Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
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PENN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except share and per share data) March 31, 2025 December 31, 2024
Assets
Current assets
Cash and cash equivalents $ 591.6 $ 706.6
Accounts receivable, net 253.3 256.8
Prepaid expenses 127.5 152.3
Other current assets 45.1 38.7
Total current assets 1,017.5 1,154.4
Property and equipment, net 3,769.2 3,705.0
Investment in and advances to unconsolidated affiliates 89.0 86.2
Goodwill 2,563.0 2,563.1
Other intangible assets, net 1,523.8 1,529.9
Operating lease right-of-use assets 3,905.0 3,976.8
Finance lease right-of-use assets 1,991.8 2,014.3
Other assets 230.7 232.0
Total assets $ 15,090.0 $ 15,261.7
Liabilities
Current liabilities
Accounts payable $ 65.6 $ 50.8
Current maturities of long-term debt 38.2 38.2
Current portion of financing obligations 44.0 43.5
Current portion of operating lease liabilities 332.0 322.1
Current portion of finance lease liabilities 54.0 53.2
Accrued expenses and other current liabilities 840.1 907.3
Total current liabilities 1,373.9 1,415.1
Long-term debt, net of current maturities, debt discounts, and debt issuance costs 2,583.5 2,732.5
Long-term portion of financing obligations 2,332.0 2,343.1
Long-term portion of operating lease liabilities 3,577.1 3,654.3
Long-term portion of finance lease liabilities 2,048.7 2,062.3
Deferred income taxes 72.6 61.0
Other long-term liabilities 132.8 135.0
Total liabilities 12,120.6 12,403.3
Commitments and contingencies (Note 8)
Stockholders’ equity
Series B Preferred stock ($ 0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding)
— —
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, no shares issued and outstanding)
— —
Common stock ($ 0.01 par value, 400,000,000 shares authorized, 177,816,495 and 177,396,073 shares issued, and 151,235,711 and 152,229,171 shares outstanding)
1.8 1.8
Exchangeable shares ($ 0.01 par value, 768,441 shares authorized in both periods, 768,441 shares issued in both periods, 380,478 and 466,534 shares outstanding)
— —
Treasury stock, at cost ( 26,580,784 and 25,166,902 shares)
( 804.6 ) ( 779.5 )
Additional paid-in capital 4,567.3 4,542.4
Accumulated deficit ( 535.2 ) ( 647.0 )
Accumulated other comprehensive loss ( 255.3 ) ( 255.0 )
Total PENN Entertainment, Inc. stockholders’ equity 2,974.0 2,862.7
Non-controlling interest ( 4.6 ) ( 4.3 )
Total stockholders’ equity 2,969.4 2,858.4
Total liabilities and stockholders’ equity $ 15,090.0 $ 15,261.7
See accompanying notes to the unaudited Consolidated Financial Statements.
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PENN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months ended March 31,
(in millions, except per share data) 2025 2024
Revenues
Gaming $ 1,298.3 $ 1,258.3
Food, beverage, hotel, and other 374.2 348.6
Total revenues 1,672.5 1,606.9
Operating expenses
Gaming 853.8 879.5
Food, beverage, hotel, and other 264.9 251.2
General and administrative 403.0 388.9
Depreciation and amortization 108.0 108.7
Total operating expenses 1,629.7 1,628.3
Operating income (loss) 42.8 ( 21.4 )
Other income (expenses)
Interest expense, net ( 110.8 ) ( 119.1 )
Interest income 3.2 7.1
Income from unconsolidated affiliates 7.6 7.2
Gain on financing arrangement 215.1 —
Other 1.3 ( 1.3 )
Total other income (expenses) 116.4 ( 106.1 )
Income (loss) before income taxes
159.2 ( 127.5 )
Income tax benefit (expense)
( 47.7 ) 12.6
Net income (loss)
111.5 ( 114.9 )
Less: Net loss attributable to non-controlling interest 0.3 0.2
Net income (loss) attributable to PENN Entertainment, Inc.
$ 111.8 $ ( 114.7 )
Earnings (loss) per share:
Basic earnings (loss) per share
$ 0.73 $ ( 0.76 )
Diluted earnings (loss) per share
$ 0.68 $ ( 0.76 )
Weighted-average common shares outstanding—basic 152.3 151.9
Weighted-average common shares outstanding—diluted 167.0 151.9
See accompanying notes to the unaudited Consolidated Financial Statements.
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PENN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
For the three months ended March 31,
(in millions) 2025 2024
Net income (loss)
$ 111.5 $ ( 114.9 )
Other comprehensive loss, net of tax:
Foreign currency translation adjustment during the period ( 0.3 ) ( 36.0 )
Other comprehensive loss ( 0.3 ) ( 36.0 )
Total comprehensive income (loss)
111.2 ( 150.9 )
Less: Comprehensive loss attributable to non-controlling interest 0.3 0.2
Comprehensive income (loss) attributable to PENN Entertainment, Inc.
$ 111.5 $ ( 150.7 )
See accompanying notes to the unaudited Consolidated Financial Statements.
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PENN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Three Months Ended March 31, 2025 and 2024
Preferred Stock Common Stock Treasury Stock Additional
Paid-In
Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total PENN Stockholders’ Equity Non-Controlling Interest Total Stockholders’ Equity
(in millions, except share data) Shares Amount PENN Entertainment, Inc. Shares Amount Exchangeable Shares Amount
Balance as of January 1, 2025 — $ — 152,229,171 $ 1.8 466,534 $ — $ ( 779.5 ) $ 4,542.4 $ ( 647.0 ) $ ( 255.0 ) $ 2,862.7 $ ( 4.3 ) $ 2,858.4
Share-based compensation arrangements — — 334,366 — — — — 15.6 — — 15.6 — 15.6
Share repurchases — — ( 1,413,882 ) — — — ( 25.0 ) — — — ( 25.0 ) — ( 25.0 )
Exchangeable share conversions — — 86,056 — ( 86,056 ) — — — — — — — —
Investment Agreement warrants — — — — — — — 14.2 — — 14.2 — 14.2
Currency translation adjustment — — — — — — — — — ( 0.3 ) ( 0.3 ) — ( 0.3 )
Net income (loss) — — — — — — — — 111.8 — 111.8 ( 0.3 ) 111.5
Other — — — — — — ( 0.1 ) ( 4.9 ) — — ( 5.0 ) — ( 5.0 )
Balance as of March 31, 2025 — $ — 151,235,711 $ 1.8 380,478 $ — $ ( 804.6 ) $ 4,567.3 $ ( 535.2 ) $ ( 255.3 ) $ 2,974.0 $ ( 4.6 ) $ 2,969.4
Balance as of January 1, 2024 — $ — 151,552,694 $ 1.8 560,267 $ — $ ( 779.5 ) $ 4,436.6 $ ( 335.5 ) $ ( 121.3 ) $ 3,202.1 $ ( 2.5 ) $ 3,199.6
Share-based compensation arrangements — — 246,970 — — — — 11.9 — — 11.9 — 11.9
Exchangeable share issuance — — — — 68,048 — — — — — — — —
Exchangeable share conversions — — 71,141 — ( 71,141 ) — — — — — — — —
Investment Agreement warrants — — — — — — — 14.3 — — 14.3 — 14.3
Currency translation adjustment — — — — — — — — — ( 36.0 ) ( 36.0 ) — ( 36.0 )
Net loss — — — — — — — — ( 114.7 ) — ( 114.7 ) ( 0.2 ) ( 114.9 )
Other — — — — — — — ( 2.9 ) — — ( 2.9 ) — ( 2.9 )
Balance as of March 31, 2024 — $ — 151,870,805 $ 1.8 557,174 $ — $ ( 779.5 ) $ 4,459.9 $ ( 450.2 ) $ ( 157.3 ) $ 3,074.7 $ ( 2.7 ) $ 3,072.0
See accompanying notes to the unaudited Consolidated Financial Statements.
