasino market access.

Our PENN Play TM program connects the Company’s brands under one loyalty program and allows members to earn loyalty points, or “PENN Cash,” redeemable for slot play and complimentaries, such as food and beverage at our restaurants, lodging at our hotels, the PENN Play TM redemption marketplace that features popular retailers, and products offered at our retail stores across the vast majority of our properties.

In addition, members of the PENN Play TM program earn credit toward tier status, which entitles them to receive certain other benefits, such as priority access, discounts, gifts, trips to PENN destinations, partner experiences, and PENN Cash.

The obligation associated with our PENN Play TM program, which is included in “Accrued expenses and other current liabilities” within our Consolidated Balance Sheets, was $ 33.1 million and $ 39.3 million as of December 31, 2023 and 2022, respectively, and consisted principally of the obligation associated with the loyalty points.

(i) the obligation associated with its PENN Play program (loyalty points and tier status benefits), (ii) advance payments on goods and services yet to be provided and for unpaid wagers, and (iii) deferred revenue associated with third-party online sports betting and/or iCasino for online sports betting and iCasino market access.

Our PENN Play program connects the Company’s brands under one loyalty program and allows members to earn loyalty points, or “PENN Cash,” redeemable for slot play and complimentaries, such as food and beverage at our restaurants, lodging at our hotels, the PENN Play redemption marketplace that features popular retailers, and products offered at our retail stores across the vast majority of our properties.

In addition, members of the PENN Play program earn credit toward tier status, which entitles them to receive certain other benefits, such as priority access, discounts, gifts, trips to PENN destinations, partner

experiences, and PENN Cash.

The obligation associated with our PENN Play program, which is included in “Accrued expenses and other current liabilities” within our Consolidated Balance Sheets, was $ 29.7 million and $ 33.1 million as of December 31, 2024 and 2023, respectively, and consisted principally of the obligation associated with the loyalty points.

Our loyalty point obligations are generally settled within six months of issuance.

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The Company’s advance payments on goods and services yet to be provided and for unpaid wagers primarily consist of the following:

(i) deposits on rooms and convention space, (ii) money deposited on behalf of a customer in advance of their property visit (referred to as “safekeeping” or “front money”), (iii) money deposited in an online wallet not yet wagered or wagered and not yet withdrawn, (iv) outstanding tickets generated by slot machine play, sports betting, or pari-mutuel wagering, (v) outstanding chip liabilities, (vi) unclaimed jackpots, and (vii) gift cards redeemable at our properties.

(i) deposits on rooms and convention space, (ii) money deposited on behalf of a customer in advance of their property visit (referred to as “safekeeping” or “front money”), (iii) money deposited in an online wallet not yet wagered, (iv) money deposited in an online wallet for pending and concluded wagers not yet withdrawn, (v) outstanding tickets generated by slot machine play, sports betting, or pari-mutuel wagering, (vi) outstanding chip liabilities, (vii) unclaimed jackpots, and (viii) gift cards redeemable at our properties.

Unpaid wagers generally represent obligations stemming from prior wagering events, of which revenue was previously recognized.

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The Company’s deferred revenue is primarily related to PENN Interactive, our wholly-owned interactive division, which enters into multi-year agreements with third-party online sports betting and/or iCasino operators for online sports betting and iCasino market access across our portfolio of properties.

We recognized $ 21.6 million, $ 10.7 million, and $ 8.2 million of previously deferred revenue during the years ended December 31, 2023, 2022, and 2021 respectively.

Deferred revenue primarily associated with third-party online sports betting and/or iCasino operators for online sports betting and iCasino market access, which is included in “Other long-term liabilities” within our Consolidated Balance Sheets was $ 39.0 million and $ 46.5 million as of December 31, 2023 and 2022, respectively.

As of December 31, 2024, and 2023, our deferred revenue balance was $ 42.6 million and $ 39.0 million, respectively, the majority of which is included in “Other long-term liabilities” within our Consolidated Balance Sheets.

During the years ended December 31, 2024, 2023, and 2022 we recognized revenue of $ 5.7 million, $ 21.6 million, and $ 10.7 million, respectively, that was included in the December 31, 2023, 2022, and 2021 deferred revenue balances.

The Company expenses advertising costs the first time the advertising takes place or as incurred.

Advertising expenses, which generally relate to media placement costs and are primarily included in “Gaming” expenses within the Consolidated Statements of Operations, were $ 173.3 million, $ 94.8 million, and $ 88.2 million, for the years ended December 31, 2023, 2022, and 2021, respectively.

Advertising expenses, which includes media marketing services and brand and other rights provided by ESPN pursuant to the Sportsbook Agreement (as defined in Note 4, “Revenue Disaggregation” ), and other media placement costs and are primarily included in “Gaming” expenses within the Consolidated Statements of Operations, were $ 456.4 million, $ 173.3 million, and $ 94.8 million, for the years ended December 31, 2024, 2023, and 2022, respectively.

Gaming and Pari-mutuel Taxes:

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Gains or losses resulting from foreign currency transactions are included in “Other” within our Consolidated Statements of Operations.

Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss:

Comprehensive Income or Loss and Accumulated Other Comprehensive Income or Loss:

Comprehensive income (loss) includes net income (loss) and all other non-stockholder changes in equity, or other comprehensive income (loss).

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The Company accounts for forfeitures in the period in which they occur based on actual amounts.

The fair value of stock options is estimated at the grant date using the Black-Scholes option-pricing model, which requires us to make assumptions, including the

expected term, which is based on the contractual term of the stock option and historical exercise data of the Company’s employees;

The fair value of stock options is estimated at the grant date using the Black-Scholes option-pricing model, which requires us to make assumptions, including the expected term, which is based on the contractual term of the stock option and historical exercise data of the Company’s employees;

the risk-free interest rate, which is based on the U.S.

Treasury spot rate with a term equal to the expected term assumed at the grant date;

the expected volatility, which is estimated based on the historical volatility of the Company’s stock price over the expected term assumed at the grant date;

the expected volatility, which is estimated based on the historical volatility of the Company’s stock

price over the expected term assumed at the grant date;

and the expected dividend yield, which is zero since we have not historically paid dividends.

See Note 15, “Stock-based Compensation.”

Earnings (Loss) Per Share:

Basic earnings (loss) per share (“EPS”) is computed by dividing net income or loss applicable to common stock by the weighted-average number of common shares outstanding during the period.

Earnings or Loss Per Share:

Basic earnings or loss per share (“EPS”) is computed by dividing net income or loss applicable to common stock by the weighted-average number of common shares outstanding during the period.

Diluted EPS reflects the additional dilution, if any, for all potentially-dilutive securities such as warrants, stock options, unvested restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) (collectively with RSAs, “restricted stock”), outstanding convertible preferred stock, and convertible debt.

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See Note 16, “Earnings (Loss) per Share” for more information.

As discussed in Note 15, “Stockholders’ Equity,” all remaining outstanding shares of Series D Preferred Stock became eligible for the conversion and were converted to common stock during the third quarter of 2023.

There are no outstanding shares of Series D Preferred Stock as of December 31, 2023.

As discussed in Note 14, “Stockholders’ Equity,” all remaining outstanding shares of Series D Preferred Stock were converted to common stock during the third quarter of 2023.

There were no outstanding shares of Series D Preferred Stock as of December 31, 2024.

Guarantees and Indemnifications:

The Company accounts for indemnity obligations in accordance with the ASC 460-20, “Contingencies” and records a liability at fair value.

Pursuant to the Barstool SPA, as described in Note 6, “Acquisitions and Dispositions,” the Company agreed to indemnify Barstool and its subsidiaries and David Portnoy for certain tax matters.

The Company accounts for indemnity obligations in accordance with ASC Topic 460-20, “Contingencies” and records a liability at fair value.

Pursuant to the Barstool SPA, the Company agreed to indemnify Barstool and its subsidiaries and David Portnoy for certain tax matters.

The indemnity provisions generally provide for the Company’s control of defense and settlement of claims, as well as certain other costs associated with potential tax matters related to Barstool and its subsidiaries and David Portnoy.

The Company has not previously incurred costs to settle claims under this indemnification obligation, nor did we did have a liability associated with this obligation as of December 31, 2022.

As of December 31, 2023, the Company recorded $ 70.0 million in liabilities associated with this obligation.

See Note 6, “Acquisitions and Dispositions” for more information.

Claims under the indemnification are paid upon demand.

In the second quarter of 2024, the Company paid $ 30.5 million in settlement costs under this indemnification obligation.

Provisions in the Barstool SPA limit the time within which an indemnification claim can be made to the later of the resolution of the indemnification claim or the relevant statutes of limitations.

The maximum potential amount of future payments the Company could be required to make under this indemnification agreement is not estimable at this time due to uncertainties related to potential outcomes and other unique facts and circumstances involved in the Barstool SPA.

As of December 31, 2024 and 2023, the Company has recorded liabilities of $ 39.5 million and $ 70.0 million for this agreement, respectively.

See Note 5, “Acquisitions and Dispositions” and Note 18, “Fair Value Measurements.” for more information.

Application of Business Combination Accounting:

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Note 3—New Accounting Pronouncements

In June 2022, the Financial Accounting Standard Board (the “FASB”) issued ASU 2022-03, “Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”).

ASU 2022-03 clarifies the guidance on the fair value measurement of an equity security that is subject to a contractual sale restriction and requires specific disclosures related to such an equity security.

Specifically, ASU 2022-03 clarifies that a “contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security” and is not included in the equity security’s unit of account.

Accordingly, the Company is no longer permitted to apply a discount

related to the contractual sale restriction, or lack of marketability, when measuring the equity security’s fair value.

In addition, ASU 2022-03 prohibits an entity from recognizing a contractual sale restriction as a separate unit of account.

ASU 2022-03 will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted.

Although we are still finalizing our assessment of the impact of the adoption of ASU 2022-03, which is effective January 1, 2024, we currently do not expect it to have a material impact on our Consolidated Financial Statements.

In March 2023, the FASB issued ASU 2023-02, “Investments—Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)” (“ASU 2023-02”).

ASU 2023-02 introduced the option to apply the proportional amortization method to account for investments made primarily for the purpose of receiving income tax credits and other income tax benefits when certain requirements are met.

In addition, ASU 2023-02 limited the proportional amortization method to investments in low-income-housing tax credit structures.

ASU 2023-02 will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Although we are still finalizing our assessment of the impact of the adoption of ASU 2023-02, which is effective January 1, 2024, we currently do not expect it to have a material impact on our Consolidated Financial Statements.

Accounting Pronouncements Adopted

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

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ASU 2023-07 updates the requirements for a public entity to disclose its significant segment expense categories and amounts for each reportable segment.

A significant segment expense is considered an expense that is;

significant to the segment, regularly provided to or easily computed from information regularly provided to the chief operating decision maker, and included in the reported measure of segment profit or loss.

A significant segment expense is considered an expense that is significant to the segment, regularly provided to or easily computed from information regularly provided to the chief operating decision maker, and included in the reported measure of segment profit or loss.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early Adoption is permitted.

The Company is currently evaluating the impact of the adoption of ASU 2023-07 and expect that any impact would be limited to additional disclosures in the notes to the Consolidated Financial Statements.

ASU 2023-07 required a retrospective adoption to all prior periods presented in the financial statements.

The adoption of ASU 2023-07 resulted in additional disclosures in the notes to the Consolidated Financial Statements.

See Note 17, “ Segment Information .

Accounting Pronouncements to be Implemented

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

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The primary purpose of the new ASU 2023-09 is to enhance the transparency of income tax disclosures and we expect that any impact would be limited to additional disclosures in the notes to the Consolidated Financial Statements.

Note 4—Hurricane Laura

On August 27, 2020, Hurricane Laura made landfall in Lake Charles, Louisiana, which caused significant damage to our L’Auberge Lake Charles property, which closed for approximately two weeks.

The Company maintains insurance, subject to certain deductibles and coinsurance, that covers business interruption, including lost profits, and covers the repair or replacement of assets that suffered losses.

The Company recorded a receivable relating to our estimate of repairs and maintenance costs which have been incurred and property and equipment which have been written off, and for which we deem the recovery of such costs and property and equipment from our insurers to be probable.

The insurance recovery receivable was included in “Accounts Receivable, net” within the Consolidated Balance Sheets.

As we deemed it probable that the proceeds to be recovered from our insurers would exceed the total of our insurance recovery recorded and our insurers’ deductible and coinsurance, we did not record any loss associated with the impact of this natural disaster.

Timing differences exist between the recognition of (i) impairment losses and capital expenditures made to repair or restore the assets and (ii) the receipt of insurance proceeds within the Consolidated Financial Statements.

During the years ended December 31, 2023 and 2022, we received $ 13.9 million and $ 39.4 million of insurance claim proceeds related to property damage, respectively, which resulted in a gain of $ 13.9 million and $ 10.7 million, respectively.

The property damage proceeds are included in “Other” expenses within the Consolidated Statements of Operations.

Additionally, during the year ended December 31, 2023, we received final proceeds of $ 19.6 million related to business interruption insurance, which are included in “General and administrative” expenses within the Consolidated Statements of Operations.

The following table summarizes the financial impact of Hurricane Laura related matters:

Life to date through December 31,

(in millions) 2023 2022

Insurance proceeds related to property damage received through the end of the period $ 100.8 $ 86.9

Insurance proceeds related to business interruption received through the end of the period $ 19.6 $ —

Deductible $ 15.0 $ 15.0

Coinsurance $ 2.5 $ 2.5

Clean-up, restoration, and other costs $ 52.8 $ 52.8

Fixed asset write-off $ 23.2 $ 23.2

Inventory write-off $ 0.2 $ 0.2

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” (“ASU 2024-03”).

ASU 2024-03 updates the requirements for a public entity to disclose additional information about specific expense categories in the notes to financial statements.

ASU 2024-03 does not change or remove current expense disclosure requirements, however, it affects where this information appears in the notes to financial statements.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026.

Early adoption is permitted.

We are conducting our assessment of the impact of the adoption of ASU 2024-03 and currently expect it to result in additional disclosures in the notes to the Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-04, “Debt—Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments” (“ASU 2024-04”).

ASU 2024-04 clarifies the determination of accounting treatment required for settlement of convertible debt (particularly, cash convertible instruments) at terms that differ from the original conversion terms.

ASU 2024-04 is effective for fiscal years beginning after December 15, 2025.

Early adoption is permitted.

The primary purpose of the new ASU 2024-04 is to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20, Debt—Debt with Conversion and Other Options.

We are conducting our assessment of the impact of the adoption of ASU 2024-04 and currently do not expect it to have a material impact on our Consolidated Financial Statements.

Note 4—Revenue Disaggregation

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and (iv) other.

Other revenues are principally comprised of PENN Interactive’s revenue from third-party online sports betting and/or iCasino operators and the related gross-up for taxes, racing operations, advertising, retail, and commissions received on ATM transactions.

Our revenue is disaggregated by type of revenue and geographic location of the related properties, which is consistent with our reportable segments, as follows:

Other revenues are principally comprised of PENN Interactive’s revenues generated from third-party online sports betting and the related gross-up for taxes, racing operations, advertising, retail, and commissions received on ATM transactions.

Our revenue is disaggregated by type of revenue and geographic location (with no single foreign country’s revenue representing more than 10% of total consolidated revenues) of the related properties, which is consistent with our reportable segments, as follows:

For the year ended December 31, 2024

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(1) Other revenues within the Interactive segment are inclusive of gaming tax reimbursement 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.

Additionally, the year ended December 31, 2023 included $ 105.8 million in advertising revenue and $ 29.8 million in retail revenue due to the inclusion of Barstool operating results prior to the disposition on August 8, 2023.

Additionally, due to the inclusion of Barstool operating results prior to the disposition on August 8, 2023, other revenues within the Interactive segment for the year ended December 31, 2023 included $ 105.8 million in advertising revenue and $ 29.8 million in retail revenue.

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

Note 5—Acquisitions and Dispositions

HitPoint Inc.

and LuckyPoint Inc.

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

and Lucky Point Inc.

(collectively, “Hitpoint”).

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

The contingent liability is payable in annual installments over three years , through a combination of cash and the Company’s common stock, and is based on achievement of certain performance factors.

