PENN Entertainment, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, the unaudited Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2024. EXECUTIVE OVERVIEW Our Business 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™, and 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™ 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” in the notes to our unaudited Consolidated Financial Statements and collectively referred to as the “Master Leases”). Recent Development Projects On October 10, 2022, the Company announced its intent to pursue four new development projects, including the land-based relocations of Hollywood Casino Joliet (“Joliet”) and Hollywood Casino Aurora (“Aurora”), a second hotel tower at M Resort Spa Casino (“M Resort”), and a new hotel at Hollywood Casino Columbus (“Columbus”). Subsequently, on February 21, 2023, as described in Note 6, “Leases” in the notes to our unaudited Consolidated Financial Statements, the Company and GLPI entered into a master development agreement (the “Master Development Agreement”) related to these development projects. The Master Development Agreement provides that GLPI will fund (i) up to $225.0 million for the anticipated relocation of our riverboat casino and related developments with respect to Aurora (the “Aurora Project”); and (ii) upon our request, up to $130.0 million for the anticipated relocation of our riverboat casino and related developments with respect to Joliet (the “Joliet Project”), up to $150.0 million for the anticipated second hotel tower at M Resort (the “M Resort Project”), up to $70.0 million for the anticipated new hotel tower at Columbus (the “Columbus Project” and together with Joliet Project and M Resort Project, the “Other Development Projects,” and together with the Aurora Project, referred to as the “PENN Development Projects”), all within accordance with certain terms and conditions set forth in the Master Development Agreement. GLPI has committed up to $225.0 million in funding for the Aurora Project at a 7.75% cap rate, which we are required to draw and the funding will be structured as rent under the 2023 Master Lease (as described in Note 6, “Leases” in the notes to our unaudited Consolidated Financial Statements). Rent within the 2023 Master Lease will increase by a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for the Other Development Projects. These funding obligations of GLPI expire on January 1, 2026. The PENN Development Projects are all subject to necessary regulatory and other government approvals. As of August 6, 2025, the Company has requested and received the full $130.0 million in funding from GLPI for the Joliet Project expected to open on August 11, 2025. We have neither requested nor received any funding from GLPI for the Aurora Project, M Resort Project, or Columbus Project. 36 Table of Contents The Joliet Project to relocate its riverboat casino operations to a new, state-of-the-art land-based facility is expected to open on August 11, 2025. The best-in-class property will feature approximately 1,000 slots and 43 live table games, including high-limit slots and table games, a baccarat room, and an ESPN BET sportsbook. Its unique bars and restaurants include Sorellina by Giada De Laurentiis and Boulevard Food & Drink Hall. Additional features of the new property include an approximately 10,000 square foot, all-ages event center with meeting areas, and approximately 1,330 parking spaces. The Aurora Project to relocate its riverboat casino operations to a new, state-of-the-art land-based facility is expected to open in the first half of 2026. The land-based casino will feature roughly 1,200 gaming positions, approximately 220 guest rooms, a retail sportsbook, outdoor entertainment area, full-service spa, high-quality bars and restaurants, an approximately 12,000 square foot event center with meeting areas, and approximately 1,700 parking spaces. The Aurora Project included the transfer of certain parcels of land from the City of Aurora, and up to $50.0 million of the project will be funded by the city through a new bond issuance. As of August 6, 2025, the Company has received $13.8 million from the City of Aurora for the Aurora Project. The second hotel tower at M Resort is expected to open in the first half of 2026. The M Resort Project is expected to add 384 rooms to the Company’s property south of the Las Vegas Strip, bringing its total to 774 rooms and suites. Along with the rooms, there will be expanded meetings space, updated amenities, and additional local partnerships. The new, state-of-the-art hotel at Columbus is expected to open in the first half of 2026. The hotel is expected to include 180 rooms, meeting space, an additional restaurant, and local partnerships and amenities. On April 24, 2025, the Company announced a development project to relocate its Ameristar Council Bluffs (“ACB”) riverboat casino operations to a new, state-of-the-art land-based property to be rebranded as Hollywood Casino Council Bluffs (“HCCB”). Under the proposed plan, the new HCCB is expected to include roughly 125,000 square feet of new development with approximately 58,000 square feet of gaming space and more than 1,000 positions on a single level. The new facility will complement the existing ESPN BET sportsbook, 160-room hotel, and dining options in the landside portion of the current infrastructure. The project is anticipated to cost between $180.0 million and $200.0 million and is expected to take 18-24 months to complete following the design and permitting approval process. GLPI has committed to finance up to $150.0 million at a 7.1% cap rate, which may be structured at PENN’s option as either rent or a 5-year term loan that is prepayable at any time without penalty. Strategic Overview We believe that our portfolio of assets provides us with the benefit of geographically-diversified cash flow from operations. We expect to continue to expand our gaming operations through the implementation and execution of a disciplined capital expenditure program at our existing properties, the pursuit of strategic acquisitions and investments, and the development of new gaming properties. Our ownership of theScore’s proprietary technology and our partnership with ESPN reflect our strategy to continue evolving from the nation’s largest regional gaming operator to a best-in-class omni-channel provider of retail gaming, iCasino, and sports betting entertainment. Operating and Competitive Environment Most of our properties operate in mature, competitive markets. We expect the majority of our future growth to come from our online sports betting and iCasino businesses; improvements, expansions, or relocations of our existing properties; entrance into new jurisdictions; expansions of gaming in existing jurisdictions; strategic investments and acquisitions; and cross-sell opportunities between our retail gaming, online sports betting, and iCasino businesses. Our portfolio is comprised largely of well-maintained regional gaming facilities, which has allowed us to develop what we believe to be a solid base for future growth opportunities. We continuously adjust operations, offerings, and cost structures to reflect changing economic conditions, as well as consumer demand and behaviors. We also continue to focus on revenue and cost synergies from recent acquisitions, technology enhancements, and providing customers with additional gaming and entertainment experiences through our differentiated omni-channel strategy. We seek to grow our customer database and PENN Play loyalty program through our online sports betting and iCasino businesses, the development of new properties, the expansion of existing properties and other business lines, and through partnerships with third-party partners, such as Shake Shack Inc., The Kroger Company, Ticketmaster Entertainment, LLC, Norwegian Cruise Line Holdings Ltd., Live Nation Entertainment, Inc., and Choice Hotels International, Inc. In addition, our strategic acquisitions (e.g. theScore) and strategic relationships (e.g. our partnership with ESPN), should enable us to acquire new customers, expand our player database, and provide additional revenue streams that enhance our omnichannel strategy. 