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PENN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the three months ended March 31,
(in millions) 2025 2024
Operating activities
Net income (loss) $ 111.5 $ ( 114.9 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 108.0 108.7
Amortization of debt discounts and debt issuance costs 2.3 2.2
Non-cash interest expense 14.0 10.6
Non-cash operating lease expense 83.5 77.7
Income from unconsolidated affiliates ( 7.6 ) ( 7.2 )
Return on investment from unconsolidated affiliates 8.3 7.3
Deferred income taxes 11.5 ( 72.3 )
Stock-based compensation 15.6 11.9
Investment Agreement warrant expense 14.2 18.7
Gain on financing arrangement ( 215.1 ) —
Changes in operating assets and liabilities
Accounts receivable 0.9 35.9
Prepaid expenses and other current assets ( 8.6 ) ( 0.5 )
Other assets 1.7 ( 6.2 )
Accounts payable 4.0 1.5
Accrued expenses ( 64.2 ) ( 81.7 )
Income taxes 55.8 58.3
Operating lease liabilities ( 78.9 ) ( 72.4 )
Other current and long-term liabilities ( 19.9 ) ( 52.5 )
Other 4.9 6.2
Net cash provided by (used in) operating activities 41.9 ( 68.7 )
Investing activities
Capital expenditures ( 125.2 ) ( 41.4 )
Other ( 10.7 ) ( 5.9 )
Net cash used in investing activities ( 135.9 ) ( 47.3 )
Financing activities
Proceeds from revolving credit facility 150.0 —
Repayments of revolving credit facility ( 90.0 ) —
Principal payments on long-term debt ( 9.4 ) ( 9.4 )
Debt issuance costs — ( 2.6 )
Principal payments on financing obligations ( 10.7 ) ( 10.0 )
Principal payments on finance leases ( 13.1 ) ( 12.2 )
Repurchase of common stock ( 25.0 ) —
Payments on insurance financing ( 12.4 ) ( 12.2 )
Other ( 5.6 ) ( 3.7 )
Net cash used in financing activities ( 16.2 ) ( 50.1 )
Effect of currency rate changes on cash, cash equivalents, and restricted cash — ( 0.8 )
Change in cash, cash equivalents, and restricted cash ( 110.2 ) ( 166.9 )
Cash, cash equivalents, and restricted cash at the beginning of the year 723.8 1,094.4
Cash, cash equivalents, and restricted cash at the end of the period $ 613.6 $ 927.5
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For the three months ended March 31,
(in millions) 2025 2024
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents $ 591.6 $ 903.6
Restricted cash included in Other current assets 20.8 22.7
Restricted cash included in Other assets 1.2 1.2
Total cash, cash equivalents, and restricted cash $ 613.6 $ 927.5
Supplemental disclosure:
Cash paid for interest, net of amounts capitalized $ 102.0 $ 114.0
Cash payments (refunds) related to income taxes, net $ ( 19.7 ) $ 0.6
Non-cash activities:
Accrued capital expenditures $ 67.7 $ 12.7
See accompanying notes to the unaudited Consolidated Financial Statements.
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PENN ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1— Organization
Organization : 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 date of this filing, 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™, theScore BET Sportsbook and Casino ® . PENN’s ability to leverage its partnership with ESPN, Inc. and ESPN Enterprises, Inc. (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 TM customer loyalty program, offering its over 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; the most significant of which are with Gaming and Leisure Properties, Inc. (Nasdaq: GLPI) (“GLPI”), a real estate investment trust (“REIT”), and include the AR PENN Master Lease, 2023 Master Lease, and Pinnacle Master Lease (as such terms are defined in Note 6, “Leases” and collectively referred to as the “Master Leases”).
Note 2— Significant Accounting Policies and Basis of Presentation
Basis of Presentation: The unaudited Consolidated Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included.
Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. These unaudited Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Principles of Consolidation: The unaudited Consolidated Financial Statements include the accounts of PENN Entertainment, Inc. and its subsidiaries. Investments in and advances to unconsolidated affiliates that do not meet the consolidation criteria of the authoritative guidance for voting interest entities (“VOEs”) or variable interest entities (“VIEs”) are accounted for under the equity method. All intercompany accounts and transactions have been eliminated in consolidation.
Reclassifications: Certain reclassifications have been made to conform the prior period presentation with current year presentation.
Use of Estimates: The preparation of unaudited 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 financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. We applied estimation methods consistently for the periods presented within our unaudited Consolidated Financial Statements. Actual results may differ from those estimates.
Segment Information: We have five reportable segments: Northeast, South, West, Midwest, and Interactive. Our gaming and racing properties are grouped by geographic location, and each is viewed as an operating segment with the exception of our two properties in Jackpot, Nevada, which are viewed as one operating segment. We consider our combined Video Gaming Terminal (“VGT”) operations, by state, to be separate operating segments.
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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 bet ting, and media operations. See Note 12, “Segment Information” and Note 6, “Leases” for further segment and lease structure information, respectively. For financial reporting purposes, we aggregate our operating segments into the following reportable segments:
Location Real Estate Assets Lease or Ownership Structure
Northeast segment
Ameristar East Chicago East Chicago, Indiana Pinnacle Master Lease
Hollywood Casino Bangor Bangor, Maine AR PENN Master Lease
Hollywood Casino at Charles Town Races Charles Town, West Virginia AR PENN Master Lease
Hollywood Casino Columbus Columbus, Ohio 2023 Master Lease
Hollywood Casino at Greektown Detroit, Michigan Greektown Lease
Hollywood Casino Lawrenceburg Lawrenceburg, Indiana AR PENN Master Lease
Hollywood Casino Morgantown Morgantown, Pennsylvania Morgantown Lease (1)
Hollywood Casino at PENN National Race Course Grantville, Pennsylvania AR PENN Master Lease
Hollywood Casino Perryville Perryville, Maryland 2023 Master Lease
Hollywood Casino at The Meadows Washington, Pennsylvania 2023 Master Lease
Hollywood Casino Toledo Toledo, Ohio 2023 Master Lease
Hollywood Casino York York, Pennsylvania Operating Lease (not with REIT Landlord)
Hollywood Gaming at Dayton Raceway Dayton, Ohio AR PENN Master Lease
Hollywood Gaming at Mahoning Valley Race Course Youngstown, Ohio AR PENN Master Lease
Marquee by PENN (2)
Pennsylvania N/A
Plainridge Park Casino Plainville, Massachusetts Pinnacle Master Lease
South segment
1 st Jackpot Casino
Tunica, Mississippi AR PENN Master Lease
Ameristar Vicksburg Vicksburg, Mississippi Pinnacle Master Lease
Boomtown Biloxi Biloxi, Mississippi AR PENN Master Lease
Boomtown Bossier City Bossier City, Louisiana Pinnacle Master Lease
Boomtown New Orleans New Orleans, Louisiana Pinnacle Master Lease
Hollywood Casino Gulf Coast Bay St. Louis, Mississippi AR PENN Master Lease
Hollywood Casino Tunica Tunica, Mississippi AR PENN Master Lease
L’Auberge Baton Rouge Baton Rouge, Louisiana Pinnacle Master Lease
L’Auberge Lake Charles Lake Charles, Louisiana Pinnacle Master Lease
Margaritaville Resort Casino Bossier City, Louisiana Margaritaville Lease
West segment
Ameristar Black Hawk Black Hawk, Colorado Pinnacle Master Lease
Cactus Petes and Horseshu Jackpot, Nevada Pinnacle Master Lease
M Resort Spa Casino Henderson, Nevada 2023 Master Lease
Zia Park Casino Hobbs, New Mexico AR PENN Master Lease
Midwest segment
Ameristar Council Bluffs Council Bluffs, Iowa Pinnacle Master Lease
Argosy Casino Alton (3)
Alton, Illinois AR PENN Master Lease
Argosy Casino Riverside Riverside, Missouri AR PENN Master Lease
Hollywood Casino Aurora Aurora, Illinois 2023 Master Lease
Hollywood Casino Joliet Joliet, Illinois 2023 Master Lease
Hollywood Casino at Kansas Speedway (4)
Kansas City, Kansas Owned - Joint Venture
Hollywood Casino St. Louis Maryland Heights, Missouri AR PENN Master Lease
Prairie State Gaming (2)
Illinois N/A
River City Casino St. Louis, Missouri Pinnacle Master Lease
(1) Upon termination of the Morgantown Lease, ownership of the constructed building and all tenant improvements will transfer from the Company to GLPI.