The purchase price allocation resulted in a recognition of $ 8.8 million of goodwill, $ 4.0 million in developed technology which is included in “Other intangible assets, net” within the Consolidated Balance Sheets, along with other miscellaneous operating assets and liabilities.

The developed technology is an amortizing intangible asset with an assigned useful life of five years , and was valued using the multi-period excess earnings method, a variation of the income approach, which is supported by observable market data for peer companies.

Hollywood Casino Perryville

On July 1, 2021, we completed the acquisition of the operations of Hollywood Casino Perryville (“Perryville”), from GLPI for a purchase price of $ 39.4 million, including working capital adjustments.

The purchase price allocation resulted in the recognition of a $ 12.7 million gaming license asset and a $ 1.0 million customer relationship asset, both of which are included in “Other intangible assets, net” within our Consolidated Balance Sheets, $ 9.2 million of goodwill, $ 8.2 million of tangible long-term assets, comprised primarily of property and equipment, and $ 8.3 million of various operating assets and liabilities.

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

The gaming license is an indefinite-lived intangible asset, and the customer relationships is an amortizing intangible asset with a useful life of two years .

The Company valued (i) the gaming license using the Greenfield Method, a form of the income approach;

(ii) the customer relationships using the “with-and-without” method, a form of the income approach, and (iii) the property and equipment and other various operating assets and liabilities primarily utilizing the cost approach.

All valuation methods of the income approach are supported by observable market data for peer casino operator companies.

For the period beginning July 1, 2021 through December 31, 2021 Perryville’s revenue and net income included in the Consolidated Statements of Operations were $ 46.9 million and $ 2.5 million, respectively.

Sam Houston Race Park and Valley Race Park

On August 1, 2021, we completed the acquisition of the remaining 50 % ownership interest in the Sam Houston Race Park in Houston, Texas, the Valley Race Park in Harlingen, Texas, and a license to operate a racetrack in Austin, Texas (collectively, “Sam Houston”), from PM Texas Holdings, LLC for a purchase price of $ 57.8 million, comprised of $ 42.0 million in cash and $ 15.8 million of the Company’s common stock, which was allocated to property and equipment.

In conjunction with the acquisition, we recorded a gain of $ 29.9 million on our equity method investment, which is included in “Other” within our Consolidated Statements of Operations.

The property and equipment assets were valued using a combination of the market and cost approaches.

Score Media and Gaming Inc.

On October 19, 2021, we acquired 100 % of Score Media and Gaming, Inc.

(“theScore”) for a purchase price of approximately $ 2.1 billion.

The acquisition provided us with the technology, resources and audience reach to accelerate our media and sports betting strategy across North America.

Under the terms of the agreement, 1317774 B.C.

(the “Purchaser”), an indirectly wholly owned subsidiary of PENN, acquired each of the issued and outstanding theScore shares (other than those held by PENN and its subsidiaries) for US$ 17.00 per share in cash consideration, totaling $ 922.8 million, and either 0.2398 of a share of common stock, par value $ 0.01 of PENN common stock or, if validly elected, 0.2398 of an exchangeable share in the capital of the Purchaser (each whole share, an “Exchangeable Share”), totaling 12,319,340 shares of PENN common stock and 697,539 Exchangeable Shares for approximately $ 1.0 billion.

Each Exchangeable Share will be exchangeable into one share of PENN common stock at the option of the holder, subject to certain adjustments.

In addition, Purchaser may redeem all outstanding Exchangeable Shares in exchange for shares of PENN common stock at any time following the fifth anniversary of the closing, or earlier under certain circumstances.

See Note 15, “Stockholders’ Equity” for further information.

The Company held shares of theScore common stock prior to the acquisition and, as such, the acquisition date estimated fair value of this previously held investment was a component of the purchase consideration.

Based on the acquisition date fair

value of this investment of $ 58.9 million, the Company recorded a gain of $ 2.9 million related to remeasurement of the equity security investment immediately prior to the acquisition date which was included in “Other” within our Consolidated Statements of Operations.

For the period beginning October 19, 2021 through December 31, 2021 theScore’s revenue and net loss included in the Consolidated Statements of Operations were $ 7.5 million and $ 11.9 million, respectively.

Tropicana Las Vegas

On January 11, 2022, PENN entered into a definitive purchase agreement to sell its outstanding equity interest in Tropicana, which had the gaming license and operated the Tropicana, to Bally’s Corporation.

On January 11, 2022, PENN entered into a definitive purchase agreement to sell its outstanding equity interest in Tropicana Las Vegas Hotel and Casino, Inc.

(“Tropicana”), which had the gaming license and operated the Tropicana, to Bally’s Corporation.

The transaction closed on September 26, 2022.

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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 entered into the Barstool SPA with David Portnoy on August 8, 2023.

Pursuant to the Barstool SPA, PENN sold 100 % of the outstanding shares of Barstool to David Portnoy in exchange for nominal cash consideration ( one dollar) and certain non-compete and other restrictive covenants.

Pursuant to the Barstool SPA, PENN sold 100 % of the outstanding shares of Barstool to David Portnoy in exchange for nominal cash consideration 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.

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Claims under the indemnification are paid upon demand.

The Company has not previously incurred costs to settle claims under this indemnification obligation and provisions in the Barstool SPA limit the time within which an indemnification claim can be made to the later of the resolution of the indemnification claim or the relevant statutes of limitations.

Provisions in the Barstool SPA limit the time within which an indemnification claim can be made to the later of the resolution of the indemnification claim or the relevant statutes of limitations.

In the second quarter of 2024, the Company paid $ 30.5 million in settlement costs under this indemnification obligation.

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Total liabilities $ 54.1

Unaudited Pro Forma Financial Information

The following table includes unaudited pro forma consolidated financial information assuming our acquisition of Hitpoint, Perryville, Sam Houston, and theScore had occurred as of January 1, 2021.

The pro forma amounts include the historical operating results of PENN and Hitpoint, Perryville, Sam Houston, and theScore prior to our acquisitions.

The pro forma financial information does not necessarily represent the results that may occur in the future.

For the year ended December 31, 2021, pro forma adjustments directly attributable to the acquisitions include acquisition and transaction related costs of $ 77.1 million incurred by both PENN and the respective acquirees, gains of $ 51.0 million related to our purchase of the remaining 50 % of Sam Houston and a net unrealized gain on the equity security investment in theScore.

For the year ended December 31,

(in millions) 2021

Revenues $ 5,978.0

Net income $ 347.6

Note 6—Investments in and Advances to Unconsolidated Affiliates

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Prior to the acquisition of the remaining Barstool shares (which occurred on February 17, 2023 as discussed in Note 5, “Acquisitions and Dispositions” ), the Company determined that it did not qualify as the primary beneficiary of Barstool either at the commencement date of its investment or for subsequent periods prior to the acquisition, primarily as a result of the Company not having the power to direct the activities of the VIE that most significantly affect Barstool’s performance.

As of December 31, 2022, our investment in Barstool was $ 160.9 million.

Therefore, the Company did not consolidate the financial position nor the results of operations of Barstool and we recorded our proportionate share of Barstool’s net income or loss one quarter in arrears during the year ended December 31, 2022 and during the period January 1, 2023 through February 16, 2023.

Kansas Joint Venture

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$ 33.5 $ 32.6 $ 31.5

Texas and New Jersey Joint Ventures

The Company had a 50 % interest in a joint venture with Sam Houston, which owns and operates the Sam Houston Race Park in Houston, Texas and the Valley Race Park in Harlingen, Texas, and holds a license for a racetrack in Austin, Texas.

On August 1, 2021, we completed the acquisition of the remaining 50 % ownership interest in Sam Houston.

In conjunction with the acquisition, we recorded a gain of $ 29.9 million on our equity method investment, which is included in “Other” within our Consolidated Statements of Operations.

Prior to the August 1, 2021 acquisition of the remaining 50 % interest, the Company determined that our Texas joint venture did not qualify as a VIE.

Using the guidance for entities that are not VIEs, the Company determined that it did not have a controlling financial interest in the joint venture, primarily as it did not have the ability to direct the activities of the joint venture that most significantly impacted the joint venture’s economic performance without the input of Sam Houston.

Therefore, the Company did not consolidate the results of operations of our Texas joint venture for the period of January 1, 2021 through July 31, 2021.

The Company has a 50 % interest in a joint venture with Greenwood, which owns and operates Freehold Raceway, in Freehold, New Jersey.

The property features a half-mile standardbred racetrack and a grandstand.

The Company has determined that our New Jersey joint venture does not qualify as a VIE.

Therefore, the Company did not consolidate the financial position of the New Jersey joint venture as of December 31, 2023 and 2022, nor the results of operations for the years ended December 31, 2023, 2022, and 2021.

Note 7—Property and Equipment

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$ 293.9 $ 288.7 $ 329.1

(1) As of a result of the lease modification that occurred on January 1, 2023, we derecognized $ 1.1 billion of “Property and equipment, net” associated with building assets within our Consolidated Balance Sheets, with an offset to “Gain on REIT transaction, net” within our Consolidated Statements of Operations.

Refer to Note 12, “Leases” for more information related to the January 1, 2023 lease modification.

(2) During the years ended December 31, 2023, 2022, and 2021, we recorded depreciation expense of $ 112.4 million, $ 175.6 million, and $ 183.4 million, related to real estate assets subject to our Master Leases.

(1) During the years ended December 31, 2024, 2023, and 2022, we recorded depreciation expense of $ 99.3 million, $ 112.4 million, and $ 175.6 million, respectively, related to real estate assets subject to our Master Leases.

Note 8—Goodwill and Other Intangible Assets

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Goodwill, net $ 124.7 $ 175.6 $ 200.2 $ 560.6 $ 1,628.4 $ — $ 2,689.5

Goodwill acquired during year — — — — 231.9 — 231.9

Goodwill disposed of during the year — — — — ( 231.9 ) — ( 231.9 )

Effect of foreign currency exchange rates — — — — 35.6 — 35.6

Impairment losses during year ( 30.0 ) — — — — — ( 30.0 )

— — — — 1.5 — 1.5

Balance as of December 31, 2023

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Goodwill, net $ 94.7 $ 175.6 $ 200.2 $ 560.6 $ 1,664.0 $ — $ 2,695.1

Goodwill acquired during year — — — — 231.9 — 231.9

Goodwill disposed of during the year — — — — ( 231.9 ) — ( 231.9 )

Effect of foreign currency exchange rates — — — — ( 119.7 ) — ( 119.7 )

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Goodwill, net $ 94.7 $ 169.5 $ 200.2 $ 554.4 $ 1,544.3 $ — $ 2,563.1

(1) Amount relates to theScore purchase price measurement period adjustment.

During the year ended December 31, 2023, in connection with the Barstool SPA, we recorded a pre-tax loss on disposal of $ 923.2 million, inclusive of a goodwill write-off of $ 231.9 million within our Interactive segment.

See Note 5, “Acquisitions and Dispositions.”

2023 Annual Assessment for Impairment

As a result of our 2023 annual assessment for impairment as of October 1, 2023, we recognized impairments on our goodwill and gaming licenses of $ 30.0 million and $ 100.6 million, respectively.

The impairment of goodwill was specific to our Hollywood Casino 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 estimated fair value of the reporting unit was determined through a combination of a discounted cash flow model and a market-based approach, which utilized Level 3 inputs.

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

(ii) Hollywood Casino at PENN National Race Course (“PNRC”), which 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, which was largely due to increased supply in the region.

Annual Assessments for Impairment

For the year ended December 31,

2024 2023 2022

(in millions) Goodwill Gaming Licenses Trademarks Goodwill Gaming Licenses Goodwill Gaming Licenses

Northeast — 66.0 1.0 30.0 100.6 37.4 79.0

South 6.1 3.3 6.5 — — — —

Midwest 6.2 — — — — — —

$ 12.3 $ 69.3 $ 7.5 $ 30.0 $ 100.6 $ 37.4 $ 79.0

In 2024, we recorded impairment charges totaling $ 12.3 million in our South and Midwest segments due to increased competition that led to slight reductions in long-term cash flow projections at certain of our properties.

In 2023 and 2022, we recorded impairment charges of $ 30.0 million and $ 37.4 million, respectively, at our Hollywood Casino Greektown (“Greektown”) reporting unit due to continued economic challenges in the region in which it operates, as well as the majority of the hotel being out of service in 2022 for longer than anticipated during renovations caused by water damage.

The estimated fair value of the reporting units was determined through a combination of a discounted cash flow model and a market-based approach, which utilized Level 3 inputs.

In 2024, 2023, and 2022, we recorded impairment charges of $ 69.3 million, $ 100.6 million, and $ 79.0 million, respectively, on our gaming licenses, primarily in our Northeast region.

A former expansion of legislation in the market and increased supply resulted in reductions in long-term cash flow projections for certain of our properties, resulting in impairment of gaming licenses.

The estimated fair values of the gaming licenses were determined by using a discounted cash flow model, which utilized Level 3 inputs.

The annual assessment for impairment did not result in any impairment charges to trademarks.

The estimated fair values of trademarks were determined by using discounted cash flow models, which utilized Level 3 inputs.

The total 2023 goodwill and gaming license impairment charges of $ 30.0 million and $ 100.6 million, respectively, pertained to our Northeast Segment.

2022 Annual and Interim Assessment for Impairment

During the third quarter of 2022, we identified an indicator of impairment on goodwill and other intangible assets at the Greektown reporting unit as the majority of the hotel was out of service for longer than anticipated during renovations caused by water damage.

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

As a result of the interim assessment for impairment, during the third quarter of 2022, we recognized impairment charges on our goodwill and gaming licenses of $ 37.4 million and $ 65.4 million, respectively.

The estimated fair value of the reporting unit was determined through a combination of a discounted cash flow model and a market-based approach, which utilized Level 3 inputs.

The estimated fair value of the gaming license was determined by using a discounted cash flow model, which utilized Level 3 inputs.

As a result of our 2022 annual assessment for impairment as of October 1, 2022, we recognized a $ 13.6 million impairment charge on our gaming licenses.

The impairment of gaming licenses is specific to PNRC and 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.

The estimated fair values of our gaming licenses were determined by using discounted cash flow models, which utilized Level 3 inputs.

The annual assessment for impairment did not result in any impairment charges to goodwill or trademarks.

The estimated fair value of reporting units was determined through a combination of discounted cash flow models and market-based approaches, which utilized Level 3 inputs.

In 2024, we recorded impairment charges of $ 7.5 million to our trademarks for one property each in our Northeast and South segments due to reductions in long-term projections as a result of increased competition.

The estimated fair values of trademarks were determined by using discounted cash flow models, which utilized Level 3 inputs.

The total 2022 goodwill and gaming license impairment charges of $ 37.4 million and $ 79.0 million, respectively, pertained to our Northeast segment.

2021 Annual Assessment for Impairment

We completed our annual assessment for impairment as of October 1, 2021, which did not result in any impairment charges to goodwill, gaming licenses or trademarks.

The estimated fair value of reporting units were determined through a combination of discounted cash flow models and market-based approaches, which utilized Level 3 inputs.

The estimated fair values of our gaming licenses and trademarks were determined by using discounted cash flow models, which utilized Level 3 inputs.

Impairment on goodwill, gaming licenses, and trademarks are recorded to “Impairment losses” within our Consolidated Statement of Operations.

Carrying Values of Goodwill and Other Intangible Assets

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Total other intangible assets, net $ 1,839.7 $ ( 309.8 ) $ 1,529.9 $ 1,869.4 $ ( 251.2 ) $ 1,618.2

During the year ended December 31, 2024, we acquired a gaming license for operating online sports wagering in the state of New York, which was recorded to “Gaming licenses” at its fair value of $ 25.0 million.

During the year ended December 31, 2023, in connection with the Barstool SPA, we recorded a pre-tax loss on disposal of $ 923.2 million, inclusive of trademarks and other intangible assets write-offs of $ 482.9 million in our Interactive segment.

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Accrued expenses and other current liabilities $ 907.3 $ 1,021.9

(1) Amounts include the obligation associated with the PENN Play TM program which are discussed in Note 2, “Significant Accounting Policies.” Additionally, amounts as of December 31, 2023 and 2022 include $ 60.8 million and $ 51.4 million, respectively, pertaining to the Company’s accrued progressive jackpot liability.