37 Table of Contents The gaming, media, and entertainment industries are characterized by an increasingly high degree of competition among a large number of participants. We compete with a variety of gaming operations, including casinos and hotel casinos of varying quality and size and other gaming options such as state and province-sponsored internet lotteries, sweepstakes, charitable gaming, video gaming terminals at bars, restaurants, taverns and truck stops, illegal slot machines and skill games, fantasy sports and third-party internet or mobile-based gaming platforms, including both legal and illegal iCasino and sports betting operations. See the “Segment comparison of the three and six months ended June 30, 2025 and 2024” section below for discussions on our results of operations by reportable segment. Key Performance Indicators In our business, revenue is driven by discretionary consumer spending. We have no certain mechanism for determining why consumers choose to spend more or less money at our properties or on our online offerings from period-to-period; therefore, we are unable to quantify a dollar amount for each factor that impacts our customers’ spending behaviors. However, based on our experience, we can generally offer some insight into the factors that we believe are likely to account for such changes and which factors may have a greater impact than others. For example, decreases in discretionary consumer spending have historically been brought about by actual or perceived weakened general economic conditions, such as recessions, inflation, rising interest rate environments, tight credit conditions, high unemployment levels, higher income taxes, low levels of consumer confidence, weakness in the housing market, high fuel or other transportation costs, global hostilities, political or social unrest, and the effects of pandemics. In addition, visitation and the volume of play have historically been negatively impacted by significant construction surrounding our properties, adverse regional weather conditions, and natural disasters. In all instances, such insights are based solely on our judgment and professional experience, and no assurance can be given as to the accuracy of our judgments. The majority of our revenues is gaming revenue, which is highly dependent upon the volume and spending levels of customers at our properties. Our gaming revenue is derived primarily from slot machines (which represented approximately 86% and 85% of our gaming revenue for each of the six months ended June 30, 2025 and 2024) and, to a lesser extent, table games, online sports betting, and iCasino. Aside from gaming revenue, our revenues are primarily derived from our hotel, dining, retail, commissions, program sales, admissions, concessions and certain other ancillary activities, and our racing operations. Key performance indicators related to gaming revenue are slot handle and table game drop, which are volume indicators, and “win” or “hold” percentage. Our typical property slot win percentage is in the range of approximately 5% to 11% of slot handle, and our typical table game hold percentage is in the range of approximately 12% to 29% of table game drop. Slot handle is the gross amount wagered during a given period. The win or hold percentage is the net amount of gaming wins and losses, with liabilities recognized for accruals related to the anticipated payout of progressive jackpots. Given the stability in our slot hold percentages on a historical basis, we have not experienced significant impacts to net income from changes in these percentages. For table games, customers usually purchase chips at the tables. The cash and markers (extensions of credit granted to certain credit-worthy customers) are deposited in the gaming table’s drop box. Table game hold is the amount of drop that is retained and recorded as gaming revenue, with liabilities recognized for funds deposited by customers before gaming play occurs and for unredeemed gaming chips. As we are primarily focused on regional gaming markets, our table game hold percentages are fairly stable as the majority of these markets do not regularly experience high-value play, which can lead to volatility in hold percentages. Therefore, changes in table game hold percentages do not typically have a material impact to our results of operations and cash flows. Key performance indicators related to online gaming revenue, including online sports betting and iCasino, are handle, which is a volume indicator, and “win” or “hold” percentage. Our online sports betting win percentage is in the range of approximately 4.6% to 9.2% of online handle, online slot win percentage is in the range of approximately 4.5% to 4.9% of online slot handle, and our online table game hold percentage is in the range of approximately 1.6% to 2.2% of online table game handle. For online gaming, customers deposit cash into their online accounts for use in online sports betting and iCasino play. Liabilities are recognized for online player account funds that have not been withdrawn and for wagers that have been placed on events that have not yet occurred. Online sportsbook handle is the gross amount wagered during a given period. The win or hold percentage is the net amount of gaming wins and losses, with liabilities recognized for any bonus funds deposited into player accounts. Given that online sports betting wagers are made based on the outcomes of future sporting events, the win or hold percentage can vary based on the bet type (i.e. straight wagers vs. parlay wagers). Online slot handle is the gross amount wagered during a given period. The win or hold percentage is the net amount of gaming wins and losses, with liabilities recognized for accruals related to the anticipated payout of online progressive jackpots. Online table game hold is the amount of handle that is retained and recorded as gaming revenue. Given the stability in our online slot and online table game hold 38 Table of Contents percentages on a historical basis, we have not experienced significant impacts to the results of our operations or cash flows from changes in these percentages. Under normal operating conditions, our properties generate significant operating cash flow since most of our revenue is cash-based from slot machines and table games. Our business is capital intensive and we rely on cash flow from our properties to generate sufficient cash to satisfy our obligations under the Triple Net Leases (as defined in “Liquidity and Capital Resources” ), repay debt, fund maintenance capital expenditures, repurchase our common stock, fund new capital projects at existing properties, and provide excess cash for future development and acquisitions. Additional information regarding our capital projects is discussed in “Liquidity and Capital Resources” below. Reportable Segments We have five reportable segments: Northeast, South, West, Midwest, and Interactive. The Northeast, South, West, and Midwest segments (referred to as our “retail segments”) primarily generate revenue from gaming operations (such as slot machines and table games), food and beverage offerings, and hotel visitation. The Interactive segment includes all of our online sports betting, online casino/iCasino, and social gaming (collectively referred to as “online gaming”) operations, management of retail sports betting, and media operations. Our gaming and racing properties are grouped by geographic location, and each is viewed as an operating segment with the exception of our two properties in Jackpot, Nevada, which are viewed as one operating segment. We consider our combined Video Gaming Terminal (“VGT”) operations, by state, to be separate operating segments. For a listing of our gaming properties and VGT operations included in each reportable segment, see Note 2, “Significant Accounting Policies and Basis of Presentation ” in the notes to our unaudited Consolidated Financial Statements. 