(2) VGT route operations.
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(3) The riverboat is owned by us and not subject to the AR PENN Master Lease.
(4) Pursuant to a joint venture with NASCAR Holdings LLC and includes the Company’s 50 % investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns Hollywood Casino at Kansas Speedway.
Revenue Recognition: Our revenue from contracts with customers consists primarily of gaming wagers, inclusive of sports betting and iCasino products, food and beverage transactions, hotel room sales, retail transactions, racing wagers, and third-party revenue sharing agreements. See Note 4, “Revenue Disaggregation” for information on our revenue by type and geographic location.
Complimentaries Associated with Gaming Contracts
Food, beverage, hotel, and other services furnished to patrons for free as an inducement to gamble at our retail properties or through the redemption of our customers’ loyalty points are recorded as “Food, beverage, hotel, and other” revenues at their estimated standalone selling prices, with an offset recorded as a reduction to “Gaming” revenues. The cost of providing complimentary goods and services to patrons as an inducement to gamble as well as for the fulfillment of our loyalty point obligation is included in “Food, beverage, hotel, and other” expenses. Revenues recorded to “Food, beverage, hotel, and other” and offset to “Gaming” revenues were as follows:
For the three months ended March 31,
(in millions) 2025 2024
Food and beverage $ 58.1 $ 53.5
Hotel 34.2 34.0
Other 1.6 2.7
Total complimentaries associated with gaming contracts $ 93.9 $ 90.2
Additionally, the Company provides discretionary complimentaries in the form of online casino gaming slots and table games and online sports betting free play bonuses. Free play bonuses provided to patrons indirectly contribute to the gaming revenue earned by the Company and are recorded as a reduction of “Gaming” revenues.
Customer-related Liabilities
The Company has three general types of liabilities related to contracts with customers: (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 unaudited Consolidated Balance Sheets, was $ 32.9 million and $ 29.7 million as of March 31, 2025 and December 31, 2024, respectively, and consisted primarily of the obligation associated with the loyalty points. Our loyalty point obligations are generally settled within six months of issuance. Changes between the opening and closing balances primarily relate to the timing of our customers’ election to redeem loyalty points as well as the timing of when our customers receive their earned tier status benefits.
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, (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. The Company’s advance payments on goods and services yet to be provided and for unpaid wagers were $ 141.8 million and $ 151.4 million as of March 31, 2025 and December 31, 2024, respectively, and are included in “Accrued expenses and other current liabilities” within our unaudited Consolidated Balance Sheets.
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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.
As of March 31, 2025 and December 31, 2024, our deferred revenue balance was $ 40.3 million and $ 42.6 million, respectively, the majority of which is included in “Other long-term liabilities” within our unaudited Consolidated Balance Sheets. During the three months ended March 31, 2025 and 2024, we recognized revenue of $ 3.6 million and $ 0.9 million, respectively, that was included in the December 31, 2024 and 2023 deferred revenue balance.
Advertising: The Company expenses advertising costs the first time the advertising takes place or as incurred. Advertising expenses are primarily included in “Gaming” expenses within the unaudited Consolidated Statements of Operations and were $ 99.9 million and $ 136.0 million for the three months ended March 31, 2025 and 2024, respectively. Advertising expense includes media marketing services and brand and other rights provided by ESPN pursuant to the Sportsbook Agreement (as defined in Note 8, “Commitments and Contingencies” ) and other media placement costs.
Gaming and Pari-mutuel Taxes: We are subject to gaming and pari-mutuel taxes based on gross gaming revenue and pari-mutuel revenue in the jurisdictions in which we operate, as well as taxes on revenues derived from arrangements which allow for third-party online sports betting and/or iCasino partners to operate online sportsbooks and iCasinos under our gaming licenses. The Company primarily recognizes gaming and pari-mutuel tax expense based on the statutorily required percentage of revenue that is required to be paid to state, provincial and/or local jurisdictions in the states and provinces where or in which the wagering occurs. Also included in gaming and pari-mutuel taxes are costs to support the operations of local regulatory authorities which some jurisdictions require us to pay. Gaming and pari-mutuel taxes are recorded in “Gaming” expenses or “Food, beverage, hotel, and other” expenses within the unaudited Consolidated Statements of Operations and were $ 609.9 million and $ 592.0 million for the three months ended March 31, 2025 and 2024, respectively.
Foreign Currency Translation: The functional currency of the Company’s foreign subsidiaries is the local currency in which the subsidiary operates. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Translation adjustments resulting from this process are recorded to other comprehensive income (loss). Revenues and expenses are translated at the average exchange rates during the year. Gains or losses resulting from foreign currency transactions are included in “Other” within our unaudited Consolidated Statements of Operations.
Comprehensive Income or Loss and Accumulated Other Comprehensive Income or Loss: Comprehensive income (loss) includes net income or loss and all other non-stockholder changes in equity, or other comprehensive income (loss). The balance of accumulated other comprehensive income (loss) consists of foreign currency translation adjustments and unrealized gains or losses on debt securities.
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”), and convertible debt.
Guarantees and Indemnifications: The Company accounts for indemnity obligations in accordance with ASC Topic 460-20, “Contingencies” and records a liability at fair value. 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. 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. Claims under the indemnification are paid upon demand. 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. 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. For both periods ended as of March 31, 2025 and December 31, 2024, the Company has recorded a liability of $ 39.5 million for this agreement. See Note 11, “Fair Value Measurements” for more information.
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Note 3— New Accounting Pronouncements
Accounting Pronouncements Adopted
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). 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. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. 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 unaudited Consolidated Financial Statements. See Note 12, “Segment Information.”
Accounting Pronouncements to be Implemented
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 updates the requirements for a public entity to enhance income tax disclosures to provide a better assessment on how an entity’s operations, related tax risks, tax planning, and operational opportunities affect its tax rate and prospects for future cash flows. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, on a prospective or retrospective basis, with early adoption permitted. We are assessing the guidance, noting adoption of the new standard is limited to additional disclosures in the notes to the Consolidated Financial Statements.
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 income statement 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, and interim periods within fiscal years beginning after December 15, 2027, on a prospective or retrospective basis, with early adoption permitted. We are assessing the guidance and currently expect adoption of the new standard 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, on a prospective or retrospective basis, with early adoption 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 assessing the guidance and currently do not expect the new standard to have a material impact on our Consolidated Financial Statements.
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Note 4— Revenue Disaggregation
Our revenues are generated primarily by providing the following types of services: (i) gaming, inclusive of retail sports betting, iCasino, and online sports betting; (ii) food and beverage; (iii) hotel; and (iv) other. Other revenues are primarily 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 three months ended March 31, 2025
(in millions) Northeast South West Midwest Interactive (1)
Other Intersegment Eliminations (2)
Total
Revenues:
Gaming $ 610.6 $ 220.7 $ 91.0 $ 252.3 $ 123.7 $ — $ — $ 1,298.3
Food and beverage 37.8 33.9 17.6 15.7 — 1.1 — 106.1
Hotel 11.9 24.1 16.8 8.1 — — — 60.9
Other 20.6 9.6 4.3 6.8 166.4 4.2 ( 4.7 ) 207.2
Total revenues $ 680.9 $ 288.3 $ 129.7 $ 282.9 $ 290.1 $ 5.3 $ ( 4.7 ) $ 1,672.5
For the three months ended March 31, 2024
(in millions) Northeast South West Midwest Interactive (1)
Other Intersegment Eliminations (2)
Total
Revenues:
Gaming $ 616.4 $ 233.8 $ 91.6 $ 260.5 $ 56.0 $ — $ — $ 1,258.3
Food and beverage 36.8 32.2 17.6 15.3 — 1.1 — 103.0
Hotel 11.7 22.4 15.6 8.5 — — — 58.2
Other 19.8 10.1 4.0 6.9 151.7 4.9 ( 10.0 ) 187.4
Total revenues $ 684.7 $ 298.5 $ 128.8 $ 291.2 $ 207.7 $ 6.0 $ ( 10.0 ) $ 1,606.9
(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 $ 128.2 million and $ 116.6 million for the three months ended March 31, 2025 and 2024, respectively.