(2) Amounts as December 31, 2023 and 2022 include $ 87.7 million and $ 70.8 million, respectively, pertaining to the Company’s non-qualified deferred compensation plan that covers management.

Amounts as December 31, 2023 and 2022 also include the current portion of advance payments on goods and services yet to be provided, including deposits for hotel rooms, of $ 127.0 million and $ 63.4 million, respectively, and $ 59.6 million and $ 54.0 million, respectively, pertaining to unpaid wagers.

See Note 2, “Significant Accounting Policies” for further discussion related to advance payments on goods and services yet to be provided and unpaid wagers.

(1) For the years ended December 31, 2024 and 2023, the amounts include the obligation associated with the PENN Play program which are discussed in Note 2, “Significant Accounting Policies and Basis of Presentation.” Additionally, amounts for the respective periods include $ 69.3 million and $ 60.8 million, respectively, related to the Company’s accrued progressive jackpot liability.

(2) For the years ended December 31, 2024 and 2023, the amounts include $ 107.2 million and $ 87.7 million, respectively, related to the Company’s non-qualified deferred compensation plan that covers management.

Additionally, amounts for the respective periods include the current portion of advance payments on goods and services yet to be provided, such as deposits for hotel rooms, of $ 90.0 million and $ 127.0 million, respectively, and $ 56.5 million and $ 59.6 million, respectively, related to unpaid wagers.

For further discussion related to advance payments on goods and services yet to be provided and unpaid wagers, refer to Note 2, “Significant Accounting Policies and Basis of Presentation.” Amounts for the year ended December 31, 2023 also included $ 30.5 million related to the indemnification obligation discussed in Note 2, “Significant Accounting Policies and Basis of Presentation.”

Note 10—Long-term Debt

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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.

In connection with the repayment of the previous Senior Secured Credit Facilities, the Company recorded a $ 10.4 million loss on the early extinguishment of debt for the year ended December 31, 2022.

The interest rates per annum applicable to loans under the Amended Credit Facilities are, at the Company’s option, equal to either an adjusted secured overnight financing rate (“Term SOFR”) or a base rate, plus an applicable margin.

The applicable

margin for each of the Amended Revolving Credit Facility and the Amended Term Loan A Facility was initially 1.75 % for Term SOFR loans and 0.75 % for base rate loans until the Company provided financial reports for the first full fiscal quarter following closing and, thereafter, ranges from 2.25 % to 1.50 % per annum for Term SOFR loans and 1.25 % to 0.50 % per annum for base rate loans, in each case depending on the Company’s total net leverage ratio (as defined within the Second Amended and Restated Credit Agreement).

The applicable margin for the Amended Term Loan B Facility is 2.75 % per annum for Term SOFR loans and 1.75 % per annum for base rate loans.

The applicable margin for each of the Amended Revolving Credit Facility and the Amended Term Loan A Facility ranges from 2.25 % to 1.50 % per annum for Term SOFR loans and 1.25 % to 0.50 % per annum for base rate loans, in each case depending on the Company’s total net leverage ratio (as defined within the Second Amended and Restated Credit Agreement).

The applicable margin for the Amended Term Loan B Facility was 2.75 % per annum for Term SOFR loans and 1.75 % per annum for base rate loans until the margins were both reduced by 25 basis points pursuant to the Second Amendment Agreement, as discussed and defined below, and effective December 4, 2024.

The Amended Term Loan B Facility is subject to a Term SOFR “floor” of 0.50 % per annum and a base rate “floor” of 1.50 % per annum.

In addition, the Company pays a commitment fee on the unused portion of the commitments under the Amended Revolving Credit Facility at a rate that was initially 0.25 % per annum, until the Company provided financial reports for the first full fiscal quarter following closing, and thereafter, ranges from 0.35 % to 0.20 % per annum, depending on the Company’s total net leverage ratio (as defined within the Second Amended and Restated Credit Agreement).

In addition, the Company pays a commitment fee on the unused portion of the commitments under the Amended Revolving Credit Facility at a rate that ranges from 0.35 % to 0.20 % per annum, depending on the Company’s total net leverage ratio (as defined within the Second Amended and Restated Credit Agreement).

The Amended Credit Facilities contain customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and certain of its subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, pay dividends, and make other restricted payments and prepay certain indebtedness that is subordinated in right of payment to the obligations under the Amended Credit Facilities.

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The Amended Credit Facilities also contain certain customary affirmative covenants and events of default, including the occurrence of a change of control (as defined in the documents governing the Second Amended and Restated Credit Agreement), termination, and certain defaults under the Master Leases (which are defined in Note 11, “Leases” ).

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 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.

In connection with the repayment of the previous Senior Secured Credit Facilities, the Company recorded a $ 10.4 million loss on the early extinguishment of debt for the year ended December 31, 2022.

Additionally, we recorded $ 1.3 million in refinancing costs, which is included in “General and administrative” within our Consolidated Statements of Operations.

In addition, we recorded $ 5.0 million of original issue discount related to the Amended Term Loan B Facility which is amortized to interest expense over the life of the Amended Term Loan B Facility.

On February 15, 2024 (the “First Amendment Effective Date ”), PENN entered into a First Amendment (the “First 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”).

Pursuant to the First Amendment Agreement, during the period beginning on the First Amendment Effective Date and ending on the date the administrative agent received our compliance certificate for the quarter ending December 31, 2024 (the “Covenant Relief Period”), we made an adjustment to exclude specified amounts of Interactive segment Adjusted EBITDAR (as defined in Note 17, “Segment Information” ) in our 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).

As of the issuance date of this report, the Covenant Relief Period has concluded, and we are now required to maintain the specified financial ratios and satisfy the financial tests under the Amended Credit Facilities, as described above.

On December 4, 2024 (the “Second Amendment Effective Date”), PENN entered into a Second Amendment (the “Second Amendment Agreement”) 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.

As of December 31, 2024 and 2023, the Company had conditional obligations under letters of credit issued pursuant to the Amended Credit Facilities with face amounts aggregating to $ 20.9 million and $ 21.7 million, respectively, resulting in $ 979.1 million and $ 978.3 million of available borrowing capacity under the Amended Revolving Credit Facility, respectively.

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 in available borrowing capacity.

5.625 % Senior Unsecured Notes

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Coupon interest $ 9.1 $ 9.1 $ 9.1

Amortization of debt discount — — 12.7

Amortization of debt issuance costs 1.8 1.7 1.7

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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.

Other Long-Term Obligations

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.

Other Long-Term Obligation

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

The amount included in interest expense related to this obligation was $ 36.1 million, $ 27.6 million, and $ 17.9 million for the years ended December 31, 2023, 2022, and 2021,

respectively.

The amount included in interest expense related to this obligation was $ 47.1 million, $ 36.1 million, and $ 27.6 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The balance of the financing obligation is $ 201.2 million and $ 154.1 million as of December 31, 2024 and 2023, respectively.

Ohio Relocation Fees

Other long-term obligations included $ 9.4 million and $ 27.4 million as of December 31, 2023 and 2022, respectively, related to the relocation fees for Hollywood Gaming at Dayton Raceway (“Dayton”) and Hollywood Gaming at Mahoning Valley Race Course (“Mahoning Valley”), which opened in August 2014 and September 2014, respectively.

The relocation fee for each facility is payable as follows:

$ 7.5 million upon the opening of the facilities and eighteen semi-annual payments of $ 4.8 million beginning one year after the commencement of operations.

These obligations are accreted to interest expense at an effective yield of 5.0 %.

As of December 31, 2023, the remaining balance of the relocation obligation of $ 9.4 million is included in “Current maturities of long-term debt” within our Consolidated Balance Sheets.

As of December 31, 2023 and 2022, other long-term obligations included $ 10.0 million and $ 10.7 million, respectively, related to the repayment obligation of a hotel and event center located less than a mile away from Hollywood Casino Lawrenceburg, which was constructed by the City of Lawrenceburg Department of Redevelopment.

Effective in January 2015, by contractual agreement, we assumed a repayment obligation for the hotel and event center in the amount of $ 15.3 million, which was financed through a loan with the City of Lawrenceburg Department of Redevelopment, in exchange for conveyance of the property.

Beginning in January 2016, the Company was obligated to make annual payments on the loan of $ 1.0 million for 20 years.

This obligation is accreted to interest expense at its effective yield of 3.0 %.

Note 11—Leases

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Changes to future lease payments that are not fixed within the Master Leases (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to either (i) increase both the ROU assets and corresponding lease liabilities with respect to operating and finance leases or (ii) record the incremental variable payment associated with the financing obligation to interest expense.

In addition, prior to the effective date of the AR PENN Master Lease (as defined and as discussed below), monthly rent associated with Hollywood Casino Columbus (“Columbus”) and monthly rent in excess of the Hollywood Casino Toledo (“Toledo”) rent floor as contained within the PENN Master Lease (as defined and discussed below), were considered contingent rent.

In addition, prior to the effective date of the AR PENN Master Lease (as defined and discussed below), monthly rent associated with Hollywood Casino Columbus (“Columbus”) and monthly rent in excess of the Hollywood Casino Toledo (“Toledo”) rent floor as contained within the PENN Master Lease (as defined and discussed below), were considered contingent rent.

AR PENN Master Lease

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The PENN Master Lease had an initial term of 15 years with four subsequent five-year renewal periods on the same terms and conditions, exercisable at the Company’s option.

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

On February 21, 2023, 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”), Columbus, 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.

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The AR PENN Master Lease along with the 2023 Master Lease (as defined and discussed below) are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee.

The payment structure under the AR PENN Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2 %, depending on the Adjusted Revenue to Rent Ratio (as defined in the AR PENN Master Lease) of 1.8 :1, and a component that is based on performance, which is prospectively adjusted every five years by an amount equal to 4 % of the average change in net revenues of all properties associated with the AR PENN Master Lease compared to a contractual baseline during the preceding five years (“PENN Percentage Rent”).

As a result of the annual escalator, effective as of November 1, 2023 for the lease year ended October 31, 2023, the fixed component of rent increased by $ 4.2 million, and additional ROU assets and corresponding lease liabilities of $ 28.7 million were recognized associated with the operating lease components.

As a result of the annual escalator, effective as of November 1, 2022 for the lease year ended October 31, 2022, the fixed component of rent increased by $ 5.7 million, additional ROU assets and corresponding lease liabilities of $ 3.6 million were recognized associated with the operating lease components, and additional ROU assets and corresponding lease liabilities of $ 44.8 million were recognized associated with the finance lease components.

As a result of the annual escalator, effective as of November 1, 2021 for the lease year ended October 31, 2021, the fixed component of rent increased by $ 5.6 million, additional ROU assets and corresponding lease liabilities of $ 34.2 million were recognized associated with the operating lease components, and additional ROU assets and corresponding lease liabilities of $ 3.1 million were recognized associated with the finance lease components.

The next annual escalator test date is scheduled to occur effective November 1, 2024.

The November 1, 2023 PENN Percentage Rent reset resulted in an annual rent reduction of $ 4.4 million, which will be in effect until the next PENN Percentage Rent reset, scheduled to occur on November 1, 2028.

Upon reset of the PENN Percentage Rent, effective November 1, 2023, we recognized additional ROU assets and corresponding lease liabilities of $ 117.4 million.

As a result of the annual escalator test, effective as of November 1 for the lease years ended October 31, the fixed components of rent and an additional ROU asset and corresponding lease liability were recognized as follows:

(in millions) 2024 2023 2022 (1)

Annual escalator

$ 4.2 $ 4.2 $ 5.7

Operating ROU asset and lease liability recognized

$ 27.2 $ 28.7 $ 3.6

Finance ROU asset and lease liability recognized

$ — $ — $ 44.8

(1) The annual escalator for the lease year ended October 31, 2022 was a part of the PENN Master Lease.

The next annual escalator test date is scheduled to occur on November 1, 2025.

The AR PENN Percentage Rent most recently reset on November 1, 2023, and will be effective until the next AR PENN Percentage Rent reset, scheduled to occur on November 1, 2028.

As a result of the AR PENN Percentage Rent resets for the lease years ended October 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:

(in millions) 2024 2023 2022

Reduction to the performance-based component of rent

N/A $ 4.4 N/A

Operating ROU asset and lease liability recognized

N/A $ 117.4 N/A

N/A – There were no AR PENN Percentage Rent resets scheduled for these periods, inclusive of the lease year ended October 31, 2022 of which performance-based rent was contained within the PENN Master Lease.

We concluded the execution of the AR PENN Master Lease constituted a modification event under ASC 842, which required us to reassess the classifications of the lease components and remeasure the associated lease liabilities.

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The execution of our omni-channel strategy continues to diversify our earning streams and precluded us from concluding all renewal periods were reasonably assured to be exercised.

As a result of the January 1, 2023 lease modification event, we concluded (i) the land components contained within the AR PENN Master Lease, which were previously primarily classified as finance leases under the PENN Master Lease, to be classified as operating leases, and (ii) control of the building assets have transferred from the Company to the lessor allowing for sale recognition in accordance with ASC 842 which results in the building components to be classified as operating leases.

As a result of the January 1, 2023 lease modification event, we concluded (i) the land components contained within the AR PENN Master Lease, which were previously primarily classified as finance leases, to be classified as operating leases, and (ii) control of the building assets have transferred from the Company to the lessor allowing for sale recognition in accordance with ASC 842 which results in the building components to be classified as operating leases.

Prior to the January 1, 2023 lease modification event, control of substantially all of the building components were concluded not to have passed from the Company to the lessor in accordance with ASC 842 which required recognition of a financing obligation in accordance with ASC 470 and continued recognition of the underlying asset in “Property and equipment, net” within our Consolidated Balance Sheets.

In conjunction with the sale recognition on the building components, we (i) derecognized $ 1.6 billion of financing obligations within our Consolidated Balance Sheets, offset to “Gain on REIT transaction, net” within our Statements of Operations;

and (ii) derecognized $ 1.1 billion of “Property and equipment, net” associated with the building assets within our Consolidated Balance Sheets, offset to “Gain on REIT transaction, net” within our Consolidated Statements of Operations.

As a result of our measurement of the associated operating lease liabilities, we recognized a reduction of the ROU assets and corresponding lease liabilities of $ 1.2 billion within our Consolidated Balance Sheets.

and (ii) derecognized $ 1.1 billion of “Property and equipment, net” associated with the building assets within our Consolidated Balance Sheets, offset to “Gain on REIT transactions, net” within our Consolidated Statements of Operations.

Lease components classified as an operating lease are recorded to “General and administrative” within our Consolidated Statements of Operations.

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On January 14, 2022, the ninth amendment to the PENN Master Lease between the Company and GLPI became effective.

The ninth amendment restated the definition of “Net Revenue” to clarify the inclusion of online-based revenues derived when a patron is physically present at a leased property, established a “floor” with respect to the PNRC Net Revenue amount used in the calculation of the annual rent escalator and PENN Percentage Rent, and modified the rent calculations upon a lease termination event as defined in the amendment.

The ninth amendment restated the definition of “Net Revenue” to clarify the inclusion of online-based revenues derived when a patron is physically present at a leased property, established a “floor” with respect to the PENN National Race Course Net Revenue amount used in the calculation of the annual rent escalator and PENN Percentage Rent, and modified the rent calculations upon a lease termination event as defined in the amendment.

We concluded the ninth amendment constituted a modification event under ASC 842, which required us to reassess the classifications of the lease components and remeasure the associated lease liabilities.

As a result of our reassessment of the lease classifications, (i) the land components of substantially all of the PENN Master Lease properties, which were previously classified as operating leases, were then primarily classified as finance leases, and (ii) the land and building components associated with the operations of Dayton and Mahoning Valley, which were previously classified as finance leases, were then classified as operating leases.

As a result of our reassessment of the lease classifications, (i) the land components of substantially all of the PENN Master Lease properties, which were previously classified as operating leases, were then primarily classified as finance leases, and (ii) the land and building components associated with the operations of Hollywood Gaming at Dayton Raceway (“Dayton”) and Hollywood Gaming at Mahoning

Valley Race Course (“Mahoning Valley”), which were previously classified as finance leases, were then classified as operating leases.

As a result of our measurement of the associated lease liabilities, we recognized additional ROU assets and corresponding lease liabilities of $ 455.4 million.