39 Table of Contents RESULTS OF OPERATIONS The following table highlights our revenues, net income (loss), and Adjusted EBITDA, on a consolidated basis, as well as our revenues and Adjusted EBITDAR by reportable segment. Such segment reporting is consistent with how we measure our business and allocate resources internally. We consider net income (loss) to be the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) to Adjusted EBITDA and Adjusted EBITDAR, which are non-GAAP financial measures. Refer to “Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA and Adjusted EBITDAR; as well as a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDAR. For the three months ended June 30, For the six months ended June 30, (dollars in millions) 2025 2024 2025 2024 Revenues: Northeast segment $ 711.6 $ 696.3 $ 1,392.5 $ 1,381.0 South segment 302.2 298.2 590.5 596.7 West segment 137.7 135.3 267.4 264.1 Midwest segment 297.0 298.1 579.9 589.3 Interactive segment 316.1 232.6 606.2 440.3 Other (1) 5.7 5.9 11.0 11.9 Intersegment eliminations (2) (5.3) (3.4) (10.0) (13.4) Total $ 1,765.0 $ 1,663.0 $ 3,437.5 $ 3,269.9 Net income (loss) $ (18.3) $ (27.1) $ 93.2 $ (142.0) Segment Adjusted EBITDAR (3) : Northeast segment $ 209.5 $ 204.7 $ 403.7 $ 407.3 South segment 104.8 111.4 208.1 224.9 West segment 53.5 50.6 99.2 96.5 Midwest segment 121.8 129.9 235.6 246.9 Interactive segment (62.0) (102.8) (151.0) (298.8) Other (1) (35.5) (26.8) (74.3) (53.6) Total Adjusted EBITDAR (4) 392.1 367.0 721.3 623.2 Rent expense associated with triple net operating leases (5) (156.0) (154.9) (311.9) (309.7) Adjusted EBITDA $ 236.1 $ 212.1 $ 409.4 $ 313.5 (1) The Other category, included in the tables to reconcile the segment information to the consolidated information, consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Park, the Company’s joint venture interest in Freehold Raceway (which ceased operations on December 28, 2024), and our management contract for Retama Park Racetrack. Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property. The Other category also includes corporate overhead, which consists of certain expenses, such as: payroll, professional fees, travel expenses, and other general and administrative expenses that do not directly relate to or have not otherwise been allocated. Corporate overhead was $38.7 million and $24.5 million for the three months ended June 30, 2025 and 2024, respectively, and $74.7 million and $49.4 million for the six months ended June 30, 2025 and 2024, respectively. Corporate overhead for the three and six months ended June 30, 2025 include $9.4 million and $17.1 million, respectively, of legal and advisory costs related to activist activity in connection with our 2025 annual meeting of shareholders. (2) Primarily represents the elimination of intersegment revenues associated with our retail sportsbooks, which are operated by PENN Interactive. (3) See definition of “Segment Adjusted EBITDAR” within the “Reportable Segment Measures” section below. (4) The total is a mathematical calculation derived from the sum of reportable segments (as well as the Other category). As noted within the “Non-GAAP Financial Measures” section below, Adjusted EBITDAR is presented on a consolidated basis outside the financial statements solely as a valuation metric. (5) Pertains to the following operating leases: (i) AR PENN Master Lease; (ii) 2023 Master Lease; (iii) Margaritaville Lease; and (iv) Greektown Lease. 40 Table of Contents Consolidated comparison of the three and six months ended June 30, 2025 and 2024 Revenues The following table presents our consolidated revenues: For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Revenues Gaming $ 1,367.7 $ 1,332.3 $ 35.4 2.7 % $ 2,666.0 $ 2,590.6 $ 75.4 2.9 % Food, beverage, hotel, and other 397.3 330.7 66.6 20.1 % 771.5 679.3 92.2 13.6 % Total revenues $ 1,765.0 $ 1,663.0 $ 102.0 6.1 % $ 3,437.5 $ 3,269.9 $ 167.6 5.1 % Gaming revenues for the three and six months ended June 30, 2025 increased by $35.4 million and $75.4 million, respectively, compared to the corresponding prior year periods, primarily due to an increase in online gaming revenues at our Interactive segment. The increase in online gaming revenues within our Interactive segment was due to iCasino and online sports betting growth driven by ongoing product enhancements and decreased promotional expense related to ESPN BET. At our retail properties, increases in gaming revenues at our Northeast and West segments were offset by decreases in gaming revenues within our South and Midwest segments as new supply continues to impact visitation. Food, beverage, hotel, and other revenues for the three and six months ended June 30, 2025 increased by $66.6 million and $92.2 million, respectively, compared to the corresponding prior year periods. For the three and six months ended June 30, 2025, the increase was primarily due to gaming tax reimbursement amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access of $55.8 million and $67.4 million, respectively, compared to the prior year periods. See “Segment comparison of the three and six months ended June 30, 2025 and 2024” below for more detailed explanations of the fluctuations in revenues. Operating expenses The following table presents our consolidated operating expenses: For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Operating expenses Gaming $ 869.7 $ 871.1 $ (1.4) (0.2) % $ 1,723.5 $ 1,750.6 $ (27.1) (1.5) % Food, beverage, hotel, and other 282.0 219.6 62.4 28.4 % 546.9 470.8 76.1 16.2 % General and administrative 410.3 388.7 21.6 5.6 % 813.3 777.6 35.7 4.6 % Depreciation and amortization 110.5 109.1 1.4 1.3 % 218.5 217.8 0.7 0.3 % Impairment loss 15.0 — 15.0 N/M 15.0 — 15.0 N/M Total operating expenses $ 1,687.5 $ 1,588.5 $ 99.0 6.2 % $ 3,317.2 $ 3,216.8 $ 100.4 3.1 % N/M - Not meaningful Gaming expenses primarily consist of gaming taxes, payroll, marketing and promotional, and other expenses associated with our gaming operations. Gaming expenses for the three and six months ended June 30, 2025 decreased by $1.4 million and $27.1 million, respectively, compared to the corresponding prior year periods. We generated additional marketing expenses to support our initial launch of ESPN BET within our Interactive segment during the corresponding prior year periods. For the three and six months ended June 30, 2025, the decrease was partially offset by an increase in gaming taxes due to increased online gaming revenue at our Interactive segment as discussed above. Additionally, in the current year periods, gaming expenses increased at our retail properties within our Northeast and West segments due to an increase in gaming revenues. Food, beverage, hotel, and other expenses consist primarily of payroll expenses, costs of goods sold, and other costs associated with our food, beverage, hotel, retail, racing, and Interactive operations. Fo od, beverage, hotel, and other expenses for the three and six months ended June 30, 2025 increased $62.4 million and $76.1 million, respectively, compared to the corresponding prior year periods, primarily due to increases in gaming tax reimbursement amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access. 