(2) Primarily represents the elimination of intersegment revenues associated with our retail sportsbooks, which are operated by PENN Interactive.
Note 5— Long-Term Debt
The table below presents long-term debt, net of current maturities, debt discounts, and issuance costs:
(in millions) March 31, 2025 December 31, 2024
Amended Credit Facilities:
Amended Revolving Credit Facility due 2027 $ 60.0 $ —
Amended Term Loan A Facility due 2027 474.4 481.3
Amended Term Loan B Facility due 2029 972.5 975.0
5.625 % Notes due 2027
400.0 400.0
4.125 % Notes due 2029
400.0 400.0
2.75 % Convertible Notes due 2026
330.5 330.5
Other long-term obligations 8.6 210.5
2,646.0 2,797.3
Less: Current maturities of long-term debt ( 38.2 ) ( 38.2 )
Less: Debt discounts ( 3.0 ) ( 3.1 )
Less: Debt issuance costs ( 21.3 ) ( 23.5 )
$ 2,583.5 $ 2,732.5
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The following is a schedule of future minimum repayments of long-term debt as of March 31, 2025 (in millions):
Years ending December 31:
2025 (excluding the three months ended March 31, 2025)
$ 28.2
2026 368.7
2027 897.0
2028 10.8
2029 1,335.8
Thereafter 5.5
Total minimum payments $ 2,646.0
Amended Credit Facilities
On May 3, 2022, the Company entered into a Second Amended and Restated Credit Agreement with its various lenders (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement provides for a $ 1.0 billion revolving credit facility, undrawn at close, (the “Amended Revolving Credit Facility”), a five-year $ 550.0 million term loan A facility (the “Amended Term Loan A Facility”) and a seven-year $ 1.0 billion term loan B facility (the “Amended Term Loan B Facility”) (together, the “Amended Credit Facilities”). The proceeds from the Amended Credit Facilities were used to repay the balances of the previous credit facilities.
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 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 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. The Amended Credit Facilities contain two financial covenants: a maximum total net leverage ratio (as defined within the Second Amended and Restated Credit Agreement) of 4.50 to 1.00, which is subject to a step up to 5.00 to 1.00 in the case of certain significant acquisitions, and a minimum interest coverage ratio (as defined within the Second Amended and Restated Credit Agreement) of 2.00 to 1.00. 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 6, “Leases” ).
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. The First Amendment Agreement provided for certain adjustments, during a specified time period (“Covenant Relief Period”), 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 March 31, 2025, the Covenant Relief Period has concluded, and we are now required to maintai n 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 Amended Term Loan B Facility loans from 2.75 % to 2.50 % for Term SOFR loans, and from 1.75 % to 1.50 % for base rate loans.
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As of March 31, 2025, the Company had $ 60.0 million drawn on the Amended Revolving Credit Facility. Additionally, the Company had conditional obligations under letters of credit issued pursuant to the Amended Credit Facilities with face amounts aggregating to $ 20.4 million, resulting in $ 919.6 million of available borrowing capacity under the Amended Revolving Credit Facility. As of May 9, 2025, the Company had $ 105.0 million in outstanding borrowings under its Amended Revolving Credit Facility, resulting in $ 874.6 million in available borrowing capacity.
2.75 % Unsecured Convertible Notes
In May 2020, the Company completed a public offering of $ 330.5 million aggregate principal amount of 2.75 % unsecured convertible notes (the “Convertible Notes”) that mature, unless earlier converted, redeemed, or repurchased, on May 15, 2026 at a price of par.
As of March 31, 2025 and December 31, 2024, no Convertible Notes have been converted into the Company’s common stock. The maximum number of shares that could be issued to satisfy the conversion feature of the Convertible Notes is 18,360,815 as of March 31, 2025.
The Convertible Notes consisted of the following components:
(in millions) March 31, 2025 December 31, 2024
Liability:
Principal $ 330.5 $ 330.5
Unamortized debt issuance costs ( 2.2 ) ( 2.6 )
Net carrying amount $ 328.3 $ 327.9
Interest expense, net
The table below presents interest expense, net:
For the three months ended March 31,
(in millions) 2025 2024
Interest expense $ 120.3 $ 120.6
Capitalized interest ( 9.5 ) ( 1.5 )
Interest expense, net $ 110.8 $ 119.1
The table below presents interest expense related to the Convertible Notes:
For the three months ended March 31,
(in millions) 2025 2024
Coupon interest $ 2.3 $ 2.3
Amortization of debt issuance costs 0.4 0.4
Convertible Notes interest expense $ 2.7 $ 2.7
Debt issuance costs are amortized to interest expense over the term of the Convertible Notes at an effective interest rate of 3.3 %. The remaining term of the Convertible Notes was 1.1 years as of March 31, 2025.
Covenants
Our Amended Credit Facilities, 5.625 % Notes due 2027 (the “ 5.625 % Notes”), and 4.125 % Notes due 2029 (the “ 4.125 % Notes”), require us, among other obligations, to maintain specified financial ratios and to satisfy certain financial tests. In addition, our Amended Credit Facilities, 5.625 % Notes and 4.125 % Notes, restrict, among other things, our ability to incur additional indebtedness, incur guarantee obligations, amend debt instruments, pay dividends, create liens on assets, make investments, engage in mergers or consolidations, and otherwise restrict corporate activities. Our debt agreements also contain customary events of default, including cross-default provisions that require us to meet certain requirements under the Master Leases (which are defined in Note 6, “Leases” ), each with GLPI. If we are unable to meet our financial covenants or in the event of a cross-default, it could trigger an acceleration of payment terms.
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As of March 31, 2025, the Company was in compliance with all required financial covenants. The Company believes that it will remain in compliance with all of its required financial covenants for at least the next twelve months following the date of filing this Quarterly Report on Form 10-Q with the SEC.
Other Long-Term Obligation
In February 2021, we entered into a third-party financing arrangement providing the Company with upfront and non-refundable cash proceeds of $ 72.5 million while permitting us to participate in future proceeds on certain claims for insurance coverage benefits from the Company’s insurers (the “Insurers”) for economic losses PENN sustained due to the COVID-19 pandemic. Subsequent to quarter end, on May 7, 2025, the Superior Court of Pennsylvania (the “SCP”) issued a ruling on the Company’s appeal of a lower court’s summary judgement that found in favor of the Insurers, affirming the lower court’s ruling. As a result of the SCP’s ruling, the Company has determined that obligations under these claims are no longer probable. Accordingly, we recognized a non-cash gain, which consists of the cash proceeds received in 2021 of $ 72.5 million and $ 142.6 million of accreted non-cash interest. The gain was recorded as “Gain on financing arrangement” within our unaudited Consolidated Statements of Operations for the three months ended March 31, 2025.
Prior to recognizing the non-cash gain, as described above, the financing obligation was classified as a non-current liability and had a $ 201.2 million balance as of December 31, 2024. Consistent with an obligor’s accounting under a debt instrument, period interest was accreted using an effective interest rate of 27.0 % until the time that the claims and related obligations were resolved. The amount included in “Interest expense, net” within the unaudited Consolidated Statements of Operations related to this obligation was $ 13.9 million and $ 10.6 million for the three months ended March 31, 2025 and 2024, respectively.
Note 6— Leases
Master Leases
The components contained within the Master Leases are accounted for as either (i) operating leases, (ii) finance leases, or (iii) financing obligations. 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.