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The AR PENN Master Lease and the 2023 Master Lease are coterminous, as such consistent with the AR PENN Master Lease, we concluded the 2023 Master Lease term ends at the current lease expiration date of October 31, 2033 and does not include any of the remaining three renewal terms of five years each.

(See above lease term discussion for AR PENN Master Lease.)

(See the above lease term discussion associated with the AR PENN Master Lease.)

As a result of our lease classification assessment, we concluded all land and building components contained within the 2023 Master Lease to be operating leases.

As a result of our measurement of the operating lease liabilities, we recognized ROU assets and corresponding lease liabilities of $ 1.8 billion.

Additionally, in connection with the termination of the prior Meadows Lease and Perryville Lease (both defined and discussed below), we (i) derecognized $ 171.9 million in ROU assets within our Consolidated Balance Sheets;

Additionally, the 2023 Master Lease terminated the individual triple net leases associated with Meadows and Perryville, as such we (i) derecognized $ 171.9 million in ROU assets within our Consolidated Balance Sheets;

(ii) derecognized $ 165.5 million in lease liabilities within our Consolidated Balance Sheets;

and (iii) recognized a $ 6.5 million loss on the termination which is recorded in “Gain on REIT transaction, net” within our Consolidated Statements of Operations.

and (iii) recognized a $ 6.5 million loss on the termination which is recorded in “Gain on REIT transactions, net” within our Consolidated Statements of Operations.

Lease components classified as an operating lease are recorded to “General and administrative” within our Consolidated Statements of Operations.

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 $ 225.0 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.

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

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

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

The 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 continue to increase annually thereafter.

The 2023 Master Lease Rent is subject to an annual fixed escalator rent increase of 1.5 % which began on November 1, 2023 and will continue to increase annually thereafter.

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.

The PENN Development Projects are all subject to necessary regulatory and other government approvals.

Pinnacle Master Lease

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The Company has determined that the lease term is 32.5 years.

The payment structure under the Pinnacle Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2 %, depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8 :1, and a component that is based on performance of the properties, which is prospectively adjusted every two years by an amount equal to 4 % of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”).

As a result of the annual escalator, effective May 1, 2023, for the lease year ended April 30, 2023, the fixed component of rent increased by $ 4.7 million, and an additional ROU asset and corresponding lease liability of $ 33.3 million were recognized associated with the finance lease components.

As a result of the annual escalator, effective as of May 1, 2022, for the lease year ended April 30, 2022, the fixed component of rent increased by $ 4.6 million, and an additional ROU asset and corresponding lease liability of $ 33.2 million were recognized associated with the finance lease components.

As a result of the annual escalator, effective as of May 1, 2021, for the lease year ended April 30, 2021, the fixed component of rent increased by $ 4.5 million, and an additional ROU asset and corresponding lease liability of $ 17.2 million were recognized associated with the operating lease components.

amount equal to 4 % of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”).

As a result of the annual escalator test, effective as of May 1 for the lease years ended April 30, the fixed components of rent and an additional ROU asset and corresponding lease liability were recognized as follows:

(in millions) 2024 2023 2022

Annual escalator

$ 4.8 $ 4.7 $ 4.6

Finance ROU asset and lease liability recognized

$ 33.4 $ 33.3 $ 33.2

The next annual escalator test date is scheduled to occur on May 1, 2025.

The May 1, 2022 Pinnacle Percentage Rent reset resulted in an annual rent increase of $ 1.9 million, which will be in effect until the next Pinnacle Percentage Rent reset, scheduled to occur on May 1, 2024.

Upon reset of the Pinnacle Percentage Rent, effective May 1, 2022, we recognized an additional finance lease ROU asset and corresponding lease liability of $ 26.1 million.

The Pinnacle Percentage Rent most recently reset on May 1, 2024, and will be effective until the next Pinnacle Percentage Rent reset, scheduled to occur on May 1, 2026.

As a result of the Pinnacle Percentage Rent resets for the lease years ended April 30, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:

(in millions) 2024 2023 2022

Increase to the performance-based component of rent

$ 3.8 N/A $ 1.9

Finance ROU asset and lease liability recognized

$ 29.6 N/A $ 26.1

N/A – There was no Pinnacle Percentage Rent reset scheduled for this period.

On January 14, 2022, the fifth amendment to the Pinnacle Master Lease between the Company and GLPI became effective.

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We concluded the fifth amendment to the Pinnacle Master Lease constituted a modification event under ASC 842 (collectively with the ninth amendment to the PENN Master Lease, the “2022 Lease Modification”).

As a result of the modification, the land components of substantially all of the Pinnacle Master Lease properties, which were previously classified as operating leases, are now primarily classified as finance leases.

As a result of the modification, the land components of substantially all of the Pinnacle Master Lease properties, which were previously classified as operating leases, were then primarily classified as finance leases.

As a result of our measurement of the associated lease liabilities, we recognized additional ROU assets and corresponding lease liabilities of $ 937.6 million.

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Morgantown Lease

On October 1, 2020, the Company entered into an individual triple net lease with a subsidiary of GLPI for the land underlying our development project in Morgantown, Pennsylvania (“Morgantown Lease”) in exchange for $ 30.0 million in rent credits which were utilized to pay rent under the Master Leases, Meadows Lease (as defined and discussed below), and the Morgantown Lease during the year ended December 31, 2020.

The initial term of the Morgantown Lease is 20 years with six subsequent, five-year renewal periods, exercisable at the Company’s option.

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We concluded control of the land underlying the Morgantown facility was not passed from the Company to the lessor in accordance with ASC 842.

As such we recognized a financing obligation in accordance with ASC 470 and continue to recognize the underlying asset in “Property and equipment, net” within our Consolidated Balance Sheets.

As such we recognized a financing obligation in accordance with ASC 470 and continue to recognize the underlying land asset in “Property and equipment, net” within our Consolidated Balance Sheets.

The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method.

Perryville Lease

In conjunction with the acquisition of the operations of Perryville on July 1, 2021, the Company entered into a triple net lease with GLPI for the real estate assets associated with the property (“Perryville Lease”) for initial annual rent of $ 7.8 million

per year subject to escalation.

The initial term of the Perryville Lease was 20 years with three subsequent, five-year renewal periods, exercisable at the Company’s option.

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The payment structure under the Margaritaville Lease includes a fixed component, a portion that is subject to an annual escalator of up to 2 % depending on a minimum coverage floor ratio of Net Revenue to Rent of 6.1 :1, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4 % of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Margaritaville Percentage Rent”).

As a result of the annual escalator test, effective as of February 1 for the lease years ended January 31, the fixed components of rent and an additional ROU asset and corresponding lease liability were recognized as follows:

(in millions) 2024 2023 2022

Annual escalator

$ 0.4 $ 0.4 $ 0.4

Operating ROU asset and lease liability recognized

$ 2.7 $ 2.8 $ 2.9

The Margaritaville Percentage Rent most recently reset on February 1, 2023, and will be effective until the next Margaritaville Percentage Rent reset, scheduled to occur on February 1, 2025.

As a result of the Margaritaville Percentage Rent resets for the lease years ended January 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:

(in millions) 2024 2023 2022

Increase to the performance-based component of rent

N/A $ 2.3 N/A

Operating ROU asset and lease liability recognized

N/A $ 9.8 N/A

N/A - There was no Margaritaville Percentage Rent reset scheduled for these periods.

Subsequent to year end, on February 1, 2025, the Margaritaville Lease annual escalator test resulted in an annual rent increase of $ 0.4 million and the recognition of an additional operating lease ROU asset and corresponding lease liability of $ 2.5 million.

On February 1, 2023, the Margaritaville Lease annual escalator test resulted in an annual rent increase of $ 0.4 million and the recognition of an additional operating lease ROU asset and corresponding lease liability of $ 2.8 million.

On February 1, 2022, the annual escalator test resulted in an annual rent increase of $ 0.4 million and the recognition of an additional operating lease ROU asset and corresponding lease liability of $ 2.9 million.

We did not incur an annual escalator for the lease year ended January 31, 2021.

On February 1, 2023, the Margaritaville Percentage Rent reset resulted in an annual rent increase of $ 2.3 million which will be in effect until the next Margaritaville Percentage Rent reset, scheduled to occur on February 1, 2025.

Upon reset of the Margaritaville Percentage Rent, effective February 1, 2023, we recognized an additional operating lease ROU asset and corresponding lease liability of $ 9.8 million.

On February 1, 2021, the Margaritaville Percentage Rent reset resulted in an annual rent reduction of $ 0.1 million which was in effect until the February 1, 2023 Margaritaville Percentage Rent reset.

Additionally, the Margaritaville Percentage Rent reset resulted in an annual rent decrease of $ 0.4 million which will be in effect until the next Margaritaville Percentage Rent reset, scheduled to occur on February 1, 2027.

Upon reset of the Margaritaville Percentage Rent, effective February 1, 2025, we recognized an additional operating lease ROU asset and corresponding lease liability of $ 9.0 million.

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The Greektown Lease has an initial term of 15 years, with four subsequent five-year renewal options on the same terms and conditions, exercisable at the Company’s option.

The payment structure under the Greektown Lease includes a fixed component, a portion subject to an annual escalator of up to 2 % depending on an Adjusted Revenue to Rent Ratio (as defined in the Greektown Lease) of 1.85 :1, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4 % of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Greektown Percentage Rent”).

In May 2020, the lease was amended to remove the escalator for the lease years ending May 31, 2022 and 2021 and to provide for a Net Revenue to Rent coverage floor to be mutually agreed upon prior to the commencement of the fourth lease year (June 1, 2022).

In April 2022, the lease was further amended to provide for a Net Revenue to Rent coverage floor to be mutually agreed upon prior to the commencement of the fifth lease year (June 1, 2023).

On April 1, 2023, the lease was amended to provide for a Net Revenue to Rent coverage floor to be mutually agreed upon prior to the commencement of the sixth lease year (June 1, 2024).

We did not incur an annual escalator for the lease year ended May 31, 2023.

On June 1, 2023, the Greektown Percentage Rent reset resulted in an annual rent increase of $ 1.5 million, which will be in effect until the next Greektown Percentage Rent reset, scheduled to occur on June 1, 2025.

Upon reset of the Greektown Percentage Rent, effective June 1, 2023, we recognized an additional operating lease ROU asset and corresponding lease liability of $ 7.0 million.

On June 1, 2021, the Greektown Percentage Rent reset resulted in an annual rent reduction of $ 4.2 million, which was in effect until the next Greektown Percentage Rent reset, which occurred on June 1, 2023.

Upon reset of the Greektown Percentage Rent, effective June 1, 2021, we recognized an additional operating lease ROU asset and corresponding lease liability of $ 4.1 million.

The payment structure under the Greektown Lease includes a fixed component, a portion subject to an annual escalator of up to 2 % initially determined based on an Adjusted Revenue to Rent ratio, as defined in the Greektown Lease, and subsequently amended to be determined based on an agreed upon minimum coverage floor ratio of Net Revenue to Rent, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4 % of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Greektown Percentage Rent”).

On April 1, 2024, the lease was amended to provide for a Net Revenue to Rent coverage floor to be mutually agreed upon prior to the commencement of the ninth lease year (June 1, 2027).

We did not incur an annual escalator for the lease years ended May 31, 2024, 2023, and 2022.

The Greektown Percentage Rent most recently reset on June 1, 2023, and will be effective until the next Greektown Percentage Rent reset, scheduled to occur on June 1, 2025.

As a result of the Greektown Percentage Rent resets for the lease years ended May 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:

(in millions) 2024 2023 2022

Increase to the performance-based component of rent

N/A $ 1.5 N/A

Operating ROU asset and lease liability recognized

N/A $ 7.0 N/A

N/A - There was no Greektown Percentage Rent reset scheduled for these periods.

The land and building components contained within the Greektown Lease are classified as operating leases.

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Lease components classified as an operating lease were recorded to “General and administrative” within our Consolidated Statements of Operations.

We refer to the Master Leases, the Morgantown Lease, the Meadows Lease, Perryville Lease, the Margaritaville Lease, the Greektown Lease, and the Tropicana Lease collectively, as our “Triple Net Leases.”

Non-REIT Operating Leases

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Interest expense, net $ 148.5 $ 146.6 $ 347.0

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

(1) 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 (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.

(2) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases, discussed in footnote (1) above.

(3) For the year ended December 31, 2023, pertains to the finance lease components associated with the Pinnacle Master Lease (land).

(3) For the years ended December 31, 2024 and 2023, pertains to the finance lease components associated with the Pinnacle Master Lease (land).

For the year ended December 31, 2022, pertains to the finance lease components associated with the (i) PENN Master Lease;

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The finance lease components contained within the PENN Master Lease and the Pinnacle Master Lease primarily consisted of the land, inclusive of the variable expense associated with Columbus and Toledo.

For the year ended December 31, 2021, pertains to the finance lease components associated with the (i) PENN Master Lease;

and (ii) Perryville Lease (effective July 1, 2021).

The finance lease components contained within the PENN Master Lease consisted of the land and building components associated with the operations of Dayton and Mahoning Valley.

(4) For the year ended December 31, 2023, pertains to the components contained within the Pinnacle Master Lease (buildings) and the Morgantown Lease.

For the years ended December 31, 2022 and 2021, pertains to the components contained within the (i) PENN Master Lease (primarily buildings) inclusive of the variable expense associated with Columbus and Toledo for the financing obligation components;

(4) For the years ended December 31, 2024 and 2023, pertains to the components contained within the Pinnacle Master Lease (buildings) and the Morgantown Lease.

For the year ended December 31, 2022, pertains to the components contained within the (i) PENN Master Lease (primarily buildings) inclusive of the variable expense associated with Columbus and Toledo for the financing obligation components;

(ii) Pinnacle Master Lease (buildings);

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$ 950.4 $ 937.8 $ 925.0

(1) For the years ended December 31, 2022 and 2021, rent payable under the Tropicana Lease was nominal.

(1) For the year ended December 31, 2022, rent payable under the Tropicana Lease was nominal.

Therefore, it has been excluded from the table above.

The Tropicana Lease was terminated on September 26, 2022.

The classification of lease ROU assets was as follows:

(in millions) 2023 2022

Lease ROU assets

Operating leases $ 4,264.7 $ 1,068.4

Finance leases 2,041.0 5,034.9

Total $ 6,305.7 $ 6,103.3

The following is a maturity analysis of our operating leases, finance leases, and financing obligations as of December 31, 2024:

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In addition, the Sportsbook Agreement may be terminated by either party (i) in the case of an uncured material breach by or bankruptcy of the other party, (ii) if at the end of year three of the term the Sportsbook has not achieved a specified level of market share based on gross gaming revenue in the states in which the Sportsbook operates while branded ESPN BET, (iii) in certain circumstances, if the other party or certain of its officers is the subject of a criminal or other investigation by federal or state authorities, is charged with certain crimes or commits certain other acts, including those which would reasonably be expected to cause material damage to the terminating party’s reputation or brand, or (iv) in certain circumstances involving non-compliance with data privacy laws.

In addition, ESPN has the right to terminate the Sportsbook Agreement if (i) a repeated material breach by PENN of the terms of the ESPN intellectual property license or an uncured material breach by PENN of the terms of the ESPN intellectual property license that results in material harm to the reputation or goodwill associated with the ESPN brand or name, (ii) in certain circumstances where PENN commits a material failure of specified product and technology guidelines or certain customer service level metrics, (iii) if at the end of year three or year seven of the term the Sportsbook’s market access is not at

least a specified percentage of the total market access by the online sportsbook operator with the most expansive market access, subject to certain exceptions, (iv) if ESPN undergoes certain transactions involving a significant change in ownership of ESPN, subject to the payment of a termination fee to PENN, or (v) in certain circumstances if PENN undergoes certain transactions involving a significant change in ownership of PENN, including such a transaction involving a competitor of The Walt Disney Company (“TWDC”).

access is not at least a specified percentage of the total market access by the online sportsbook operator with the most expansive market access, subject to certain exceptions, (iv) if ESPN undergoes certain transactions involving a significant change in ownership of ESPN, subject to the payment of a termination fee to PENN, or (v) in certain circumstances if PENN undergoes certain transactions involving a significant change in ownership of PENN, including such a transaction involving a competitor of The Walt Disney Company (“TWDC”).