41 Table of Contents General and administrative expenses include items such as compliance, facility maintenance, utilities, property and liability insurance, surveillance and security, and lobbying expenses, as well as all expenses for administrative departments such as accounting, purchasing, human resources, legal and internal audit. General and administrative expenses also include stock-based compensation expense; pre-opening expenses; acquisition and transaction costs; gains and losses on disposal of assets; insurance recoveries, net of deductible charges; changes in the fair value of our contingent purchase price obligations; expense associated with cash-settled stock-based awards (including changes in fair value thereto); and rent expense associated with our triple net operating leases. For the three and six months ended June 30, 2025, general and administrative expenses increased by $21.6 million and $35.7 million, respectively, compared to the corresponding prior year periods. The increase is primarily due to legal and advisory costs related to activist activity incurred in connection with our 2025 annual meeting of shareholders of $9.4 million and $17.1 million, respectively, as well as increases in pre-opening expenses for the PENN Development Projects, and stock-based compensation. Impairment loss for both the three and six months ended June 30, 2025 relates to an impairment charge of $15.0 million at our ACB property on its trademark. As a result of the strategic decision to rebrand ACB, the Company reassessed the indefinite-lived classification of the ACB trademark and concluded the trademark is no longer considered to have an indefinite useful life. The Company performed a quantitative impairment test, then assigned the remaining carrying amount a finite useful life of approximately 2.5 years. The interim assessment for impairment resulted in a non-cash impairment charge of $15.0 million, reflecting the decline in the trademark’s fair value. The primary driver of the impairment was a reduction in the projected revenues attributable to the ACB trademark compared to its prior valuation. There were no impairment losses for the three and six months ended June 30, 2024. Other income (expenses) The following table presents our consolidated other income (expenses): For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Other income (expenses) Interest expense, net $ (95.9) $ (119.4) $ 23.5 (19.7) % $ (206.7) $ (238.5) $ 31.8 (13.3) % Interest income $ 2.1 $ 5.8 $ (3.7) (63.8) % $ 5.3 $ 12.9 $ (7.6) (58.9) % Income from unconsolidated affiliates $ 13.3 $ 7.8 $ 5.5 70.5 % $ 20.9 $ 15.0 $ 5.9 39.3 % Gain on financing arrangement $ — $ — $ — N/M $ 215.1 $ — $ 215.1 N/M Loss on early extinguishment of debt $ (11.8) $ — $ (11.8) N/M $ (11.8) $ — $ (11.8) N/M Other $ 2.9 $ 1.0 $ 1.9 N/M $ 4.2 $ (0.3) $ 4.5 N/M Income tax benefit (expense) $ (6.4) $ 3.2 $ (9.6) N/M $ (54.1) $ 15.8 $ (69.9) N/M N/M - Not meaningful Interest expense, net decreased by $23.5 million and $31.8 million for the three and six months ended June 30, 2025, respectively, compared to the corresponding prior year periods, primarily due to an increase in capitalized interest related to the PENN Development Projects. Additionally, the prior year periods and the first quarter of 2025 included interest expense related to the Company’s financing arrangement, which is described in further detail below in “Gain on financing arrangement.” Interest income decreased by $3.7 million and $7.6 million for the three and six months ended June 30, 2025, respectively, compared to the corresponding prior year periods, primarily due to a decrease in the amount invested in money market funds, which we use for short term investing. Income from unconsolidated affiliates relates primarily to our investment in Kansas Entertainment and Freehold Raceway joint ventures. Operations at Freehold Raceway ceased on December 28, 2024. The change in income from the corresponding prior year periods is due to fluctuations in earnings from our investments in these unconsolidated affiliates. Gain on financing arrangement relates to a $215.1 million non-cash gain on a financing arrangement that we entered into in February 2021 with a third-party, which provided the Company with upfront and non-refundable cash proceeds while 42 Table of Contents permitting us to participate in future proceeds on certain insurance coverage claims for economic losses PENN sustained due to the COVID-19 pandemic. As discussed in Note 5, “Long-Term Debt,” during the first quarter of 2025, the Company determined that obligations under these claims are no longer probable and therefore recognized a non-cash gain related to this obligation comprised of cash proceeds received in 2021 of $72.5 million and $142.6 million of accreted non-cash interest. Loss on early extinguishment of debt relates to the repurchases of the 2.75% convertible notes due 2026 (the “Convertible Notes”). See Note 5, “Long-Term Debt,” to our unaudited Consolidated Financial Statements for further discussion. Other primarily relates to realized and unrealized gains and losses on equity securities held by PENN Interactive as well as miscellaneous income and expense items. The equity securities were sold during the quarter ended June 30, 2025. Income tax expense was $6.4 million as compared to a benefit of $3.2 million for the three months ended June 30, 2025 and 2024, respectively, and expense of $54.1 million as compared to a benefit of $15.8 million for the six months ended June 30, 2025 and 2024, respectively. The effective tax rate (income taxes as a percentage of income from operations before income taxes) including discrete items was 54.4% and 28.0% for the three and six months ended June 30, 2025, respectively. We excluded certain foreign losses from our worldwide effective tax rate calculation due to a year-to-date ordinary loss for which no benefit may be recognized. The change in the effective tax rate for the three and six months ended June 30, 2025, as compared to the corresponding prior periods 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. See Note 7, “Income Taxes” to our unaudited Consolidated Financial Statements for additional details. Our effective income tax rate may vary each reporting period depending on, among other factors, the geographic and business mix of our earnings, changes to our valuation allowances, and the level of our tax credits. These and other factors, including our history and projections of pre-tax earnings, are considered in assessing the realizability of our net deferred tax assets. On January 16, 2025, the Indiana Supreme Court listened to oral arguments between the Company and the Indiana Department of State Revenue on notices of proposed assessments for tax years 2015 through 2017. The Company believes that it is reasonably possible that its current unrecognized tax reserve may change within the next twelve months. On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was enacted. Key business income tax provisions of the OBBB applicable to the Company include (i) reinstatement of immediate deduction for domestic research or experimental expenditures, (ii) extension of 100% accelerated tax bonus depreciation for qualifying depreciable assets, and (iii) restoration of the favorable EBITDA-based business interest expense limitation. These provisions are expected to reduce the Company’s estimated cash tax liability for the year ending December 31, 2025. We are currently assessing the provisions' potential impact on our broader financial results and tax strategy. 43 Table of Contents Segment comparison of the three and six months ended June 30, 2025 and 2024 Northeast Segment For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Revenues Gaming $ 635.7 $ 624.0 $ 11.7 1.9 % $ 1,246.3 $ 1,240.4 $ 5.9 0.5 % Food, beverage, hotel, and other 75.9 72.3 3.6 5.0 % 146.2 140.6 5.6 4.0 % Total revenues $ 711.6 $ 696.3 $ 15.3 2.2 % $ 1,392.5 $ 1,381.0 $ 11.5 0.8 % Adjusted EBITDAR $ 209.5 $ 204.7 $ 4.8 2.3 % $ 403.7 $ 407.3 $ (3.6) (0.9) % Adjusted EBITDAR margin 29.4 % 29.4 % 0 bps 29.0 % 29.5 % -50 bps The Northeast segment’s revenues for the three and six months ended June 30, 2025 increased $15.3 million and $11.5 million, respectively, primarily due to an increase in gaming revenues, particularly slots revenues. The increase in food and beverage revenues for the three and six months ended June 30, 2025 was driven by increases in visitation and spend per visit, primarily at the Northeast segment properties not impacted by new supply. For the three and six months ended June 30, 2025, the Northeast segment’s Adjusted EBITDAR increased $4.8 million and decreased $3.6 million , respectively, and Ad justed EBITDAR margins remained consistent with prior periods . South Segment For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Revenues Gaming $ 224.9 $ 230.2 $ (5.3) (2.3) % $ 445.6 $ 464.0 $ (18.4) (4.0) % Food, beverage, hotel, and other 77.3 68.0 9.3 13.7 % 144.9 132.7 12.2 9.2 % Total revenues $ 302.2 $ 298.2 $ 4.0 1.3 % $ 590.5 $ 596.7 $ (6.2) (1.0) % Adjusted EBITDAR $ 104.8 $ 111.4 $ (6.6) (5.9) % $ 208.1 $ 224.9 $ (16.8) (7.5) % Adjusted EBITDAR margin 34.7 % 37.4 % -270 bps 35.2 % 37.7 % -250 bps The South segment’s revenues for the three months ended June 30, 2025 increased by $4.0 million, compared to the prior year period, primarily due to an increase in visitation at the South segment’s properties’ hotels, partially offset by a decrease in gaming revenues at the South segment properties impacted by new supply . The South segment’s revenues for the six months ended June 30, 2025 decreased by $6.2 million, compared to the prior year period, primarily due to a decrease in gaming revenues as increased competition negatively impacted several of our properties, partially offset by an increase in food, beverage, hotel, and other revenues. For the three and six months ended June 30, 2025, the South segment’s Adjusted EBITDAR decreased $6.6 million and $16.8 million , respectively, and Adjusted EBITDAR margin decreased to 34.7% and 35.2% , respectively, primarily due to the decreases in gaming revenues discussed above, and increased labor costs. 