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”), Hollywood Casino Columbus (“Columbus”), Hollywood Casino Toledo (“Toledo”), and the M Resort Spa Casino (“M Resort”), and (ii) make associated adjustments to the rent. Subsequent to the execution of the AR PENN Master Lease, the lease contains real estate assets associated with 14 of the Company’s gaming facilities used in its operations. The current term of the AR PENN Master Lease expires on October 31, 2033 and thereafter contains three renewal terms of five years each on the same terms and conditions, exercisable at the Company’s option. The AR PENN Master Lease along with the 2023 Master Lease (as defined and discussed below) are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee.
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 (“AR PENN Percentage Rent”).
The land and building components contained within the AR PENN Master Lease are classified as operating leases and are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations.
The next annual escalator test date is scheduled to occur on November 1, 2025. The next AR PENN Percentage Rent reset is scheduled to occur on November 1, 2028.
2023 Master Lease
Concurrent with the execution of the AR PENN Master Lease, the Company and GLPI entered into a new triple net master lease (the “2023 Master Lease”), effective January 1, 2023, specific to the property associated with Aurora, Joliet, Columbus, Toledo, M Resort, Hollywood Casino at The Meadows (“Meadows”), and Hollywood Casino Perryville (“Perryville”) and a
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master development agreement (the “Master Development Agreement”). The 2023 Master Lease has an initial term through October 31, 2033 with three subsequent five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. The 2023 Master Lease and AR PENN Master Lease are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee.
The land and building components contained within the 2023 Master Lease are classified as operating leases and are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations.
The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) 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 $ 225.0 million for the Aurora Project and, upon our 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. 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 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 PENN Development Projects are all subject to necessary regulatory and other government approvals. As of the date of this filing, the Company has neither requested nor received any funding from GLPI for the PENN Development Projects.
Pinnacle Master Lease
In connection with the acquisition of Pinnacle Entertainment, Inc. on October 15, 2018, the Company assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option. 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”).
The Pinnacle Master Lease contains land and building components that are classified as finance leases and financing obligations. Lease components classified as a finance lease are recorded to “Depreciation and amortization” and “Interest expense, net” within our unaudited Consolidated Statements of Operations. The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method.
The next annual escalator test date is scheduled to occur on May 1, 2025. The next Pinnacle Percentage Rent reset is scheduled to occur on May 1, 2026.
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Other Triple Net Leases with REIT Landlords
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.
The initial term of the Morgantown Lease is 20 years with six subsequent, five-year renewal periods, exercisable at the Company’s option. Initial annual rent under the Morgantown Lease is $ 3.0 million, subject to a 1.50 % fixed annual escalation in each of the first three years subsequent to the facility opening, which occurred on December 22, 2021. Thereafter, the lease will be subject to an annual escalator consisting of either (i) 1.25 %, if the consumer price index increase is greater than 0.50 %, or (ii) zero , if the consumer price index increase is less than 0.50 %. All improvements made on the land, including the constructed building, will be owned by the Company while the lease is in effect, however, on the expiration or termination of the Morgantown Lease, ownership of all tenant improvements on the land will transfer to GLPI.
We concluded control of the land underlying the Morgantown facility was not passed from the Company to the lessor in accordance with ASC Topic 842, “Leases,” (“ASC 842”). As such we recognized a financing obligation in accordance with ASC Topic 470, “Debt,” (“ASC 470”) and continue to recognize the underlying land asset in “Property and equipment, net” within our unaudited Consolidated Balance Sheets. The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method.
Margaritaville Lease
On January 1, 2019, the Company entered into an individual triple net lease with VICI Properties Inc. (NYSE: VICI) (“VICI”) for the real estate assets used in the operations of Margaritaville Resort Casino (the “Margaritaville Lease”). The Margaritaville 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 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 year ended January 31, the fixed components of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) 2025
Annual escalator
$ 0.4
Operating ROU asset and lease liability recognized
$ 2.5
The Margaritaville Percentage Rent most recently reset on February 1, 2025, and will be effective until the next Margaritaville Percentage Rent reset, scheduled to occur on February 1, 2027. As a result of the Margaritaville Percentage Rent reset for the lease year ended January 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) 2025
Decrease to the performance-based component of rent
$ 0.4
Operating ROU asset and lease liability recognized
$ 9.0
The land and building components contained within the Margaritaville Lease are classified as operating leases and are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations.
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Greektown Lease
On May 23, 2019, the Company entered into an individual triple net lease with VICI for the real estate assets used in the operations of Hollywood Casino at Greektown (the “Greektown Lease”). 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 % 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).
The land and building components contained within the Greektown Lease are classified as operating leases and are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations.
The next annual escalator test date and Greektown Percentage Rent reset are both scheduled to occur on June 1, 2025.
We refer to the Master Leases, the Morgantown Lease, the Margaritaville Lease, and the Greektown Lease, collectively, as our “Triple Net Leases.”
Non-REIT Operating Leases
In addition to any operating lease components contained within the Master Leases, Margaritaville Lease, and Greektown Lease (collectively referred to as “triple net operating leases”), the Company’s operating leases consist of (i) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (ii) buildings and equipment not associated with our REIT Landlords. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation, and rental payments based on usage. The Company’s leases include options to extend the lease terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The following is a maturity analysis of our operating leases, finance leases, and financing obligations as of March 31, 2025:
(in millions) Operating Leases Finance Leases Financing Obligations
Year ended December 31,
2025 (excluding the three months ended March 31, 2025) $ 465.4 $ 122.0 $ 124.9
2026 622.3 152.3 166.6
2027 620.5 147.0 166.6
2028 618.7 146.9 166.6
2029 598.2 146.9 166.7
Thereafter 2,744.1 3,127.0 3,663.2
Total lease payments 5,669.2 3,842.1 4,454.6
Less: Imputed interest ( 1,760.1 ) ( 1,739.4 ) ( 2,078.6 )
Present value of future lease payments 3,909.1 2,102.7 2,376.0
Less: Current portion of lease obligations ( 332.0 ) ( 54.0 ) ( 44.0 )
Long-term portion of lease obligations $ 3,577.1 $ 2,048.7 $ 2,332.0
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Total payments made under our Triple Net Leases were as follows:
For the three months ended March 31,
(in millions) 2025 2024
AR PENN Master Lease $ 72.1 $ 71.0
2023 Master Lease 59.8 58.9
Pinnacle Master Lease 87.4 85.2
Margaritaville Lease 6.7 6.7
Greektown Lease 13.2 13.2
Morgantown Lease 0.8 0.8
Total $ 240.0 $ 235.8
Information related to lease term and discount rate was as follows:
March 31, 2025 December 31, 2024
Weighted-Average Remaining Lease Term
Operating leases 10.0 years 10.2 years
Finance leases 26.1 years 26.3 years
Financing obligations 26.3 years 26.6 years
Weighted-Average Discount Rate
Operating leases 7.7 % 7.7 %
Finance leases 5.2 % 5.2 %
Financing obligations 5.2 % 5.2 %
The components of lease expense were as follows:
Location on unaudited
Consolidated Statements of Operations For the three months ended March 31,
(in millions) 2025 2024
Operating Lease Costs
Rent expense associated with triple net operating leases General and administrative $ 155.9 $ 154.8
Operating lease cost (1)
Primarily General and administrative 4.1 5.3
Short-term lease cost Primarily Gaming expenses 23.8 22.8
Variable lease cost (1)
Primarily Gaming expenses 0.8 1.0
Total $ 184.6 $ 183.9
Finance Lease Costs
Interest on lease liabilities (2)
Interest expense, net $ 27.6 $ 27.5
Amortization of ROU assets (2)
Depreciation and amortization 22.7 21.9
Total $ 50.3 $ 49.4
Financing Obligation Costs
Interest on financing obligations (3)
Interest expense, net $ 37.2 $ 36.6
(1) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases.
(2) Pertains to finance lease components associated with the Pinnacle Master Lease (primarily land).