PENN has the right to terminate the Sportsbook Agreement (i) if ESPN undergoes certain transactions resulting in a significant change in ownership of ESPN involving a competitor of PENN, (ii) in certain circumstances related to the suitability of ESPN, TWDC, or certain of their respective officers for gaming regulatory purposes, or (iii) in certain circumstances if PENN is unable to utilize the ESPN BET brand in states comprising a specified percentage of the aggregate population for all states in which PENN conducts online sports betting in the United States.

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If the Sportsbook Agreement is terminated for any other reason, then all unvested warrants will immediately be forfeited, subject to certain exceptions.

At the grant date, the $ 550.4 million fair value of the awards was determined using the Black Scholes pricing model with contractual terms ranging from 9.5 to 11.5 years, and strike prices ranging from $ 26.08 to $ 32.60 .

At the grant date, the $ 550.4 million fair value of the awards was determined using the Black-Scholes option-pricing model with contractual terms ranging from 9.5 to 11.5 years, and strike prices ranging from $ 26.08 to $ 32.60 .

Additionally, if after February 29, 2024 and during the term of the Sportsbook Agreement PENN achieves specified performance conditions based on an average market share based on gross gaming revenue in the states in which the Sportsbook operates (as defined within the Investment Agreement), PENN could issue to ESPN, Inc.

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The additional warrants will be fully vested upon issuance, have an exercise price of $ 28.95 , and will be exercisable for 10.5 years from the date of issuance.

During the year ended December 31, 2023, the Company recognized $ 33.3 million in marketing expenses related to the Sportsbook Agreement and recognized $ 12.5 million in marketing expenses related to the Investment Agreement.

Expenses related to the Sportsbook Agreement and the Investment Agreement are recorded as marketing expense within “Gaming” expenses on the Consolidated Statements of Operations and recognized when services are received.

During the years ended December 31, 2024 and 2023 , the Company recognized expenses of $ 179.2 million and $ 33.3 million, respectively, related to the Sportsbook Agreement, and $ 67.9 million and $ 12.5 million, respectively, related to the Investment Agreement.

Expenses related to the Sportsbook Agreement and the Investment Agreement are recorded within “Gaming” expenses on the Consolidated Statements of Operations and recognized in accordance with ou r policies.

See Note 2, “Significant Accounting Policies and Basis of Presentation” for further information.

The Company is subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions, development agreements and other matters arising in the ordinary course of business.

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Purchase Obligations

The Company has obligations to purchase various goods and services totaling $ 790.7 million as of December 31, 2023, including $ 339.4 million which will be incurred in 2024.

The Company has obligations to purchase various goods and services totaling $ 1.0 billion as of December 31, 2024, including $ 673.8 million which will be incurred in 2025.

Purchase obligations totaled $ 790.7 million as of December 31, 2023.

The increase over the prior year is primarily due to the Sportsbook Agreement with ESPN described above.

Additionally, 2024 amounts include capital expenditure obligations related to the Aurora Project and Other Development Projects as described below.

The increase over the prior year is primarily due to the PENN Development Projects as discussed below and in Note 11, “Leases.”

Capital Expenditure Commitments

Pursuant to each of our Triple Net Leases, with the exception of our Morgantown Lease (which is a land lease we entered into on October 1, 2020 with GLPI as discussed in Note 11, “Leases” ), we are obligated to spend a minimum of 1 % of annual net revenues, in the aggregate under each lease, on the maintenance of such facilities.

In addition, we are expecting to have capital expenditures in connection with the Aurora Project and Other Development Projects as a result of our Master Development Agreement with GLPI (also discussed in Note 12, “Leases” ).

Additionally, during the year ended December 31, 2024, we had capital expenditures of $ 253.3 million in connection with the PENN Development Projects as a result of our Master Development Agreement with GLPI (also discussed in Note 11, “Leases” ) and expect to incur additional costs in 2025 and 2026.

Employee Benefit Plans

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In addition, in order to operate gaming machines and table games in West Virginia, the Company must maintain agreements with each of the Charles Town horsemen, pari-mutuel clerks and breeders.

As of December 31, 2023, we had 35 collective bargaining agreements covering approximately 4,180 active employees.

Twelve collective bargaining agreements are scheduled to expire in 2024.

Note 13—Income Taxes

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ASC 740 suggests that additional scrutiny should be given to deferred taxes of an entity with cumulative pre-tax book losses during the three most recent years and is considered significant negative evidence that is objectively verifiable and therefore, an entity would need sufficient quality and quantity to support a conclusion to overcome.

During 2023, there were no material changes to our core business operations that altered our prior year conclusion to release the valuation allowance against the federal, foreign, and state net deferred tax assets for the portion that is more-likely-than-not to be realized.

The Company continued to generate significant positive evidence in the U.S.

with three-year cumulative domestic pre-tax book income of $ 518.7 million, despite the significant pre-tax book charge related to the sale of Barstool Sports and the $ 130.6 million impairment charges recorded during the year.

The Company maintained a valuation allowance of $ 210.5 million, as of December 31, 2023, against certain net deferred tax assets primarily related to (i) a capital loss realized on the sale of Barstool Sports of $ 126.1 million, (ii) foreign jurisdictions that were in a three-year cumulative pre-tax loss position as of the balance sheet date of $ 47.1 million, (iii) certain state net operating loss (“NOL”) carryforwards of $ 30.6 million, and (iv) other state deferred tax assets of $ 6.7 million.

with three-year cumulative domestic pre-tax book income of $ 657.4 million, despite the $ 89.1 million impairment charges recorded during the year.

The Company maintained a valuation allowance of $ 268.0 million as of December 31, 2024, against certain net deferred tax assets primarily related to (i) a capital loss realized on the sale of Barstool of $ 127.2 million, (ii) foreign jurisdictions that were in a three-year cumulative pre-tax loss position as of the balance sheet date of $ 84.4 million, inclusive of unrealized foreign currency translation adjustment, (iii) certain state net operating loss (“NOL”) carryforwards of $ 45.6 million, and (iv) other state deferred tax assets of $ 10.8 million.

The Company intends to continue to maintain a valuation allowance on its net deferred tax assets until there is sufficient objectively verifiable positive evidence to support the realization of all or some portion of these deferred tax assets.

In the event the Company determines that the deferred income tax assets would be realized

in the future more than their net recorded amount, an adjustment to the valuation allowance would be recorded, which would reduce the provision for income taxes.

In the event the Company determines that the deferred income tax assets would be realized in the future more than their net recorded amount, an adjustment to the valuation allowance would be recorded, which would reduce the provision for income taxes.

As of December 31, 2024, the Company had the following pre-tax carryforwards:

(i) pre-tax U.S.

federal NOL carryforwards of $ 100.3 million, $ 88.0 million will expire at various dates through 2037, and the residual being carried forward indefinitely;

federal NOL carryforwards of $ 89.6 million, of which $ 80.0 million will expire at various dates through 2037, and the residual being carried forward indefinitely;

(ii) pre-tax foreign NOL carryforwards of $ 293.5 million that will expire through 2043;

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All acquired tax attributes are subject to limitations under the Internal Revenue Code and underlying Treasury Regulations.

As of December 31, 2023, the Company also had $ 1.2 billion of pre-tax state NOL carryforwards, primarily generated in the Commonwealth of Pennsylvania, Colorado, Illinois, Iowa, Louisiana, Maryland, Michigan, Missouri, New Mexico, and localities within Ohio and Michigan.

The tax benefit associated with these NOL carryforwards was $ 65.4 million and a partial valuation allowance as mentioned above has been recorded due to negative evidence of certain statutorily limitations and level of earnings projections in the respective jurisdictions.

The majority of the state NOL carryforwards will expire at various dates from December 31, 2023 through December 31, 2042 with the remaining being carried forward indefinitely.

As of December 31, 2024, the Company also had $ 1.5 billion of pre-tax state NOL carryforwards, primarily generated in the Commonwealth of Pennsylvania, Colorado, Illinois, Iowa, Louisiana, Maryland, Missouri, New Mexico, and localities within Ohio.

The tax benefit associated with these NOL carryforwards was $ 72.7 million and a partial valuation allowance as mentioned above has been recorded due to negative evidence of certain statutory limitations and level of earnings projections in the respective jurisdictions.

The majority of the state NOL carryforwards, existing as of December 31, 2024, will expire at various dates through December 31, 2043 with the remaining being carried forward indefinitely.

In general, the Company has not recognized any U.S.

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The undistributed foreign earnings were immaterial at December 31, 2024.

The domestic and foreign components of income (loss) before income taxes for the years ended December 31, 2023, 2022, and 2021 were as follows:

The domestic and foreign components of income (loss) before income taxes were as follows:

For the year ended December 31,

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Total $ ( 341.3 ) $ ( 499.6 ) $ 175.3

The components of income tax benefit (expense) for the years ended December 31, 2023, 2022, and 2021 were as follows:

The components of income tax benefit were as follows:

For the year ended December 31,

(in millions) 2024 2023 2022

Current tax expense

Current tax benefit (expense)

Federal $ ( 25.6 ) $ ( 20.8 ) $ ( 89.0 )

State ( 4.7 ) ( 4.9 ) ( 15.3 )

Foreign 0.2 — —

Total current ( 30.1 ) ( 25.7 ) ( 104.3 )

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Total deferred 58.1 33.9 150.7

Total income tax benefit (expense) $ 8.2 $ 46.4 $ ( 118.6 )

The following table reconciles the statutory federal income tax rate to the actual effective income tax rate, and related amounts of income tax benefit (expense), for the years ended December 31, 2023, 2022, and 2021:

Total income tax benefit $ 28.0 $ 8.2 $ 46.4

The following table reconciles the statutory federal income tax rate to the actual effective income tax rate, and related amounts of income tax benefit:

For the year ended December 31,

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Other 0.2 ( 5.0 ) ( 5.7 )

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

Income tax benefit $ 28.0 $ 8.2 $ 46.4

Effective Tax Rate 8.2 % 1.7 % ( 26.5 ) %

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Unrecognized tax benefits as of December 31, 2024 $ 41.9

During the year ended December 31, 2023, we did no t record any new tax reserves, and accrued interest or penalties related to current year uncertain tax positions.

During the year ended December 31, 2024, we did no t record any new tax reserves or accrued interest and penalties related to current year uncertain tax positions.

Regarding prior year tax positions, we recorded $ 2.5 million of tax reserves and accrued interest and reversed $ 5.0 million of previously recorded tax reserves and accrued interest for uncertain tax positions.

As of December 31, 2023 and 2022, unrecognized tax benefits, inclusive of accruals for income tax related penalties and interest, of $ 47.2 million and $ 46.0 million, respectively, were included in “Other long-term liabilities” within the Company’s Consolidated Balance Sheets.

Overall, the Company recorded a net tax expense of $ 1.1 million in connection with its uncertain tax positions for the year ended December 31, 2023.

As of December 31, 2024 and 2023, unrecognized tax benefits, inclusive of accruals for income tax related interest and penalties, of $ 44.8 million and $ 47.2 million, respectively, were included in “Other long-term liabilities” within the Company’s Consolidated Balance Sheets.

Overall, the Company recorded a net tax benefit of $ 2.1 million in connection with its uncertain tax positions for the year ended December 31, 2024.

The liability for unrecognized tax benefits as of December 31, 2024 and 2023, included $ 35.4 million and $ 37.3 million, respectively, of tax positions that, if reversed, would affect the effective tax rate.

During the year ended December 31, 2023, we recognized income of $ 0.2 million to interest and penalties, net of deferred taxes, as compared to an expense of $ 0.6 million and $ 0.7 million to interest and penalties, net of deferred taxes for the years ended December 31, 2022 and 2021, respectively.

In addition, the Company had an immaterial amount of reductions in previously accrued interest and penalties for the year ended December 31, 2023 and no reductions for the year ended December 31, 2022.

We classify any income tax related penalties and interest accrued related to unrecognized tax benefits in “Income tax benefit (expense)” within the Consolidated Statements of Operations.

We recognized income of $ 0.5 million and $ 0.2 million to interest and penalties, net of deferred taxes, as compared an expense of $ 0.6 million to interest and penalties, net of deferred taxes, for the years ended December 31, 2024, 2023 and 2022, respectively.

We classify any income tax related penalties and interest accrued related to unrecognized tax benefits in “Income tax benefit” within the Consolidated Statements of Operations.

The Company is currently in various stages of the examination process in connection with its open audits.

Generally, it is difficult to determine when these examinations will be closed, but the Company reasonably expects that its ASC 740 liabilities will not significantly change over the next twelve months.

As of December 31, 2023, the Company has open tax years 2019

through 2021 that could be subject to examination for U.S.

Generally, it is difficult to determine when these examinations will be closed.

On January 16, 2025, the Indiana Supreme Court listened to oral arguments between the Company and the Indiana Department of State Revenue on notices of proposed assessments for tax years 2015 through 2017.

The Company believes that it is reasonably possible that its current unrecognized tax reserve, may change within the next twelve months.

As of December 31, 2024, the Company has open tax years 2021 through 2023 that

could be subject to examination for U.S.

federal income taxes.

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Based on our analysis of the IRA and subsequent guidance, management does not expect the CAMT to have a material effect on our future cash flows and results of operations.

In 2023, the 1% excise tax on corporate stock repurchases was an immaterial amount.

In 2023, the 1% excise tax on corporate stock repurchases was an immaterial amount, and in 2024, there were no stock repurchases.

Note 14—Stockholders' Equity

Common and Preferred Stock

On May 11, 2021, as part of the acquisition of Hitpoint, the Company issued 43,684 shares for a total of $ 3.5 million.

On both July 8, 2022 and June 29, 2023, the Company issued 4,055 shares in connection with the achievement of the first and second of three annual mutual goals established by the Company and Hitpoint for a total of $ 0.2 million and $ 0.1 million, respectively.

On August 1, 2021, as part of the acquisition of Sam Houston, the Company issued 198,103 shares for a total of $ 15.8 million.

On October 19, 2021, as part of the acquisition of theScore, the Company issued 12,319,340 shares of common stock with a par value of $ 0.01 and 697,539 Exchangeable Shares for approximately $ 1.0 billion, as discussed in Note 6, “Acquisitions and Dispositions.” During the year ended December 31, 2023, we issued 2,854 Exchangeable Shares.

In connection with the acquisition of Score Media and Gaming, Inc.

(“theScore”) in October 2021, the Company issued 12,319,340 shares of PENN common stock with a par value of $ 0.01 and 697,539 , par value $ 0.01 , of exchangeable shares through the capital of an indirect wholly-owned subsidiary of PENN (“Exchangeable Shares”), in addition to cash consideration.

Each Exchangeable Share is exchangeable into one share of PENN common stock at the option of the holder, subject to certain adjustments.

Upon the acquisition of theScore, certain employees of theScore elected to have their outstanding equity awards, which were assumed under theScore plan (as defined below), issued as Exchangeable Shares, once the shares vest or are exercised.

In addition, the Company may redeem all outstanding Exchangeable Shares in exchange for shares of PENN common stock at any time following the fifth anniversary of the closing, or earlier under certain circumstances.

During the years ended December 31, 2024 and 2023, we issued 68,048 and 2,854 Exchangeable Shares, respectively.

During the year ended December 31, 2022, we did not issue Exchangeable Shares.

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1/1,000th of a share of Series D Preferred Stock was convertible into one share of PENN common stock.

The Series D Preferred Stock was available for conversion into PENN common stock in tranches over four years , with the first and second 20 % tranches having been available for conversion into PENN common stock in the first quarter of 2021 and first quarter of 2022, respectively.

During the first quarter of 2023, an additional tranche of 30 % became available for conversion.

On each of February 22, 2021 and August 23, 2021, the Company issued 43 shares of Series D Preferred Stock in conjunction with acquiring additional shares of Barstool common stock.

The Series D Preferred Stock was available for conversion into PENN common stock in tranches over four years .

On June 1, 2022, the Company issued 64,000 shares of common stock in conjunction with acquiring additional shares of Barstool common stock from certain individual stockholders affiliated with Barstool.

The issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

On February 22, 2021 and August 23, 2021, 151 and 43 shares of Series D Preferred Stock, respectively, were converted to common stock.