44 Table of Contents West Segment For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Revenues Gaming $ 97.8 $ 94.5 $ 3.3 3.5 % $ 188.8 $ 186.1 $ 2.7 1.5 % Food, beverage, hotel, and other 39.9 40.8 (0.9) (2.2) % 78.6 78.0 0.6 0.8 % Total revenues $ 137.7 $ 135.3 $ 2.4 1.8 % $ 267.4 $ 264.1 $ 3.3 1.2 % Adjusted EBITDAR $ 53.5 $ 50.6 $ 2.9 5.7 % $ 99.2 $ 96.5 $ 2.7 2.8 % Adjusted EBITDAR margin 38.9 % 37.4 % 150 bps 37.1 % 36.5 % 60 bps The West segment’s revenues for the three months ended June 30, 2025 increased by $2.4 million , compared to the prior year period, primarily due to increased gaming revenues, partially offset by a decrease in food, beverage, hotel, and other revenues. The West segment’s revenues for the six months ended June 30, 2025 increased by $3.3 million , compared to the prior year period, primarily due to increased gaming revenues as well as increased visitation at the West segment’s properties’ hotels. For the three and six months ended June 30, 2025, the West segment’s Adjusted EBITDAR increased $2.9 million and $2.7 million, respectively, and Adjusted EBITDAR margin increased to 38.9% and 37.1%, respectively, primarily due to the increases in gaming revenues discussed above. Midwest Segment For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Revenues Gaming $ 263.9 $ 265.1 $ (1.2) (0.5) % $ 516.2 $ 525.6 $ (9.4) (1.8) % Food, beverage, hotel, and other 33.1 33.0 0.1 0.3 % 63.7 63.7 — — % Total revenues $ 297.0 $ 298.1 $ (1.1) (0.4) % $ 579.9 $ 589.3 $ (9.4) (1.6) % Adjusted EBITDAR $ 121.8 $ 129.9 $ (8.1) (6.2) % $ 235.6 $ 246.9 $ (11.3) (4.6) % Adjusted EBITDAR margin 41.0 % 43.6 % -260 bps 40.6 % 41.9 % -130 bps The Midwest segment’s revenues for the three and six months ended June 30, 2025 decreased by $1.1 million and $9.4 million, respectively, compared to the corresponding prior year periods, primarily due to a decrease in gaming revenues as increased competition negatively impacted visitation at several of our properties. Severe weather events in the first quarter of 2025 also contributed to the decrease in visitation during the six months ended June 30, 2025. For the three and six months ended June 30, 2025, the Midwest segment’s Adjusted EBITDAR decreased $8.1 million and $11.3 million, respectively, and A djusted EBITDAR margin decreased to 41.0% and 40.6%, respectively, primarily due to the decreases in gaming revenues discussed above, and increased labor costs. 45 Table of Contents Interactive Segment For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Revenues Gaming $ 145.4 $ 118.5 $ 26.9 22.7 % $ 269.1 $ 174.5 $ 94.6 54.2 % Food, beverage, hotel, and other (1) 170.7 114.1 56.6 49.6 % 337.1 265.8 71.3 26.8 % Total revenues $ 316.1 $ 232.6 $ 83.5 35.9 % $ 606.2 $ 440.3 $ 165.9 37.7 % Adjusted EBITDA $ (62.0) $ (102.8) $ 40.8 (39.7) % $ (151.0) $ (298.8) $ 147.8 (49.5) % Adjusted EBITDA margin (19.6) % (44.2) % N/M (24.9) % (67.9) % N/M (1) - “Food, beverage, hotel, and other” only includes “other” revenue. N/M - Not meaningful The Interactive segment’s revenues for the three and six months ended June 30, 2025 increased by $83.5 million and $165.9 million, respectively, compared to the corresponding prior year periods, primarily due to an increase in gaming revenues and other revenues. Gaming revenues were positively impacted by iCasino and online sports betting growth driven by ongoing product enhancements and a decrease in promotional spend. Other revenues are inclusive of gaming tax amounts related to third-party online sports betting and/or iCasino partners for online sports betting and iCasino market access of $137.9 million and $82.1 million for the three months ended June 30, 2025 and 2024, respectively, and $266.1 million and $198.7 million for the six months ended June 30, 2025 and 2024, respectively. For the three and six months ended June 30, 2025, the Interactive segment’s Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the increase in gaming revenues and decrease in marketing expense, as discussed above. Other For the three months ended June 30, Change For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % 2025 2024 $ % Revenues Food, beverage, hotel, and other $ 5.7 $ 5.9 $ (0.2) (3.4) % $ 11.0 $ 11.9 $ (0.9) (7.6) % Total revenues $ 5.7 $ 5.9 $ (0.2) (3.4) % $ 11.0 $ 11.9 $ (0.9) (7.6) % Adjusted EBITDAR $ (35.5) $ (26.8) $ (8.7) 32.5 % $ (74.3) $ (53.6) $ (20.7) 38.6 % Other consists of the Company’s stand-alone racing operations, as well as corporate overhead expenses, which primarily includes certain expenses such as payroll, professional f ees, travel expenses, and other general and administrative expenses that do not directly relate to or have not otherwise been allocated. Revenues for the three and six months ended June 30, 2025 decreased slightly compared to the prior year periods, primarily due to fluctuations in racing revenues. Corporate overhead expenses were $38.7 million and $24.5 million for the three months ended June 30, 2025 and 2024, respectively, and $74.7 million and $49.4 million for the six months ended June 30, 2025 and 2024, respectively. Corporate overhead expenses for the three and six months ended June 30, 2025 include $9.4 million and $17.1 million, respectively, of legal and advisory costs related to activist activity in connection with our 2025 annual meeting of shareholders. Changes in Adjusted EBITDAR for the three and six months ended June 30, 2025 primarily relate to increased general and administrative costs, inclusive of the $9.4 million and $17.1 million, respectively, of legal and advisory costs as described above. 46 Table of Contents Reportable Segment Measures Segment Adjusted EBITDAR is our measure of profit or loss for our reportable segments and underlying operating segments. We define Segment Adjusted EBITDAR as earnings before interest expense, net, interest income, income taxes, depreciation and amortization, stock-based compensation, debt extinguishment charges, impairment losses, insurance recoveries, net of deductible charges, changes in the estimated fair value of our contingent purchase price obligations, gain or loss on disposal of assets, the difference between budget and actual expense for cash-settled stock-based awards, pre-opening expenses, loss on disposal of a business, non-cash gains/losses associated with REIT transactions, and other. Segment Adjusted EBITDAR excludes rent expense associated with triple net operating leases (which is a normal, recurring cash operating expense necessary to operate our business). Segment Adjusted EBITDAR is inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as interest expense, net, and depreciation and amortization) added back for our Kansas Entertainment, LLC joint venture. Segment Adjusted EBITDAR margin is Segment Adjusted EBITDAR divided by related segment revenues. Non-GAAP Financial Measures Use and Definitions In addition to GAAP financial measures, management