(3) Pertains to the components contained within the Pinnacle Master Lease (buildings) and the Morgantown Lease.
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Supplemental cash flow information related to leases was as follows:
For the three months ended March 31,
(in millions) 2025 2024
Non-cash lease activities:
Commencement of operating leases $ 11.6 $ 2.7
Commencement of finance leases $ 0.2 $ —
Note 7— Income Taxes
The Company calculates the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pre-tax book income or loss. The tax effects of discrete items are reported in the interim period in which they occur. The effective tax rate (income taxes as a percentage of income from operations before income taxes) including discrete items was 26.2 % for the three months ended March 31, 2025, as compared to 14.8 % for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2024, was lower than the statutory federal tax rate of 21% primarily due to non-deductible executive compensation and the decrease in our valuation allowance. The change in the effective tax rate for the three months ended March 31, 2025, as compared to the corresponding prior period, was primarily due to (i) excluding certain foreign losses for which no tax benefit can be recognized in our worldwide effective tax rate calculation, (ii) non-deductible permanent items offset against tax credit utilization, (iii) state taxes, and (iv) changes to the valuation allowance. We excluded certain foreign losses from our worldwide effective tax rate calculation due to a year-to-date ordinary loss for which no benefit may be recognized. Our effective tax rate can vary from period to period depending on, among other factors, the geographic and business mix of our earnings, and changes to our valuation allowance assessment. Certain of these and other factors, including our history and projections of pre-tax earnings, are considered in assessing our ability to realize our net deferred tax assets.
As of each reporting date, the Company considers all available positive and negative evidence that could affect its view of the future realization of deferred tax assets pursuant to ASC Topic 740, “Income Taxes.” As of March 31, 2025, we intend to continue maintaining a valuation allowance on our deferred tax assets not “more likely than not” to be realized until there is sufficient positive evidence to support the reversal of all or some portion of these allowances. A reduction in the valuation allowance could result in a significant decrease to income tax expense in the period the release is recorded. Although the exact timing and valuation reversal amount are estimated, the actual determination is contingent upon the earnings level we achieve in 2025 as well as our projected income levels in future periods.
As of March 31, 2025 and December 31, 2024, the Company had accrued income taxes of $ 23.8 million and prepaid income taxes of $ 31.9 million, respectively, which were included in “Accrued expenses and other current liabilities” and “Prepaid expenses” within our unaudited Consolidated Balance Sheets, respectively.
Note 8— Commitments and Contingencies
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. Although the Company maintains what it believes to be adequate insurance coverage to mitigate the risk of loss pertaining to covered matters, legal and administrative proceedings can be costly, time-consuming, and unpredictable. The Company does not believe that the final outcome of these matters will have a material adverse effect on its financial position, results of operations, or cash flows.
ESPN Sportsbook and Investment Agreements
On August 8, 2023, PENN entered into the Sportsbook Agreement (the “Sportsbook Agreement”) with ESPN which provides for a long-term strategic relationship between PENN and ESPN relating to online sports betting in the United States. Pursuant to the Sportsbook Agreement, PENN received the exclusive right to use the ESPN BET trademark for online sports betting in the United States.
The Sportsbook Agreement has an initial 10-year term and may be extended for an additional ten years upon mutual agreement of PENN and ESPN. In consideration for the media marketing services and brand and other rights provided by ESPN, PENN will pay $ 150.0 million per year in cash pursuant to the Sportsbook Agreement for the initial 10-year term and issue warrants pursuant to the Investment Agreement (as defined and described in more detail below). The Sportsbook Agreement may be terminated by either party if at the end of year three of the term ESPN BET has not achieved a specified level of market share based on gross gaming revenue in the states in which it operates while branded ESPN BET, and other terms pursuant to the agreement.
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In connection with the Sportsbook Agreement, PENN and ESPN, Inc. entered into an Investment Agreement (the “Investment Agreement”) on August 8, 2023. The Investment Agreement provides for the issuance to ESPN, Inc. of certain warrants to purchase shares of PENN common stock, par value $ 0.01 per share, and setting forth certain other governance rights of ESPN, Inc. Pursuant to the Investment Agreement PENN issued to ESPN, Inc. warrants to purchase approximately 31.8 million shares of PENN common stock. The warrants are classified as equity and contain three separate tranches which vest quarterly over ten years from the date of the Investment Agreement, provided that any remaining unvested portion of the first tranche of warrants will vest on August 8, 2032.
If the Sportsbook Agreement is terminated by ESPN due to a material breach of the Sportsbook Agreement by PENN, then all unvested warrants will immediately vest. 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 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 ESPN BET operates (as defined within the Investment Agreement), PENN could issue to ESPN, Inc. warrants to purchase up to an additional 6.4 million shares of PENN common stock. 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 three months ended March 31, 2025 and 2024 , the Company recognized $ 37.5 million and $ 50.0 million of expense , respectively, related to the Sportsbook Agreement, and $ 14.2 million and $ 18.7 million , respectively, related to the Investment Agreement. Expenses related to the Sportsbook Agreement and the Investment Agreement are recorded within “Gaming” expenses on the unaudited Consolidated Statements of Operations and recognized in accordance with our policies. See Note 2, “Significant Accounting Policies and Basis of Presentation” for further information.
Note 9— Stockholders’ Equity and Stock-Based Compensation
Common and Preferred Stock
In connection with the acquisition of Score Media and Gaming, Inc. (“theScore”) in October 2021, the Company issued 12,319,340 shares of common stock with a par value of $ 0.01 , and 697,539 exchangeable shares, par value $ 0.01 (“Exchangeable Shares”) through the capital of an indirect wholly-owned subsidiary of PENN, 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 three months ended March 31, 2025, we did not issue any Exchangeable Shares, as compared to 68,048 Exchangeable Shares issued during the three months ended March 31, 2024. As of both March 31, 2025 and December 31, 2024, there were 768,441 Exchangeable Shares authorized, of which 380,478 shares and 466,534 shares were outstanding, respectively.
Share Repurchase Authorization
On December 6, 2022, the Board of Directors approved a share repurchase authorization for $ 750.0 million (the “December 2022 Authorization”), which expires on December 31, 2025.
Repurchases by the Company are subject to available liquidity, general market and economic conditions, alternate uses for the capital, and other factors. Share repurchases may be made from time to time through a Rule 10b5-1 trading plan, open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other legal requirements. 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 three months ended March 31, 2025, the Company repurchased 1,413,882 shares of its common stock in open market transactions for $ 25.0 million at an average price of $ 17.67 per share. No shares of the Company’s common stock were repurchased during the three months ended March 31, 2024.
The cost of all repurchased shares is recorded as “Treasury stock” within our unaudited Consolidated Balance Sheets.
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Subsequent to the quarter ended March 31, 2025, the Company repurchased 665,972 shares of its common stock at an average price of $ 15.03 per share for an aggregate amount of $ 10.0 million. As of May 9, 2025, the remaining availability under our December 2022 Authorization was $ 714.2 million.
2022 Long Term Incentive Compensation Plan
On June 7, 2022, the Company’s shareholders, upon the recommendation of the Company’s Board of Directors, approved the Company’s 2022 Long Term Incentive Compensation Plan (the “2022 Plan”). The 2022 Plan authorizes the Company to issue stock options (incentive and/or non-qualified), stock appreciation rights (“SARs”), restricted stock (shares and/or units), performance awards (shares and/or units), and cash awards to executive officers, non-employee directors, other employees, consultants, and advisors of the Company and its subsidiaries. Non-employee directors and consultants are eligible to receive all such awards, other than incentive stock options. Pursuant to the 2022 Plan, an initial 6,870,000 shares of the Company’s common stock were reserved for issuance, plus any shares of common stock subject to outstanding awards under both the previous 2018 Long Term Incentive Compensation Plan, as amended (“2018 Plan”) and Score Media and Gaming Inc. 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.