As a result of the conversions, the Company issued 151,200 and 43,000 shares of common stock, respectively, each with a par value of $ 0.01 .

On February 23, 2022 and February 24, 2022, 43 and 151 shares of Series D Preferred Stock, respectively, were converted to common stock.

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On February 17, 2023, as part of the Barstool Acquisition as discussed in Note 5, “Acquisitions and Dispositions,” the Company issued 2,442,809 shares of common stock with a par value of $ 0.01 , to certain former stockholders of Barstool (the “Share Consideration”).

The issuance of the Share Consideration was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, because such issuance did not involve a public offering.

The Share Consideration was subject to transfer restrictions which were waived on August 11, 2023, pursuant to the Barstool SPA.

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The issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

As of both December 31, 2023 and 2022, there were 5,000 shares authorized of Series D Preferred Stock of which zero shares and 581 shares were outstanding, respectively.

As of both December 31, 2024 and 2023, there were 5,000 shares authorized of Series D Preferred Stock of which zero shares were outstanding.

The Company previously issued two series of preferred stock, Series B and Series C, each with a par value of $ 0.01 per share.

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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.

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.

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As of February 27, 2025, the remaining availability under our December 2022 Authorization was $ 749.5 million.

In the second quarter of 2021, the Company entered into two promissory notes with shareholders for a total of $ 9.0 million.

The promissory notes were unsecured with interest of 2.25 %.

As of December 31, 2022, the receivable was recorded as a reduction of equity within “Additional paid-in capital” in our Consolidated Balance Sheets.

During the first quarter of 2023, the outstanding loan balance was settled and recorded as an increase of equity within “Additional paid-in capital” in our Consolidated Balance Sheets.

Note 15—Stock-Based Compensation

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Second Amended and Restated Stock Option and Restricted Stock Unit Plan (the “theScore Plan”) as of June 7, 2022 and outstanding awards that are forfeited or settled for cash under each of the prior plans.

In connection with the approval of the 2022 Plan, the 2018 Plan and theScore Plan remain in place until all the awards previously granted thereunder have been paid,

forfeited, or expired.

However, no shares are available for issuance and all future equity awards will be granted pursuant to the 2022 Plan.

On June 6, 2023, the Company’s shareholders, upon the recommendation of the Company’s Board of Directors, approved an amendment to the 2022 Plan (as amended, the “2022 Amended Plan”), which increased the number of shares reserved for issuance under the plan by 7,000,000 shares to 13,870,000 shares.

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As of December 31, 2024, there are 5,456,563 shares available for future grants under the 2022 Amended Plan.

2018 Long Term Incentive Compensation Plan (“2018 Plan”)

The Company’s 2018 Plan authorized it to issue stock options (incentive and/or non-qualified), SARs, restricted stock (shares and/or units), performance awards (shares and/or units), and cash awards to employees and any consultant or advisor to the Company or subsidiary.

Non-employee directors were eligible to receive all such awards, other than incentive stock options.

Pursuant to the 2018 Plan, 12,700,000 shares of the Company’s common stock were reserved for issuance.

For purposes of determining the number of shares available for issuance under the 2018 Plan, stock options and SARs (except cash-settled SARs) counted against the 12,700,000 limit as one share of common stock for each share granted and restricted stock or any other full value stock award are counted as 2.30 shares of common stock for each share granted.

Any awards that were not settled in shares of common stock were not counted against the share limit.

In connection with the approval of the 2022 Plan, the 2018 Plan remains in place until all of the awards previously granted thereunder have been paid, forfeited, or expired.

However, the shares which remained available for issuance under the 2018 Plan are no longer available for issuance and all future equity awards will be granted pursuant to the 2022 Plan.

On April 12, 2021, the Board of Directors granted 600,000 restricted stock units and 300,000 restricted stock awards with market-based and service-based vesting conditions (collectively the “Stock Awards”), solely to the Company’s Chief Executive Officer and President pursuant to the 2018 Plan.

The Stock Awards are classified as equity with separate tranches and requisite service periods identified for each separately achievable component.

As of the grant date, the fair value of the Stock Awards was $ 48.7 million and was calculated using a Monte Carlo simulation.

The fair value of the restricted stock awards was estimated at $ 19.4 million and segregated into 15 tranches with expense recognition periods ranging from 2.2 to 6.0 years.

The fair value of the restricted stock units was estimated at $ 29.3 million and segregated into four tranches with expense recognition periods ranging from 6.7 to 8.7 years.

We recognized $ 8.4 million, $ 8.6 million, and $ 6.3 million of stock compensation expense for the Stock Awards during the years ended December 31, 2023, 2022, and 2021, respectively.

Score Media And Gaming Inc.

Second Amended And Restated Stock Option And Restricted Stock Unit Plan ( “ theScore Plan ” )

In connection with the acquisition of theScore on October 19, 2021, the Company registered theScore Plan.

theScore Plan authorized the Company to issue non-qualified stock options and restricted stock units to employees and service providers affiliated with theScore prior to the acquisition date.

At the date of acquisition, the Company rolled over all outstanding non-vested, unexercised stock options, and non-vested restricted stock units equivalent to 853,904 shares of the Company.

Each rollover option and restricted stock unit were subject to substantially the same terms and conditions applicable to the award immediately prior to the acquisition.

In connection with the transaction, the vesting provisions of unvested options and restricted stock units, awarded under the theScore Plan prior to August 4, 2021, were amended to provide for a new acceleration right for legacy theScore employees and service providers.

The amendment provides that, if an involuntary termination without cause occurs at any time prior to April 19, 2023, unvested options and restricted stock units will automatically accelerate and become fully vested on the effective date of termination.

In connection with the approval of the 2022 Plan, theScore Plan

remains in place until all of the awards previously granted thereunder have been paid, forfeited or expired.

However, the shares which remained available for future grants under theScore Plan are no longer available for issuance and all future equity awards will be pursuant to the 2022 Plan.

Stock-based Compensation Expense

Stock-based compensation expense pertains to our stock options and restricted stock, including restricted stock with performance conditions.

Stock-based compensation expense pertains to our stock options and restricted stock, including restricted stock with performance and market conditions.

For options, restricted stock, and performance awards, the expense is recognized ratably over the total requisite service period for the entire award, which is generally three to four years , based on the grant date fair value.

We recognize forfeitures as they occur.

For performance awards, the expense is adjusted based on the expectation of the achievement of the performance conditions.

For awards with market conditions, we recognize the expense over the service period derived from the related valuation.

The Company recognized $ 52.9 million, $ 85.9 million, and $ 58.1 million stock-based compensation expense for the years ended December 31, 2024, 2023, and 2022, respectively, which is included within the Consolidated Statements of Operations as a component of “General and administrative” expense.

Stock Options

Stock options that expire between January 4, 2024 and November 1, 2033 have been granted to officers, directors, employees, and predecessor employees to purchase common stock at prices ranging from $ 2.51 to $ 117.82 per share, including options rolled over from theScore Plan.

All options were granted at the fair market value of the common stock on the grant date (as defined in the respective plan document) and have contractual lives ranging from 4 to 10 years.

The Company issues new authorized common shares to satisfy stock option exercises.

During the years ended December 31, 2023, 2022, and 2021, respectively, the Company granted 846,291 , 398,945 , and 587,399 stock options, which includes 352,768 that were rolled over under theScore Plan during the year ended December 31, 2021.

Stock options are usually awarded to officers, directors and employees.

The Company determines the grant date fair value of these options using the Black-Scholes option-pricing model.

Typically, stock options are awarded with a ten-year contractual term.

To fulfill stock option exercises, the Company issues new authorized common shares.

The following table presents activity related to our stock options for the year ended December 31, 2024:

Number of Option

Shares Weighted-Average

Number of Stock Options Weighted-Average

Exercise Price Weighted-Average Remaining Contractual

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Exercised ( 143,534 ) $ 10.72

Expired ( 160,915 ) $ 27.07

Forfeited ( 82,593 ) $ 37.69

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2,620,314 $ 27.71 4.9 $ 1.9

The following table presents information related to the fair value and intrinsic value of our stock options for the years ended December 31, 2023, 2022, and 2021:

Expected to vest as of December 31, 2024

1,991,548 $ 28.54 8.6 $ 0.3

The following table presents information related to the fair value and intrinsic value of our stock options:

For the year ended December 31,

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Weighted-average grant-date fair value of options $ 15.28 $ 18.60 $ 30.09

$ 18.60 $ 30.09 $ 57.70

Aggregate intrinsic value of stock options exercised (in millions) $ 1.2 $ 4.1 $ 8.6

Fair value of stock options vested (in millions) $ 11.6 $ 15.9 $ 21.3

(1) For the year ended December 31, 2021, the combined weighted-average grant-date fair values include options rolled over under theScore Plan.

As of December 31, 2024, the unamortized compensation costs not yet recognized related to stock options granted totaled $ 24.1 million and the weighted-average period over which the costs are expected to be recognized was 1.7 years.

The following are the weighted-average assumptions used in the Black-Scholes option-pricing model for the years ended December 31, 2023, 2022, and 2021:

The following table provides the weighted-average assumptions used in the Black-Scholes option-pricing model:

For the year ended December 31,

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As noted above, the Company grants restricted stock to our employees and certain non-employee directors.

In addition, the Company issues its named executive officers (“NEOs”) and other key executives restricted stock with performance conditions, which are discussed in further detail below.

In addition, the Company issues its named executive officers (“NEOs”) and other key executives restricted stock with performance and market conditions, which are discussed in further detail below.

The grant date fair value for restricted stock is generally based on the closing stock price of the Company’s shares of common stock on the trading day preceding the grant date.

The Stock Awards are classified as equity with separate tranches and requisite service periods identified for each separately achievable component.

As of the grant date, the fair value of the Stock Awards was $ 48.7 million and was calculated using a Monte Carlo simulation.

The fair value of the restricted stock awards was estimated at $ 19.4 million and segregated into 15 tranches with expense recognition periods ranging from 2.2 to 6.0 years.

The fair value of the restricted stock units was estimated at $ 29.3 million and segregated into four tranches with expense recognition periods ranging from 6.7 to 8.7 years.

We recognized $ 7.4 million, $ 8.4 million, and $ 8.6 million of stock compensation expense for the Stock Awards during the years ended December 31, 2024, 2023, and 2022, respectively.

Performance Share Programs

The Company’s performance share programs were adopted to provide our NEOs and certain other key executives with stock-based compensation tied directly to the Company’s performance, which further aligns their interests with our shareholders and provides compensation only if the designated performance goals are met for the applicable performance periods.

On April 12, 2021, in addition to the Stock Awards mentioned above, an aggregate of 94,673 restricted shares and units with performance-based vesting conditions were granted at target under our performance share program (“Performance Share Program II”).

During the years ended December 31, 2023 and 2022, an aggregate of 461,747 and 244,955 restricted units with performance-based vesting conditions were granted at target under the Performance Share Program II.

Restricted stock issued pursuant to the Performance Share Program II consist of three one-year performance periods over a three-year service period.

The awards have the potential to be earned at between 0 % and 200 % of the number of shares granted during the year ended December 31, 2021, and 0 % and 150 % of the number of shares granted during the years ended December 31, 2023 and 2022 depending on achievement of the annual performance goals, and remain subject to vesting for the full three-year service period.

During the year ended December 31, 2024, the Company granted 1,317,269 restricted units with performance-based vesting conditions, at target, under the 2022 Amended Plan.

The restricted performance units granted in 2024 consist of one three-year performance period over a three-year service period.

The awards have the potential to be earned at between 0 % and 200 % of the number of shares granted depending on achievement of the performance goals, and remain subject to vesting for the full three-year service period.

During the years ended December 31, 2023, and 2022, the Company granted 461,747 , and 244,955 restricted units with performance-based vesting conditions, at target, under the 2022 Plan.

The restricted performance units granted in 2023 and 2022 consist of three one-year performance periods over a three-year service period.

The awards have the potential to be earned at between 0 % and 150 % of the number of shares granted depending on achievement of the annual performance goals, and remain subject to vesting for the full three-year service period.

In addition to the above, during the years ended December 31, 2023 and 2022, the Company granted employees of theScore 199,733 and 102,422 restricted units, respectively, with performance-based vesting conditions that are dependent on the achievement of certain milestones.

The grant date fair value was determined using the five-day volume weighted average closing stock price of the Company’s shares of common stock as of the trading day immediately preceding the grant date.

The awards have the potential to be earned at between 0 % and 100 % and consist of two , one-year performance periods, each containing an applicable milestone.

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(a) the satisfaction of the milestones on or before the applicable expiration date and (b) continued service through the date on which the respective portion of the awards vests.

The grant date fair value for restricted stock is generally based on the closing stock price of the Company’s shares of common stock on the trading day preceding the grant date.

The grant date fair value for the performance awards issued to key employees of theScore was determined using the five-day volume weighted average closing stock price of the Company’s shares of common stock as of the trading day immediately preceding the grant date.

The stock-based compensation expense is recognized over the remaining service period at the time of grant, adjusted for the Company’s expectation of the achievement of the performance conditions.

All awards were fully vested as of December 31, 2024.

The following table presents activity related to our restricted stock for the year ended December 31, 2024:

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The total fair values of restricted stock that vested during the years ended December 31, 2024, 2023, and 2022 were $ 38.3 million, $ 57.2 million, and $ 28.8 million, respectively.

Cash-settled Phantom Stock Units

Our outstanding phantom stock units (“CPUs”) are settled in cash and entitle plan recipients to receive a cash payment based on the fair value of the Company’s common stock which is based on the closing stock price of the trading day preceding the vest date.

Our CPUs vest over a period of one to four years .

The CPUs are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with compensation expense being recognized over the requisite service period.

The Company has a liability, which is included in “Accrued expenses and other current liabilities” within the Consolidated Balance Sheets, associated with its cash-settled CPUs of $ 1.2 million and $ 2.1 million as of December 31, 2023 and 2022 respectively.

As of December 31, 2023, there was a total of $ 0.6 million unrecognized compensation cost related to CPUs that will be recognized over the awards remaining weighted-average vesting period of 1.9 years.

For the years ended December 31, 2023, 2022, and 2021, the Company recognized $ 3.3 million, $ 4.0 million, and $ 12.1 million of compensation expense associated with these awards, respectively.

Compensation expense associated with our CPUs is recorded in “General and administrative” within the Consolidated Statements of Operations.

We paid $ 4.2 million, $ 10.5 million, and $ 13.3 million during the years ended December 31, 2023, 2022, and 2021, respectively, pertaining to cash-settled CPSUs.

Stock Appreciation Rights

Our outstanding SARs are settled in cash and are accounted for as liability awards, and generally vest over a period of four years .

The fair value of cash-settled SARs is calculated each reporting period and estimated using the Black-Scholes option pricing model.

The Company has a liability, which is included in “Accrued expenses and other current liabilities” within the Consolidated Balance Sheets, associated with its cash-settled SARs of $ 5.8 million and $ 9.2 million as of December 31, 2023 and 2022 respectively.

For SARs held by employees of the Company, there was $ 1.0 million of total unrecognized compensation cost as of December 31, 2023 that will be recognized over the awards remaining weighted-average vesting period of two years .

For the years ended December 31, 2023 and 2022, the Company recognized reductions to compensation expense of $ 3.1 million and $ 5.5 million, as compared to a charge to compensation expense of $ 3.1 million for the year ended December 31, 2021, respectively.

Compensation expense associated with our SARs is recorded in “General and administrative” within the Consolidated Statements of Operations.

We paid $ 0.8 million, $ 3.1 million, and $ 39.6 million during the years ended December 31, 2023, 2022, and 2021, respectively, related to cash-settled SARs.

Note 16—Earnings (Loss) per Share

For the year ended December 31, 2023, we recorded a net loss attributable to PENN.

For the years ended December 31, 2024 and 2023, we recorded a net loss attributable to PENN.

As such, because the dilution from potential common shares was antidilutive, we used basic weighted-average common shares outstanding, rather than diluted weighted-average common shares outstanding when calculating diluted loss per share.