uses Adjusted EBITDA and Adjusted EBITDAR as non-GAAP financial measures. These non-GAAP financial measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP. Each of these non-GAAP financial measures is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure of comparing performance among different companies. We define Adjusted EBITDA as earnings before interest expense, net; interest income; income taxes; depreciation and amortization; stock-based compensation; debt extinguishment charges; impairment losses; insurance recoveries, net of deductible charges; changes in the estimated fair value of our contingent purchase price obligations; gain or loss on disposal of assets; the difference between budget and actual expense for cash-settled stock-based awards; pre-opening expenses; loss on disposal of business; non-cash gains/losses associated with REIT transactions; and other. Adjusted EBITDA is inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as interest expense, net; and depreciation and amortization) added back for our Kansas Entertainment, LLC joint venture. Adjusted EBITDA is inclusive of rent expense associated with our triple net operating leases with our REIT landlords. Although Adjusted EBITDA includes rent expense associated with our triple net operating leases, we believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our consolidated results of operations. Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business, and is especially relevant in evaluating large, long-lived casino-hotel projects because it provides a perspective on the current effects of operating decisions separated from the substantial non-operational depreciation charges and financing costs of such projects. We present Adjusted EBITDA because it is used by some investors and creditors as an indicator of the strength and performance of ongoing business operations, including our ability to service debt, and to fund capital expenditures, acquisitions and operations. These calculations are commonly used as a basis for investors, analysts, and credit rating agencies to evaluate and compare operating performance and value companies within our industry. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including us, have historically excluded from their Adjusted EBITDA calculations certain corporate expenses that do not relate to the management of specific casino properties. However, Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP. Adjusted EBITDA information is presented as a supplemental disclosure, as management believes that it is a commonly used measure of performance in the gaming industry and that it is considered by many to be a key indicator of the Company’s operating results. We define Adjusted EBITDAR as Adjusted EBITDA (as defined above) plus rent expense associated with triple net operating leases (which is a normal, recurring cash operating expense necessary to operate our business). Adjusted EBITDAR is presented on a consolidated basis outside the financial statements solely as a valuation metric. Management believes that Adjusted EBITDAR is an additional metric traditionally used by analysts in valuing gaming companies subject to triple net leases since it eliminates the effects of variability in leasing methods and capital structures. This metric is included as a supplemental disclosure because (i) we believe Adjusted EBITDAR is traditionally used by gaming operator analysts and investors to determine the equity value of gaming operators and (ii) Adjusted EBITDAR is one of the metrics used by other financial analysts in valuing our business. We believe Adjusted EBITDAR is useful for equity valuation purposes because (i) its calculation isolates the effects of financing real estate; and (ii) using a multiple of Adjusted EBITDAR to calculate enterprise value allows for an adjustment to the balance sheet to recognize estimated liabilities arising from operating leases related to real estate. However, Adjusted EBITDAR when presented on a consolidated basis is not a financial measure in accordance with 47 Table of Contents GAAP, and should not be viewed as a measure of overall operating performance or considered in isolation or as an alternative to net income because it excludes the rent expense associated with our triple net operating leases and is provided for the limited purposes referenced herein. Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures The following table includes a reconciliation of net income (loss), which is determined in accordance with GAAP, to Adjusted EBITDA and Adjusted EBITDAR, which are non-GAAP financial measures: For the three months ended June 30, For the six months ended June 30, (dollars in millions) 2025 2024 2025 2024 Net income (loss) $ (18.3) $ (27.1) $ 93.2 $ (142.0) Income tax (benefit) expense 6.4 (3.2) 54.1 (15.8) Interest expense, net 95.9 119.4 206.7 238.5 Interest income (2.1) (5.8) (5.3) (12.9) Income from unconsolidated affiliates (13.3) (7.8) (20.9) (15.0) Gain on financing arrangement — — (215.1) — Loss on early extinguishment of debt 11.8 — 11.8 — Other (income) expenses (2.9) (1.0) (4.2) 0.3 Operating income 77.5 74.5 120.3 53.1 Stock-based compensation (1) 16.1 14.2 31.7 26.1 Cash-settled stock-based award variance (1)(2) (3.1) (3.1) (6.3) (11.1) Loss on disposal of assets (1) 0.1 9.1 0.3 8.9 Pre-opening expenses (1) 4.4 — 4.9 — Depreciation and amortization 110.5 109.1 218.5 217.8 Impairment loss (3) 15.0 — 15.0 — Insurance recoveries, net of deductible charges (1) — (2.7) — (2.7) Income from unconsolidated affiliates 13.3 7.8 20.9 15.0 Non-operating items of equity method investments (4) 1.1 1.0 2.2 2.1 Other expenses (1)(5) 1.2 2.2 1.9 4.3 Adjusted EBITDA 236.1 212.1 409.4 313.5 Rent expense associated with triple net operating leases (1) 156.0 154.9 311.9 309.7 Adjusted EBITDAR $ 392.1 $ 367.0 $ 721.3 $ 623.2 ( 1) These items are included in “General and administrative” within the Company’s unaudited Consolidated Statements of Operations. (2) Our cash-settled stock-based awards are adjusted to fair value each reporting period based primarily on the price of the Company’s common stock. As such, significant fluctuations in the price of the Company’s common stock during any reporting period could cause significant variances to budget on cash-settled stock-based awards. (3) Relates to an impairment charge in our Midwest segment. (4) Consists primarily of depreciation expense associated with our Kansas Entertainment joint venture. (5) Consists of non-recurring transaction costs and, prior to August 1, 2024, finance transformation costs associated with the implementation of our new Enterprise Resource Management system. 48 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity and capital resources have been and are expected to be cash flow from operations, borrowings from banks, and proceeds from the issuance of debt and equity securities. Our ongoing liquidity will depend on a number of factors, including available cash resources, cash flow from operations, acquisitions or investments, funding of construction for development projects, and our compliance with covenants contained under our debt agreements. We currently believe that our operating cash flow and other sources of liquidity, as described herein, will be sufficient to meet our liquidity needs on a short and long-term basis. For the six months ended June 30, Change (dollars in millions) 2025 2024 $ % Net cash provided by operating activities $ 220.1 $ 81.7 $ 138.4 169.4 % Net cash used in investing activities $ (272.5) $ (146.1) $ (126.4) 86.5 % Net cash provided by (used in) financing activities $ 28.3 $ (128.6) $ 156.9 N/M N/M - Not meaningful Operating Cash Flow Trends in our operating cash flows tend to follow trends in operating income (loss), excluding non-cash charges, but can be affected by changes in working capital, the timing of significant interest payments, tax payments or refunds, and distributions from unconsolidated affiliates. Net cash provided by operating activities increased by $138.4 million for the six months ended June 30, 2025, primarily due to