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. For purposes of determining the number of shares available for issuance under the 2022 Amended Plan, stock options, restricted stock and all other equity settled awards count against the 13,870,000 share limit as one share of common stock for each share granted. Any awards that are not settled in shares of common stock are not counted against the share limit. As of March 31, 2025, there are 2,799,358 shares available for future grants under the 2022 Amended Plan.
Performance Share Program
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.
The Company did not grant restricted units with performance-based vesting conditions during the three months ended March 31, 2025 and 2024. In April 2025, the Company granted 1,254,323 restricted units with performance-based vesting conditions, at target, under the 2022 Plan. The restricted performance units granted in 2025 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.
Stock-based Compensation Expense
Stock-based compensation expense pertains to our stock options and restricted stock, including restricted stock with performance conditions. The Company recognized stock-based compensation expense of $ 15.6 million and $ 11.9 million for the three months ended March 31, 2025 and 2024, respectively, which is included in “General and administrative” expense within the unaudited Consolidated Statements of Operations.
Note 10—Earnings (L oss) per Share
For the three months ended March 31, 2025, 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, and convertible debt that could potentially dilute basic EPS in the future are included in the computation of diluted income per share.
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For the three months ended March 31, 2024, we recorded a net loss attributable to PENN. As such, because the dilution from potential common shares was anti-dilutive, 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, 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 three months ended March 31,
(in millions) 2024
Assumed conversion of dilutive stock options 0.2
Assumed conversion of dilutive restricted stock 0.2
Assumed conversion of convertible debt 14.1
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 three months ended March 31, 2025 and 2024:
For the three months ended March 31,
(in millions) 2025 2024
Weighted-average common shares outstanding 152.3 151.9
Assumed conversion of:
Dilutive stock options 0.1 —
Dilutive restricted stock 0.5 —
Convertible debt 14.1 —
Weighted-average common shares outstanding - Diluted 167.0 151.9
Restricted stock with performance and market based vesting conditions that have not been met as of March 31, 2025 were excluded from the computation of diluted EPS.
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 8, “Commitments and Contingencies.”
Anti-dilutive options and warrants to purchase 35.6 million and 34.6 million shares were outstanding during the three months ended March 31, 2025 and 2024, respectively.
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The Company’s calculation of weighted-average common shares outstanding includes the Exchangeable Shares issued in connection with theScore acquisition, as discussed in Note 9, “Stockholders’ Equity and Stock-Based Compensation.” The following table presents the calculation of basic and diluted earnings (loss) per share for the Company’s common stock for the three months ended March 31, 2025 and 2024:
For the three months ended March 31,
(in millions, except per share data) 2025 2024
Calculation of basic earnings (loss) per share:
Net income (loss) applicable to common stock
$ 111.8 $ ( 114.7 )
Weighted-average shares outstanding — PENN Entertainment, Inc. 151.9 151.4
Weighted-average shares outstanding — Exchangeable Shares
0.4 0.5
Weighted-average common shares outstanding — basic
152.3 151.9
Basic earnings (loss) per share
$ 0.73 $ ( 0.76 )
Calculation of diluted earnings (loss) per share:
Net income (loss) applicable to common stock
$ 111.8 $ ( 114.7 )
Interest expense, net of tax (1) :
Convertible Notes 1.8 —
Diluted income (loss) applicable to common stock
$ 113.6 $ ( 114.7 )
Weighted-average common shares outstanding — diluted
167.0 151.9
Diluted earnings (loss) per share
$ 0.68 $ ( 0.76 )
(1) The tax-affected rate was 21 % for the three months ended March 31, 2025.
Note 11— Fair Value Measurements
ASC Topic 820, “Fair Value Measurements and Disclosures,” establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach, and cost approach). The levels of the hierarchy are described below:
• Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets, such as interest rates and yield curves that are observable at commonly quoted intervals.
• Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions, as there is little, if any, related market activity.
The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy. 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 payable approximates the carrying amounts.
Long-Term Debt
The fair value of o ur Amended Credit Facilities, 5.625 % Notes, 4.125 % Notes, and the Convertible Notes is estimated based on quoted prices in active markets. Due to their trading frequency, these long-term debt instruments are classified as Level 2 measurements.
Other long-term obligations as of March 31, 2025 and December 31, 2024 included a financing arrangement entered in February of 2021 (as discussed below) as well as the repayment obligation of the hotel and event center located near Hollywood Casino Lawrenceburg. The fair value of the Lawrenceburg repayment obligation is estimated based on rates consistent with the Company’s credit rating for comparable terms and debt instruments and is classified as a Level 2 measurement.
Additionally, in February 2021, we entered into a third-party financing arrangement providing the Company with upfront and non-refundable cash proceeds while permitting us to participate in future proceeds on certain claims. As discussed in Note 5, “Long-Term Debt , ” the Company determined that obligations under these claims are no longer probable and therefore
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recognized a non-cash gain related to this obligation. Prior to March 31, 2025, the financing obligation had been classified as a non-current liability and the fair value of the financing obligation was based on what we expected to be settled in a future period of which the principal was contingent and predicated on other events, plus accreted period non-cash interest using an effective interest rate of 27.0 %. The financing obligation was classified as a Level 3 measurement and as of December 31, 2024 was included within our unaudited Consolidated Balance Sheets in “Long-term debt, net of current maturities, debt discounts, and debt issuance costs.”
Other Liabilities
As of March 31, 2025 and December 31, 2024, other liabilities included a contingent purchase price liability related to Plainridge Park Casino, calculated based on earnings of the gaming operations over the first ten years of operations, which commenced on June 24, 2015. As of March 31, 2025, we were contractually obligated to make one additional annual payment. The fair value of this liability was estimated based on an income approach using a discounted cash flow model. This contingent purchase price liability is classified as a Level 3 measurement and is included within our unaudited Consolidated Balance Sheets in “Accrued expenses and other current liabilities.”
Additionally, as of both periods ended March 31, 2025 and December 31, 2024, other liabilities include a $ 39.5 million tax indemnification, as described in Note 2, “Significant Accounting Policies and Basis of Presentation.” Liabilities associated with the indemnification are recorded in “Other long-term liabilities” within our unaudited 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 March 31, 2025 and December 31, 2024. The assessment of the significance of a particular input to the fair value measurement requires judgment.
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The carrying amounts and estimated fair values by input level of the Company’s financial instruments were as follows:
March 31, 2025
(in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 591.6 $ 591.6 $ 591.6 $ — $ —
Equity securities $ 11.4 $ 11.4 $ 11.4 $ — $ —
Available-for-sale debt securities $ 31.5 $ 31.5 $ — $ — $ 31.5
Held-to-maturity securities $ 6.7 $ 6.7 $ — $ 6.7 $ —
Promissory notes $ 7.9 $ 7.9 $ — $ 7.9 $ —
Financial liabilities:
Long-term debt
Amended Credit Facilities $ 1,489.2 $ 1,500.9 $ — $ 1,500.9 $ —
5.625 % Notes
$ 399.9 $ 392.0 $ — $ 392.0 $ —
4.125 % Notes
$ 395.7 $ 357.0 $ — $ 357.0 $ —
Convertible Notes $ 328.3 $ 340.4 $ — $ 340.4 $ —
Other long-term obligations $ 8.6 $ 7.6 $ — $ 7.6 $ —
Other liabilities $ 44.6 $ 44.6 $ — $ 2.7 $ 41.9
December 31, 2024
(in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 706.6 $ 706.6 $ 706.6 $ — $ —
Equity securities $ 10.6 $ 10.6 $ 10.6 $ — $ —
Available-for-sale debt securities $ 31.5 $ 31.5 $ — $ — $ 31.5
Held-to-maturity securities $ 6.7 $ 6.7 $ — $ 6.7 $ —
Promissory notes $ 7.9 $ 7.9 $ — $ 7.9 $ —
Financial liabilities:
Long-term debt
Amended Credit Facilities $ 1,437.0 $ 1,453.9 $ — $ 1,453.9 $ —
5.625 % Notes
$ 399.8 $ 393.0 $ — $ 393.0 $ —
4.125 % Notes
$ 395.5 $ 356.0 $ — $ 356.0 $ —
Convertible Notes $ 327.9 $ 355.7 $ — $ 355.7 $ —
Other long-term obligations $ 210.5 $ 209.3 $ — $ 8.1 $ 201.2
Other liabilities $ 44.6 $ 44.6 $ — $ 2.7 $ 41.9
The following table summarizes the changes in fair value of our Level 3 assets and liabilities measured on a recurring basis:
(in millions) Other Assets and Liabilities
Balance as of January 1, 2025 $ 274.6
Interest 13.9
Included in income and other comprehensive income (1)
( 215.1 )
Balance as of March 31, 2025
$ 73.4
(1) Relates to the $ 215.1 million non-cash gain on financing arrangement. See Note 5, “Long-Term Debt.”