Stock options, restricted stock,

convertible preferred shares, and convertible debt that could potentially dilute basic EPS in the future that are not included in the computation of diluted loss per share are as follows:

(in millions) For the year ended December 31, 2023

Stock options, restricted stock, convertible preferred shares, and convertible debt that could potentially dilute basic EPS in the future that are not included in the computation of diluted loss per share are as follows:

For the year ended December 31,

(in millions) 2024 2023

Assumed conversion of dilutive stock options 0.1 0.6

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Assumed conversion of convertible debt 14.1 14.1

For the years ended December 31, 2022 and 2021, we recorded net income attributable to PENN.

For the year ended December 31, 2022, we recorded net income attributable to PENN.

As such, we used diluted weighted-average common shares outstanding when calculating diluted income per share.

Stock options, restricted stock, convertible preferred shares, and convertible debt that could potentially dilute basic EPS in the future were included in the computation of diluted income per share.

The following table sets forth the allocation of net income for the years ended December 31, 2022 and 2021 under the two-class method.

For the year ended December 31, 2023, we did not utilize the two-class method due to incurring a net loss for the year.

The following table sets forth the allocation of net income for the year ended December 31, 2022 under the two-class method.

For both years ended December 31, 2024 and 2023, we did not utilize the two-class method due to incurring a net loss.

For the year ended December 31,

(in millions) 2022

Net income (loss) attributable to PENN Entertainment, Inc.

$ ( 490.0 ) $ 222.1 $ 420.8

Net income attributable to PENN Entertainment, Inc.

Net income applicable to preferred stock 0.9

Net income (loss) applicable to common stock $ ( 490.0 ) $ 221.2 $ 418.7

The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the years ended December 31, 2023, 2022, and 2021:

Net income applicable to common stock $ 221.2

The table below reconciles the weighted-average common shares outstanding used to calculate basic EPS with those used to calculate diluted EPS for the year ended December 31, 2022.

As we recorded a net loss for both years ended December 31, 2024 and 2023, there are no reconciling items between the weighted-average common shares outstanding for basic and diluted EPS calculations.

For the year ended December 31,

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Restricted stock with performance and market based vesting conditions that have not been met as of December 31, 2024 were excluded from the computation of diluted EPS.

Options and warrants to purchase 14.5 million, 0.8 million, and 0.2 million shares were outstanding during the years ended December 31, 2023, 2022, and 2021, respectively, but were not included in the computation of diluted EPS because they were anti-dilutive.

The assumed conversion of 0.3 million, 0.6 million, and 0.8 million preferred shares were excluded from the computation of diluted EPS for the years ended December 31, 2023, 2022, and 2021, respectively, because including them would have been antidilutive.

The Company’s calculation of weighted-average common shares outstanding includes the Exchangeable Shares issued in connection with theScore acquisition, as discussed in Note 6, “Acquisitions and Dispositions” and Note 15, “Stockholders’ Equity.” The following table presents the calculation of basic and diluted earnings (loss) per share for the Company’s common stock for the years ended December 31, 2023, 2022, and 2021:

Anti-dilutive equity-based awards are excluded from the computation of diluted EPS, and primarily consists of stock options awarded under the Company’s previous and current long-term incentive compensation plans and warrants issued under the terms of the Investment Agreement on August 8, 2023 as described in Note 12, “Commitments and Contingencies.”

Options and/or warrants to purchase 35.1 million, 14.5 million, and 0.8 million shares were outstanding during each of the years ended December 31, 2024, 2023, and 2022, respectively, but were not included in the computation of diluted EPS because they were anti-dilutive.

Additionally, the assumed conversion of 0.3 million and 0.6 million preferred shares were excluded from the computation of diluted EPS for the years ended December 31, 2023 and 2022, respectively, because including them would have been anti-dilutive.

The Company’s calculation of weighted-average common shares outstanding includes the Exchangeable Shares issued in connection with theScore acquisition, as discussed in Note 14, “Stockholders’ Equity.” The following table presents the calculation of basic and diluted earnings (loss) per share for the Company’s common stock for the years ended December 31, 2024, 2023, and 2022:

For the year ended December 31,

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Diluted earnings (loss) per share $ ( 2.05 ) $ ( 3.22 ) $ 1.29

(1) The tax-affected rates were 21 % and 22 % for the years ended December 31, 2022 and 2021, respectively .

(1) The tax-affected rate was 21 % for the year ended December 31, 2022.

Note 17—Segment Information

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We consider our combined VGT operations, by state, to be separate operating segments.

Interactive includes all of our online gaming operations, management of retail sports betting, media, and the operating results of Barstool.

The retail segments primarily generate revenue from gaming operations (such as slot machines and table games), food and beverage offerings, and hotel visitation.

The accounting policies of our retail segments are the same as those described in our significant accounting policies.

See Note 2, “Significant Accounting Policies and Basis of Presentation” for further information.

The Interactive segment includes all of our online gaming operations, management of retail sports betting, media, and in the prior years, the operating results of Barstool.

The accounting policies of our Interactive segment are the same as those described in our significant accounting policies.

See Note 2, “Significant Accounting Policies and Basis of Presentation” for further information.

We owned 36 % of Barstool common stock prior to the February 17, 2023 Barstool Acquisition, pursuant to which we acquired the remaining 64 % of Barstool common stock.

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See Note 5, “Acquisitions and Dispositions” for further information.

The Company utilizes Adjusted EBITDAR (as defined below) as its measure of segment profit or loss.

The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to net income (loss).

The Other category, included in the tables to reconcile the segment information to the consolidated information, consists of our 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.

The Other category also includes corporate overhead costs, which consist of certain expenses, such as:

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

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer and President.

Adjusted EBITDAR (as defined below) is our measure of segment profit or loss for each segment and is utilized by the CODM as follows:

• within the annual budget and forecasting process when making decisions about the allocation of operating and capital resources to each segment;

• to evaluate monthly budget-to-actual variances which are used in assessing segment performance;

• to determine whether to reinvest profits into the segment or into other parts of the Company, such as new development projects, return generating investments in our retail operations and Interactive segment;

• to determine various capital allocation initiatives such as mergers and acquisitions, share repurchases, and delevering.

The tables below provide information about our revenues, expenses, and Adjusted EBITDAR for each reportable segment, and provide a reconciliation to net income (loss).

For the year ended December 31, 2024

(in millions) 2023 2022 2021

Northeast segment $ 2,738.4 $ 2,695.9 $ 2,552.4

South segment 1,216.4 1,314.2 1,322.2

West segment 528.5 581.9 521.4

Midwest segment 1,172.6 1,159.6 1,102.7

Interactive segment 718.8 663.1 432.9

20.2 21.3 10.6

(in millions) Northeast South West Midwest Interactive (1)

Intersegment Eliminations (2)

Total revenues

$ 2,755.7 $ 1,169.0 $ 525.3 $ 1,172.2 $ 959.9 $ 19.6 $ ( 23.6 ) $ 6,578.1

Total $ 6,362.9 $ 6,401.7 $ 5,905.0

Adjusted EBITDAR (3) :

Northeast segment $ 831.0 $ 842.5 $ 848.4

South segment 494.1 548.1 587.0

West segment 204.2 220.1 195.0

Midwest segment 496.6 501.2 500.1

Interactive segment ( 402.5 ) ( 74.9 ) ( 35.4 )

Gaming taxes ( 1,113.2 ) ( 251.9 ) ( 94.2 ) ( 305.1 ) ( 566.3 )

Compensation and benefits ( 414.5 ) ( 222.6 ) ( 123.5 ) ( 174.6 ) ( 168.3 )

Media and advertising (3)

Other segment items (4)

( 427.0 ) ( 261.3 ) ( 120.1 ) ( 205.7 ) ( 317.8 )

Reportable Segment Adjusted EBITDAR (5)

$ 801.0 $ 433.2 $ 187.5 $ 486.8 $ ( 499.5 ) $ 1,409.0

Other operating benefits (costs) and other income (expenses):

Other category (6)

Rent expense associated with triple net operating leases (7)

( 591.1 ) ( 149.6 ) ( 454.4 )

Stock-based compensation ( 52.9 )

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Contingent purchase price 1.2

Pre-opening expenses (5)

— ( 4.1 ) ( 5.4 )

Depreciation and amortization ( 433.6 )

Impairment losses (8)

( 130.6 ) ( 118.2 ) —

Insurance recoveries, net of deductible charges 5.5

Non-operating items of equity method investments (9)

Interest expense, net ( 470.5 )

Interest income 23.6

Loss on early extinguishment of debt ( 0.3 )

Loss before income taxes ( 341.3 )

Income tax benefit 28.0

Net loss $ ( 313.3 )

(1) Revenues and gaming taxes expense within the Interactive segment are inclusive of gaming tax reimbursement amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access of $ 435.6 million for the year ended December 31, 2024.

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

(3) Includes advertising expenses of $ 179.2 million related to the Sportsbook Agreement and $ 67.9 million related to the Investment Agreement with ESPN.

While the Sportsbook Agreement and Investment Agreement commenced on August 8, 2023, the Company began recognizing advertising expense, specific to the initial annual period, during the fourth quarter of 2023.

Also, includes advertising and media expenses (including such expenses associated with theScore) across various platforms, including television, radio, social media, and both paid and organic search, and sponsorships and media costs associated with partnerships with major sports leagues, and other professional sports teams.

(4) For each reportable segment, the Other segment items category includes:

Northeast segment - cost of goods sold, professional services, legal expenses, facility maintenance, utilities, supplies, property and liability insurance, advertising and promotional expenses, property taxes, sales and use taxes, other taxes and fees, non-REIT lease expenses, and allocated corporate expenses.

South segment - cost of goods sold, professional services, legal expenses, facility maintenance, utilities, supplies, property and liability insurance, advertising and promotional expenses, property taxes, sales and use taxes, other taxes and fees, non-REIT lease expenses, and allocated corporate expenses.

West segment - cost of goods sold, professional services, legal expenses, facility maintenance, utilities, supplies, property and liability insurance, advertising and promotional expenses, property taxes, sales and use taxes, other taxes and fees, non-REIT lease expenses, and allocated corporate expenses.

Midwest segment - cost of goods sold, professional services, legal expenses, facility maintenance, utilities, supplies, property and liability insurance, advertising and promotional expenses, property taxes, sales and use taxes, other taxes and fees, non-REIT lease expenses, allocated corporate expenses, and third-party revenue share fees.

Interactive segment - professional ser vices, legal expenses, software subscriptions and maintenance fees, software development costs, utilities, supplies, property and liability insurance, other taxes and fees, lease expense, allocated corporate expenses, and third-party revenue share fees.

(5) We define Adjusted EBITDAR as earnings before interest expense, net, interest income, income taxes, depreciation and amortization, rent expense associated with triple net operating leases (see footnote (7) below), 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, non-cash gains/losses associated with partial and step acquisitions as measured in accordance with ASC 805 “Business Combinations,” and other.

Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (see footnote (9) below) added back for our Kansas Entertainment joint venture.

(6) Primarily represents corporate overhead costs of $ 104.8 million for the year ended December 31, 2024.

(7) Pertains to the following operating leases:

(i) AR PENN Master Lease;

(ii) 2023 Master Lease;

(iii) Margaritaville Lease;

and (iv) Greektown Lease.

(8) Relates to impairment charges in our Northeast, South, and Midwest segments.

See Note 8, “Goodwill and Other Intangible Assets.”

(9) Consists principally of depreciation expense associated with our Kansas Entertainment joint venture.

(10) Primarily relates to transaction costs and finance transformation costs associated with the implementation of our new Enterprise Resource Management system, partially offset by dividend income received.

For the year ended December 31, 2023

(in millions) Northeast South West Midwest Interactive (1)

Intersegment Eliminations (2)

Total revenues

$ 2,738.4 $ 1,216.4 $ 528.5 $ 1,172.6 $ 718.8 $ 20.2 $ ( 32.0 ) $ 6,362.9

Gaming taxes ( 1,115.5 ) ( 263.1 ) ( 93.6 ) ( 309.4 ) ( 498.6 )

Compensation and benefits ( 388.4 ) ( 215.3 ) ( 114.7 ) ( 165.4 ) ( 176.7 )

Media and advertising (3)

Other segment items (4)

( 403.5 ) ( 243.9 ) ( 116.0 ) ( 201.2 ) ( 301.1 )

Reportable Segment Adjusted EBITDAR (5)

$ 831.0 $ 494.1 $ 204.2 $ 496.6 $ ( 402.5 ) $ 1,623.4

Other operating benefits (costs) and other income (expenses):

Other category (6)

Rent expense associated with triple net operating leases (7)

Stock-based compensation ( 85.9 )

Cash-settled stock award variance 13.8

Loss on disposal of assets ( 0.1 )

Contingent purchase price ( 1.9 )

Depreciation and amortization ( 435.1 )

Impairment losses (8)

Insurance recoveries, net of deductible charges 13.9

Non-operating items of equity method investments (9)

Interest expense, net ( 464.7 )

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Loss on disposal of Barstool (10)

( 923.2 ) — —

Gain on Barstool Acquisition, net (11)

Gain on REIT transactions, net (12)

Loss on early extinguishment of debt — ( 10.4 ) —

Other (5)(11)

( 24.4 ) ( 127.3 ) ( 42.3 )

Income (loss) before income taxes ( 499.6 ) 175.3 539.1

Income tax benefit (expense) 8.2 46.4 ( 118.6 )

Net income (loss) $ ( 491.4 ) $ 221.7 $ 420.5

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

The Other category also includes corporate overhead costs, which consist of certain expenses, such as:

payroll, professional fees, travel expenses and other general and

administrative expenses that do not directly relate or have not otherwise been allocated.

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

Loss before income taxes ( 499.6 )

Income tax benefit 8.2

Net loss $ ( 491.4 )

(1) Revenues and gaming taxes expense within the Interactive segment are inclusive of gaming tax reimbursement amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access of $ 390.4 million for the year ended December 31, 2023.

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

(3) We define Adjusted EBITDAR as earnings before interest expense, net, interest income, income taxes, depreciation and amortization, rent expense associated with triple net operating leases (see footnote (4) below), 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;

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

(3) Includes advertising expenses of $ 33.3 million related to the Sportsbook Agreement and $ 12.5 million related to the Investment Agreement with ESPN.

While the Sportsbook Agreement and Investment Agreement commenced on August 8, 2023, the Company began recognizing advertising

expense, specific to the initial annual period, during the fourth quarter of 2023.

(4) For each reportable segment, the Other segment items category includes:

Interactive segment - cost of goods sold, professional services, legal expens es, software subscriptions and maintenance fees, software dev elopment costs, utilities, supplies, property and liability insurance, other taxes and fees, lease expense, allocated corporate expenses, and third-party revenue share fees.

Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (see footnote (9) below) added back for Barstool and our Kansas Entertainment joint venture.

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

(6) Primarily represents corporate overhead costs of $ 106.7 million for the year ended December 31, 2023.

(7) 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 Dayton and Mahoning Valley);

(ii) Meadows Lease;

(iii) Margaritaville Lease;

(iv) Greektown Lease;

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

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

(iii) Meadows Lease;

(iv) Margaritaville Lease;

(v) Greektown Lease;

and (vi) Tropicana Lease.

(5) 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.

(6) 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.

(8) Relates to impairment charges in our Northeast segment.

See Note 8, “Goodwill and Other Intangible Assets.”

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See Note 11, “Leases.”

(11) For the year ended December 31, 2023, primarily relates to unrealized holding losses on our equity securities of $ 6.4 million and non-recurring acquisition and transaction costs of $ 25.0 million, partially offset by dividend income received.

(13) Primarily relates to unrealized holding losses on our equity securities of $ 6.4 million and non-recurring acquisition and transaction costs of $ 25.0 million, partially offset by dividend income received.

See Note 18, “Fair Value Measurements.”

For the year ended December 31, 2022, primarily relates to unrealized holding losses on our equity securities of $ 69.9 million and non-recurring acquisition and transaction costs of $ 52.1 million.