an increase in our reportable segments’ Adjusted EBITDAR. Investing Cash Flow Cash used in investing activities during the six months ended June 30, 2025 and June 30, 2024, was $272.5 million and $146.1 million, respectively, and primarily related to capital expenditures of $284.6 million and $129.6 million, respectively. Capital Expenditures Capital expenditures are accounted for as either project capital (new facilities or expansions) or maintenance (replacement) which is inclusive of projects such as our retail sportsbooks, our cashless, cardless and contactless technology and hotel renovations. Cash provided by operating activities, as well as cash available under our Amended Revolving Credit Facility, was available to fund our capital expenditures for the six months ended June 30, 2025 and 2024, as applicable. Fo r the year ending December 31, 2025 , we anticipate capital expenditures of approximately $240.0 million, inclusive of capital expenditures required under our Triple Net Leases, which require us to spend a specified percentage of total revenues, and capital expenditures of $87.9 million incurred during the six months ended June 30, 2025. Additionally, f or the year ending December 31, 2025 , we anticipate capital project expenditures of $490.0 million, the majority of which are in connection with the PENN Development Projects pursuant to our Master Development Agreement with GLPI (as described in Note 6, “Leases” in the notes to our unaudited Consolidated Financial Statements). During the six months ended June 30, 2025, we incurred capital expenditures of $196.7 million in connection with the PENN Development Projects. The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon PENN’s request, up to $130.0 million for the Joliet Project and up to $220.0 million in the aggregate for the Columbus Project and the M Resort Project, in accordance with certain terms and conditions set forth in the Master Development Agreement. The PENN Development Projects are all subject to necessary regulatory and other government approvals. As of August 6, 2025, the Company has requested and received the full $130.0 million in funding from GLPI for the Joliet Project expected to open August 11, 2025. Financing Cash Flow For the six months ended June 30, 2025, net cash provided by financing activities totaled $28.3 million, primarily related to net proceeds from our revolving credit facility of $467.5 million, offset by repurchases of $223.8 million of our Convertible Notes, repurchases of our common stock of $115.3 million, principal payments of $48.2 million on our finance leases and finance obligations, $16.8 million in payments on insurance financing, as well as $18.8 million in principal payments on long-term debt. 49 Table of Contents For the six months ended June 30, 2024, net cash used in financing activities totaled $128.6 million, primarily related to principal payments of $45.0 million on our finance leases and finance obligations, $30.5 million in indemnification payments, $17.5 million in payments on insurance financing, as well as $18.8 million in principal payments on long-term debt. As of June 30, 2025, we had $2.8 billion in aggregate principal amount of indebtedness, including $1.9 billion outstanding under our Amended Credit Facilities, $400.0 million outstanding under our 5.625% Notes, $400.0 million outstanding under our 4.125% Notes, $106.7 million outstanding under our Convertible Notes, and $8.6 million outstanding in other long-term obligations. We ha d $467.5 million drawn on our Amended Revolving Credit Facility. See definitions for (i) Amended Credit Facilities; (ii) 5.625% Notes; (iii) 4.125% Notes; and (iv) Amended Revolving Credit Facility in Note 5, “Long-Term Debt” in the notes to our unaudited Consolidated Financial Statements. With the exception of the Convertible Notes, which we expect to refinance on a long-term basis, we have no other debt maturing before January 2027. As of August 6, 2025, the Company had $380.0 million in outstanding borrowings under its Amended Revolving Credit Facility, resulting in $595.3 million in available borrowing capacity. Covenants Our Amended Credit Facilities, 5.625% Notes, and 4.125% Notes require us, among other obligations, to maintain specified financial ratios and to satisfy certain financial tests. 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. 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. As of June 30, 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. See Note 5, “Long-Term Debt” in the notes to our unaudited Consolidated Financial Statements for additional information of the Company’s debt and other long-term obligations. 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 six months ended June 30, 2025, the Company repurchased 7,249,349 shares of its common stock in open market transactions for $115.3 million at an average price of $15.90 per share. As of August 6, 2025, the remaining availability under our December 2022 Authorization was $634.4 million. The cost of all repurchased shares is recorded as “Treasury stock” within our unaudited Consolidated Balance Sheets. 50 Table of Contents Other Factors Affecting Liquidity ESPN BET Sportsbook Agreement On August 8, 2023, PENN entered into the Sportsbook Agreement with ESPN which provides for a long-term strategic relationship between PENN and ESPN relating to online sports betting in the United States. 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 (see Note 8, “Commitments and Contingencies” in the notes to our unaudited Consolidated Financial Statements for additional information). Triple Net Leases The majority of the real estate assets (i.e., land and buildings) used in our operations are subject to triple net master leases; the most significant of which are the Master Leases with GLPI. We refer to the Master Leases, the Margaritaville Lease, the Greektown Lease, and the Morgantown Lease, collectively, as our “Triple Net Leases.” The Company’s Triple Net Leases are accounted for as either operating leases, finance leases, or financing obligations. On February 21, 2023, as described in Note 6, “Leases” in the notes to our unaudited Consolidated Financial Statements, the Company and GLPI entered into the Master Development Agreement. The Master Development Agreement contains additional rent (together with the 2023 Master Lease base rent, the “2023 Master Lease Rent”) equal to (i) 7.75% of any project funding received by PENN from GLPI for the Aurora Project and (ii) a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for the Other Development Projects. The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon PENN’s request, up to $130.0 million for the Joliet Project, up to $150.0 million for the M Resort Project, and up to $70.0 million for the Columbus Project, in accordance with certain terms and conditions set forth in the Master Development Agreement. These funding obligations of GLPI expire on January 1, 2026. Our new Joliet facility is expected to open on August 11, 2025, and the new hotel tower at the M Resort, the new Aurora facility, and the Columbus hotel tower are expected to open in the first half of 2026. The PENN Development Projects are all subject to necessary regulatory and other government approvals. As of August 6, 2025, the Company has requested and received the full $130.0 million in funding from GLPI for the Joliet Project. Under our Triple Net Leases, in addition to lease payments for the real estate assets, we are required to pay the following, among other things: (i) all facility maintenance; (ii) all insurance required in connection with the leased properties and the business conducted on the leased properties; (iii) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (iv) all tenant capital improvements; and (v) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. Additionally, our Triple Net Leases are subject to annual escalators and periodic percentage rent resets, as applicable. See Note 6, “Leases” in the notes to our unaudited Consolidated Financial Statements for further discussion and disclosure