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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 March 31, 2025:
Valuation Technique Unobservable Input Discount Rate
Available-for-sale debt securities Discounted cash flow Discount rate 35.0 %
Contingent purchase price - Plainridge Park Casino Discounted cash flow Discount rate 6.8 %
Note 12— Segment Information
We have five reportable segments: Northeast, South, West, Midwest, and Interactive. Our gaming and racing properties are grouped by geographic location, and each is viewed as an operating segment with the exception of our two properties in Jackpot, Nevada, which are viewed as one operating segment. We consider our combined VGT operations, by state, to be separate operating segments.
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, and media operations. 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.
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 expenses, which consist of certain expenses, such as: payroll, professional fees, travel expenses, and other general and administrative expenses that 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; and
• to determine various capital allocation initiatives such as mergers and acquisitions, share repurchases, and delevering.
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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 three months ended March 31, 2025
(in millions) Northeast South West Midwest Interactive (1)
Other
Intersegment Eliminations (2)
Total
Total revenues
$ 680.9 $ 288.3 $ 129.7 $ 282.9 $ 290.1 $ 5.3 $ ( 4.7 ) $ 1,672.5
Less:
Gaming taxes ( 279.5 ) ( 63.4 ) ( 23.7 ) ( 74.7 ) ( 168.6 )
Compensation and benefits ( 103.5 ) ( 56.8 ) ( 31.3 ) ( 44.1 ) ( 36.7 )
Media and advertising (3)
( 88.5 )
Other segment items (4)
( 103.7 ) ( 64.8 ) ( 29.0 ) ( 50.3 ) ( 85.3 )
Reportable Segment Adjusted EBITDAR (5)
$ 194.2 $ 103.3 $ 45.7 $ 113.8 $ ( 89.0 ) $ 368.0
Other operating benefits (costs) and other income (expenses):
Other category (6)
( 38.8 )
Rent expense associated with triple net operating leases (7)
( 155.9 )
Stock-based compensation ( 15.6 )
Cash-settled stock-based awards variance 3.2
Loss on disposal of assets ( 0.2 )
Pre-opening expenses ( 0.5 )
Depreciation and amortization ( 108.0 )
Non-operating items of equity method investments (8)
( 1.1 )
Interest expense, net ( 110.8 )
Interest income 3.2
Gain on financing arrangement (9)
215.1
Other (10)
0.6
Income before income taxes
159.2
Income tax expense
( 47.7 )
Net income $ 111.5
(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 $ 128.2 million for the three months ended March 31, 2025.
(2) Primarily represents the elimination of intersegment revenues associated with our retail sportsbooks, which are operated by PENN Interactive.
(3) Includes advertising expenses of $ 37.5 million related to the Sportsbook Agreement and $ 14.2 million related to the Investment Agreement with ESPN. Also, includes advertising and media expenses (including such expenses associated with theScore) across various platforms, including television, radio, out-of-home, 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:
a. 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.
b. 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, allocated corporate expenses, and third-party revenue share fees.
c. 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.
d. 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.
e. 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.
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(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, 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 our Kansas Entertainment joint venture.
(6) Primarily represents corporate overhead expenses of $ 36.0 million for the three months ended March 31, 2025, which is inclusive of $ 7.7 million of legal and advisory costs related to our response to a purported proxy campaign in connection with our 2025 annual meeting of shareholders.
(7) Pertains to the following operating leases: (i) AR PENN Master Lease; (ii) 2023 Master Lease; (iii) Margaritaville Lease; and (iv) Greektown Lease.
(8) Consists primarily of depreciation expense associated with our Kansas Entertainment joint venture.
(9) Relates to the $ 215.1 million non-cash gain on financing arrangement. See Note 5, “Long-Term Debt.”
(10) Primarily relates to unrealized holding gains on our equity securities of $ 0.8 million for the three months ended March 31, 2025.
For the three months ended March 31, 2024
(in millions) Northeast South West Midwest Interactive (1)
Other
Intersegment Eliminations (2)
Total
Total revenues
$ 684.7 $ 298.5 $ 128.8 $ 291.2 $ 207.7 $ 6.0 $ ( 10.0 ) $ 1,606.9
Less:
Gaming taxes ( 274.9 ) ( 66.1 ) ( 24.0 ) ( 77.4 ) ( 149.6 )
Compensation and benefits ( 104.2 ) ( 56.4 ) ( 29.7 ) ( 43.0 ) ( 52.3 )
Media and advertising (3)
( 122.8 )
Other segment items (4)
( 103.0 ) ( 62.5 ) ( 29.2 ) ( 53.8 ) ( 79.0 )
Reportable Segment Adjusted EBITDAR (5)
$ 202.6 $ 113.5 $ 45.9 $ 117.0 $ ( 196.0 ) $ 283.0
Other operating benefits (costs) and other income (expenses):
Other category (6)
( 26.8 )
Rent expense associated with triple net operating leases (7)
( 154.8 )
Stock-based compensation ( 11.9 )
Cash-settled stock award variance 8.0
Gain on disposal of assets 0.2
Depreciation and amortization ( 108.7 )
Non-operating items of equity method investments (8)
( 1.1 )
Interest expense, net ( 119.1 )
Interest income 7.1
Other (9)
( 3.4 )
Loss before income taxes ( 127.5 )
Income tax benefit 12.6
Net loss $ ( 114.9 )
(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 $ 116.6 million for the three months ended March 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 $ 50.0 million related to the Sportsbook Agreement and $ 18.7 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, out-of-home, 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:
a. 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.
b. 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, allocated corporate expenses, and third-party revenue share fees.
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c. 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.
d. 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.
e. Interactive segment - 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.
(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, 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 our Kansas Entertainment joint venture.
(6) Primarily represents corporate overhead expenses of $ 24.9 million for the three months ended March 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) Consists primarily of depreciation expense associated with our Kansas Entertainment joint venture.
(9) Primarily relates to unrealized holding losses on our equity securities of $ 1.5 million for the three months ended March 31, 2024.
The table below presents capital expenditures by segment:
For the three months ended March 31,
(in millions) 2025 2024
Capital expenditures:
Northeast segment $ 13.5 $ 5.6
South segment 13.7 11.8
West segment 40.5 1.5
Midwest segment 51.7 19.2
Interactive segment 3.6 0.7
Other 2.2 2.6
Total capital expenditures $ 125.2 $ 41.4
The table below presents investment in and advances to unconsolidated affiliates and total assets by segment:
(in millions) Northeast South West Midwest Interactive Other (1)
Total
Balance sheet as of March 31, 2025
Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 81.1 $ — $ 7.8 $ 89.0
Total assets $ 1,787.2 $ 1,304.5 $ 495.7 $ 1,547.4 $ 2,335.0 $ 7,620.2 $ 15,090.0
Balance sheet as of December 31, 2024
Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 80.9 $ — $ 5.2 $ 86.2
Total assets $ 1,808.1 $ 1,301.7 $ 453.2 $ 1,503.7 $ 2,385.6 $ 7,809.4 $ 15,261.7
(1) The real estate assets subject to the Master Leases, which are classified as either property and equipment, net, operating lease ROU assets, or finance lease ROU assets, are included within the Other category.
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