For the year ended December 31, 2022

(in millions) Northeast South West Midwest Interactive (1)

Intersegment Eliminations (2)

Total revenues

$ 2,695.9 $ 1,314.2 $ 581.9 $ 1,159.6 $ 663.1 $ 21.3 $ ( 34.3 ) $ 6,401.7

Gaming taxes ( 1,120.1 ) ( 286.5 ) ( 91.5 ) ( 311.3 ) ( 346.5 )

Compensation and benefits ( 366.7 ) ( 219.0 ) ( 142.6 ) ( 153.8 ) ( 112.8 )

Media and advertising ( 76.1 )

Other segment items (3)

( 366.6 ) ( 260.6 ) ( 127.7 ) ( 193.3 ) ( 202.6 )

Reportable Segment Adjusted EBITDAR (4)

$ 842.5 $ 548.1 $ 220.1 $ 501.2 $ ( 74.9 ) $ 2,037.0

Other operating benefits (costs) and other income (expenses):

Other category (5)

Rent expense associated with triple net operating leases (6)

Stock-based compensation ( 58.1 )

Cash-settled stock award variance 15.5

Loss on disposal of assets ( 7.9 )

Contingent purchase price 0.6

Pre-opening expenses ( 4.1 )

Depreciation and amortization ( 567.5 )

Impairment losses (7)

Insurance recoveries, net of deductible charges 10.7

Non-operating items of equity method investments (8)

Interest expense, net ( 758.2 )

Interest income 18.3

Loss on early extinguishment of debt ( 10.4 )

Income before income taxes 175.3

Income tax benefit 46.4

Net income $ 221.7

(1) Revenues and gaming taxes expense within our Interactive segment are inclusive of gaming tax reimbursement amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access of $ 251.6 million for the year ended December 31, 2022.

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

(3) For each reportable segment, the Other segment items category includes:

Interactive segment - professional services, legal expenses, software subscriptions and maintenance fees, software development costs, utilities, supplies, property and liability insurance, other taxes and fees, lease expense, allocated corporate expenses, and third-party revenue share fees.

(4) We define Adjusted EBITDAR as earnings before interest expense, net, interest income, income taxes, depreciation and amortization, rent expense associated with triple net operating leases (see footnote (6) below), 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, non-cash gains/losses associated with partial and step acquisitions as measured in accordance with ASC 805 “Business Combinations,” and other.

Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (see footnote (8) below) added back for Barstool and our Kansas Entertainment joint venture.

(5) Primarily represents corporate overhead costs of $ 98.5 million for the year ended December 31, 2022.

(6) 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 Dayton and Mahoning Valley);

(ii) Meadows Lease;

(iii) Margaritaville Lease;

(iv) Greektown Lease;

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

(7) Primarily relates to $ 116.4 million of impairment charges in the Northeast segment.

See Note 8, “Goodwill and Other Intangible Assets.”

(8) 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.

(9) Primarily relates to unrealized holding losses on our equity securities of $ 69.9 million and non-recurring acquisition and transaction costs of $ 52.1 million.

See Note 18, “Fair Value Measurements.”

For the year ended December 31, 2021, primarily relates to realized and unrealized losses on our equity securities of $ 24.9 million, non-recurring acquisition and transaction costs of $ 43.1 million, offset by a gain on our equity method investment of $ 29.9 million.

See Note 19, “Fair Value Measurements” and Note 7, “Investments in and Advances to Unconsolidated Affiliates.”

The table below presents capital expenditures by segment:

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Total capital expenditures $ 482.7 $ 360.0 $ 263.4

The measure of segment assets is reported on our Consolidated Balance Sheets as total consolidated assets.

The table below presents investment in and advances to unconsolidated affiliates and total assets by segment:

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The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate.

The fair value of the Company’s trade accounts receivable and payables approximates the carrying amounts.

The fair value of the Company’s trade accounts receivable and payable approximates the carrying amounts.

Cash and Cash Equivalents

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These equity securities are the result of PENN Interactive entering into multi-year agreements with third-party online sports betting and/or iCasino operators for online sports betting and iCasino market access across our portfolio.

We recognized unrealized holding losses of $ 6.4 million, unrealized holding losses of $ 69.9 million, and realized and unrealized holding losses of $ 24.9 million during the years ended December 31, 2023, 2022, and 2021, respectively, related to these equity securities, which are included in “Other” as reported in “Other income (expenses)” within our Consolidated Statements of Operations.

As of December 31, 2023, the fair value of the equity securities was determined using Level 1 inputs, which use market approach valuation techniques.

We recognized unrealized holding losses of $ 0.1 million, $ 6.4 million, and $ 69.9 million during the years ended December 31, 2024, 2023, and 2022, respectively, related to these equity securities, which are included in “Other” as reported in “Other income (expenses)” within our Consolidated Statements of Operations.

The fair value of the equity securities was determined using Level 1 inputs, which use market approach valuation techniques.

The primary inputs to those techniques include the quoted market price of the equity securities and foreign currency exchange rates.

As of December 31, 2022, the fair value of the equity securities was determined using Level 2 inputs, which use market approach valuation techniques.

The primary inputs to those techniques include the quoted market price of the equity securities, foreign currency exchange rates, a discount for lack of marketability (“DLOM”) with respect to the ordinary shares.

The DLOM was based on the remaining term of the relevant lock-up periods and the volatility associated with the underlying equity securities.

Available-for-Sale Debt Securities

The Company acquired 12.0 % secured convertible notes on April 7, 2023 for $ 20.0 million, due on the third-year anniversary of the date of issuance, which are reported in “Other assets” in our Consolidated Balance Sheets.

The Company acquired 12.0 % secured convertible notes in a technology provider on April 7, 2023 for $ 20.0 million, due on the third-year anniversary of the date of issuance.

The terms contain optional and mandatory conversion provisions pursuant to which we will receive common stock upon conversion.

As of December 31, 2023, the fair value of the convertible notes were valued at $ 24.2 million, as such we recorded an unrealized gain to “Other comprehensive income (loss)” within our Consolidated Statements of Comprehensive Income (Loss).

As of December 31, 2024 and 2023, the fair value of the convertible notes were valued at $ 31.5 million and $ 24.2 million, respectively.

As such, during the year ended December 31, 2024 and 2023, we recorded unrealized gains of $ 7.3 million and $ 4.2 million, respectively, and corresponding tax expense of $ 1.9 million and $ 1.0 million, respectively, to “Other comprehensive income (loss)” within our Consolidated Statements of Comprehensive Income (Loss).

The fair value of the convertible notes was determined using a binomial lattice model and is categorized as a Level 3 measurement.

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In addition, we own 1.0 % of the equity of Retama Nominal Holder, LLC, which holds a nominal interest in the racing license used to operate Retama Park Racetrack, and a 75.5 % interest in Pinnacle Retama Partners, LLC (“PRP”), which owns the contingent gaming rights that may arise if gaming under the existing racing license becomes legal in Texas in the future.

As of both December 31, 2023 and 2022, PRP held $ 7.9 million in promissory notes issued by RDC and $ 6.7 million in local government corporation bonds issued by RDC, at amortized cost.

As of both periods ended December 31, 2024 and 2023, PRP held $ 7.9 million in promissory notes issued by RDC and $ 6.7 million in local government corporation bonds issued by RDC, at amortized cost.

The promissory notes and the local government corporation bonds are collateralized by the assets of Retama Park Racetrack.

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however, we have not recorded accrued interest on these promissory notes because uncertainty exists as to RDC’s ability to make interest payments.

We have the positive intent and ability to hold the local government corporation bonds to maturity and until the amortized cost is recovered.

We have the positive intent and ability to hold the local government corporation bonds until the amortized cost is recovered.

The estimated fair values of such investments are principally based on appraised values of the land associated with Retama Park Racetrack, which are classified as Level 2 inputs.

Long-term Debt

The fair value of our Amended Term Loan A Facility, Amended Term Loan B Facility, 5.625 % Notes, 4.125 % Notes, and the Convertible Notes is estimated based on quoted prices in active markets and is classified as a Level 1 measurement.

Other long-term obligations as of December 31, 2023 and 2022 included a financing arrangement entered in February of 2021, the relocation fees for Dayton and Mahoning Valley, and the repayment obligation of the hotel and event center located near Hollywood Casino Lawrenceburg.

See Note 11, “Long-term Debt” for details.

The fair values of the Dayton and Mahoning Valley relocation fees and the Lawrenceburg repayment obligation are estimated based on rates consistent with the Company’s credit rating for comparable terms and debt instruments and are classified as Level 2 measurements.

The fair value of our Amended Term Loan A Facility, Amended Term Loan B Facility, 5.625 % Notes, 4.125 % Notes, and the Convertible Notes is estimated based on quoted prices in active markets.

During the first quarter of 2024, we reassessed the trading frequency of our previously described long-term debt instruments and reclassified them from a Level 1 measurement to a Level 2 measurement.

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

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Other Liabilities

Other liabilities as of December 31, 2023 include contingent purchase price liabilities related to Plainridge Park Casino and Hitpoint, which was acquired on May 11, 2021.

The Hitpoint contingent purchase price liability is payable in installments up to

a maximum of $ 1.0 million in the form of cash and equity, on the first three anniversaries of the acquisition close date and is based on the achievement of mutual goals established by the Company and Hitpoint.

As of December 31, 2023, there is one annual achievement period remaining.

Other liabilities as of December 31, 2024 include contingent purchase price liabilities related to Plainridge Park Casino and HitPoint Inc.

and Lucky Point Inc.

(collectively, “HitPoint”).

The HitPoint contingent purchase price liability was payable in installments up to a maximum of $ 1.0 million in the form of cash and equity, on the first three anniversaries of the acquisition close date and was based on the achievement of mutual goals established by the Company and HitPoint.

The final payment of shares and cash were issued during the second and third quarters of 2024, respectively.

See Note 14, “Stockholders’ Equity.” As of December 31, 2024, there are no annual achievement periods remaining.

The Plainridge Park Casino contingent purchase price liability is calculated based on earnings of the gaming operations over the first ten years of operations, which commenced on June 24, 2015.

As of December 31, 2023, we were contractually obligated to make two additional annual payments.

As of December 31, 2024, we were contractually obligated to make one additional annual payment.

The fair value of the Plainridge Park Casino contingent purchase price liability is estimated based on an income approach using a discounted cash flow model.

These contingent purchase price liabilities have been classified as a Level 3 measurement and are included within our Consolidated Balance Sheets in “Accrued expenses and other current liabilities” or “Other long-term liabilities,” depending on the timing of the next payment.

Additionally, Other liabilities as of December 31, 2023, include $ 70.0 million tax indemnification described in Note 6, “Acquisitions and Dispositions.” Liabilities associated with the indemnification of $ 35.0 million were recorded in “Accrued expenses and other current liabilities” and $ 35.0 million were recorded in “Other long-term liabilities” within our Consolidated Balance Sheets.

Additionally, as of December 31, 2024 and 2023, Other liabilities include a $ 39.5 million and $ 70.0 million tax indemnification, respectively, as described in Note 2, “Significant Accounting Policies and Basis of Presentation” Liabilities associated with the indemnification of $ 39.5 million are recorded in “Other long-term liabilities” within our Consolidated Balance Sheets.

The indemnity has been classified as a Level 3 measurement.

Key assumptions used to estimate the fair value of the indemnification include the expected tax rate and the probability of potential outcomes based on valuation methods that utilize unobservable inputs that are significant to the overall fair value as of December 31, 2023.

The assessment of the significance of a particular input to the fair value measurement requires judgment.

23 unchanged sentences

Equity securities $ 10.7 $ 10.7 $ 10.7 $ — $ —

Available-for-sale debt securities $ 24.2 $ 24.2 $ — $ — $ 24.2

Held-to-maturity securities $ 6.7 $ 6.7 $ — $ 6.7 $ —

10 unchanged sentences

Other liabilities $ 79.0 $ 78.9 $ — $ 2.7 $ 76.2

Puts and calls related to certain Barstool shares $ 0.4 $ 0.4 $ — $ 0.4 $ —

The following table summarizes the changes in fair value of our Level 3 assets and liabilities measured on a recurring basis:

1 unchanged sentence

Balance as of January 1, 2022

Additions 75.5

Interest 27.6

Payments ( 2.7 )

Included in earnings (1)

Balance as of December 31, 2021

Interest 27.6

Payments ( 2.7 )

Included in loss (1)

5 unchanged sentences

Balance as of December 31, 2023

Interest 47.1

Payment installments ( 33.1 )

Included in loss and other comprehensive loss (1)(2)

Balance as of December 31, 2024

(1) The expense is included in “ General and administrative ” within our Consolidated Statements of Operations.

(2) Includes unrealized gains and losses on debt securities within our Consolidated Statements of Comprehensive Income (Loss).

(2) Includes unrealized gain on debt securities within our Consolidated Statements of Comprehensive Income (Loss).

The following table sets forth the assets measured at fair value on a non-recurring basis as of December 31, 2024 and 2023:

2 unchanged sentences

Gaming licenses 10/1/2024 Discounted cash flow $ — $ — $ 71.0 $ 71.0 $ 69.3

Trademarks 10/1/2024 Discounted cash flow $ — $ — $ 56.0 $ 56.0 $ 7.5

Goodwill 10/1/2023 Discounted cash flow and market approach $ — $ — $ — $ — $ 30.0

Gaming licenses 10/1/2023 Discounted cash flow $ — $ — $ 130.0 $ 130.0 $ 100.6

9/30/2022 Discounted cash flow and market approach $ — $ — $ 30.0 $ 30.0 $ 37.4

Gaming licenses (1)

9/30/2022 Discounted cash flow $ — $ — $ 101.0 $ 101.0 $ 65.4

(1) During the third quarter of 2022, we identified an indicator of impairment on our goodwill and other intangible assets.

See Note 9, “Goodwill and Other Intangible Assets” for more information.

The following table summarizes the significant unobservable inputs used in calculating fair value for our Level 3 assets and liabilities on a recurring basis as of December 31, 2024:

3 unchanged sentences

Contingent purchase price - Plainridge Park Casino Discounted cash flow Discount rate 6.6 %

As discussed in Note 9, “Goodwill and Other Intangible Assets,” we recorded impairment on our goodwill at the Greektown reporting unit and on our gaming licenses associated with Greektown, PNRC, and Ameristar East Chicago, which are indefinite-lived intangible assets, as a result of our 2023 annual assessment for impairment.

Additionally, we recorded impairments on our goodwill and gaming licenses associated with Greektown as a result of the third quarter of 2022 interim assessment for impairment.

Our annual assessment for impairment as of October 1, 2022 resulted in an additional impairment charge associated with our gaming license at PNRC.

The following table presents quantitative information about the significant unobservable inputs used in the fair value measurements of other indefinite-lived intangible assets as of the valuation date below:

As discussed in Note 8, “Goodwill and Other Intangible Assets,” we recorded impairment charges on the indefinite-lived intangible asset classes below, following our annual impairment assessments in the Northeast, South, and Midwest segments for the year ended December 31, 2024, and in the Northeast segment for the year ended December 31, 2023.

The table below presents quantitative information about the significant unobservable inputs used in the fair value measurements as of the valuation date below:

(in millions) Fair Value Valuation Technique Unobservable Input Range or Amount

2 unchanged sentences

Long-term revenue growth rate 2.0 %

As of December 31, 2022

Gaming licenses $ 74.0 Discounted cash flow Discount rate 13.0 %

Trademarks $ 56.0 Discounted cash flow Discount rate 12.5 % - 14.5 %

Long-term revenue growth rate 2.0 % - 4.0 %

As of September 30, 2022

Pretax royalty rate 1.5 % - 5.0 %

As of December 31, 2023

Gaming licenses $ 130.0 Discounted cash flow Discount rate 12.5 % - 13.0 %

1 unchanged sentence

Note 19—Related Party Transactions

The Company currently leases executive office buildings in Wyomissing, Pennsylvania from affiliates of its chairman emeritus of the Board of Directors.

Rent expense was $ 1.1 million, $ 1.1 million, and $ 1.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.

One lease was renewed in the prior year and will expire in December 2025.

The Company currently leases two executive office buildings in Wyomissing, Pennsylvania from affiliates of its chairman emeritus of the Board of Directors.

Rent expense was $ 1.1 million for each of the three years ended December 31, 2024, 2023, and 2022, respectively.

One lease was renewed in December 2022 and will expire in December 2025.

The other long-term lease will expire in August 2026.

The remaining lease, which had been previously on a month-to-month basis, was terminated as of December 31, 2021.

The future minimum lease commitments relating to these leases as of December 31, 2023 are $ 1.9 million.

The future minimum lease commitments relating to the leases as of December 31, 2024 are $ 1.1 million.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data