related to the Company’s leases. Payments to our REIT Landlords under Triple Net Leases Total payments made to our REIT Landlords, GLPI and VICI, were as follows: For the three months ended June 30, For the six months ended June 30, (in millions) 2025 2024 2025 2024 AR PENN Master Lease $ 72.0 $ 70.9 $ 144.1 $ 141.9 2023 Master Lease 59.8 58.9 119.6 117.8 Pinnacle Master Lease 87.4 86.7 174.8 171.9 Margaritaville Lease 6.7 6.7 13.4 13.4 Greektown Lease 13.3 13.2 26.5 26.4 Morgantown Lease 0.8 0.8 1.6 1.6 Total $ 240.0 $ 237.2 $ 480.0 $ 473.0 51 Table of Contents Outlook Based on our current level of operations, we believe that cash generated from operations and cash on hand, together with amounts available under our Amended Credit Facilities, will be adequate to meet our anticipated obligations under our Triple Net Leases, debt service requirements, capital expenditures and working capital needs for the foreseeable future. However, our ability to generate sufficient cash flow from operations will depend on a range of economic, competitive, and business factors, many of which are outside our control. We cannot be certain: (i) of the impact of price inflation, changes in interest rates on the U.S. economy, changes in trade policies, economic downturns or uncertainty, and geopolitical uncertainty; (ii) that our anticipated earnings projections will be realized; (iii) that we will achieve the expected synergies from our acquisitions and joint ventures; and (iv) that future borrowings will be available under our Amended Credit Facilities or otherwise will be available in the credit markets to enable us to service our indebtedness or to make anticipated capital expenditures. We caution that the performance and trends seen across our portfolio may not continue. In addition, while we anticipate that a significant amount of our future growth would come through the pursuit of opportunities within other distribution channels, such as media, retail and online gaming; from acquisitions of gaming properties at reasonable valuations; greenfield projects; development projects; and jurisdictional expansions and property expansion in under-penetrated markets; there can be no assurance that this will be the case. If we consummate significant acquisitions in the future or undertake any significant property expansions, our cash requirements may increase significantly, and we may need to make additional borrowings or complete equity or debt financings to meet these requirements. See Part I, Item 1A. “Risk Factors” of the Company’s Form 10-K for the year ended December 31, 2024 for a discussion of additional risks, including risks related to the Company’s capital structure. We have historically maintained a capital structure comprised of a mix of equity and debt financing. We vary our leverage to pursue opportunities in the marketplace in an effort to maximize our enterprise value for our shareholders. We expect to meet our debt obligations as they come due through internally-generated funds from operations and/or refinancing them through the debt or equity markets prior to their maturity. CRITICAL ACCOUNTING ESTIMATES A complete discussion of our critical accounting estimates is included in our Form 10-K for the year ended December 31, 2024. There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2025. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS For information with respect to new accounting pronouncements and the impact of these pronouncements on our unaudited Consolidated Financial Statements, see Note 3, “New Accounting Pronouncements” in the notes to our unaudited Consolidated Financial Statements. IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as “expects,” “believes,” “estimates,” “projects,” “intends,” “plans,” “goal,” “seeks,” “may,” “will,” “should,” or “anticipates” or the negative or other variations of these or similar words, or by discussions of future events, strategies or risks and uncertainties. Specifically, forward-looking statements include, but are not limited to, statements regarding: the Company’s expectations of future results of operations and financial condition, including, but not limited to, projections of revenue, Segment Adjusted EBITDAR, Adjusted EBITDA, Adjusted EBITDAR, and other financial measures; the assumptions provided regarding the guidance, including the scale and timing of the Company’s product and technology investments; the Company’s expectations regarding results and customer growth and the impact of competition in retail/mobile/online sportsbooks, iCasino, social gaming, and retail operations; the Company’s development and launch of its Interactive segment’s products in new jurisdictions and enhancements to existing Interactive segment products, including the content for the ESPN BET and theScore BET and the further development of ESPN BET and theScore BET on our proprietary player account management system and risk and trading platforms; the benefits of the Sportsbook Agreement between the Company and ESPN; the Company’s expectations regarding its Sportsbook Agreement with ESPN and the future success of ESPN BET; the Company’s expectations with respect to share repurchases; the Company’s expectations with respect to the integration and synergies related to the Company’s integration of theScore and the continued growth and monetization of the Company’s media business; the Company’s expectations that its portfolio of assets provides a benefit of geographically-diversified cash flows from operations; management’s plans and strategies for future operations, including statements relating to the Company’s plan to expand gaming operations through the implementation and execution of a disciplined capital expenditure program at our existing properties, the pursuit of strategic acquisitions and investments, and the development of new gaming properties, including the development projects and the anticipated benefits; improvements, expansions, or relocations of our existing properties; entrance into new jurisdictions; expansion of gaming in existing jurisdictions; strategic investments and acquisitions; 52 Table of Contents cross-sell opportunities between our retail gaming, online sports betting, and iCasino businesses; our ability to obtain financing for our development projects on attractive terms; the timing, cost and expected impact of planned capital expenditures on the Company’s results of operations; and the actions of regulatory, legislative, executive, or judicial decisions at the federal, state, provincial, or local level with regard to our business and the impact of any such actions. Such statements are all subject to risks, uncertainties and changes in circumstances that could significantly affect the Company’s future financial results and business. Accordingly, the Company cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. Such factors include: the effects of economic and market conditions in the markets in which the Company operates or otherwise, including the impact of global supply chain disruptions, price inflation, changes in interest rates, economic downturns, changes in trade policies, and geopolitical and regulatory uncertainty; competition with other entertainment, sports content, and gaming experiences; the timing, cost and expected impact of product and technology investments; risks relating to operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions; our ability to successfully acquire and integrate new properties and operations and achieve expected synergies from acquisitions; the availability of future borrowings under our Amended Credit Facilities or other sources of capital to enable us to service our indebtedness, make anticipated capital expenditures or pay off or refinance our indebtedness prior to maturity; the impact of indemnification obligations under the Barstool SPA; our ability to achieve the anticipated financial returns from the Sportsbook Agreement with ESPN, including due to fees, costs, taxes, or circumstances beyond the Company’s or ESPN’s control; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the Company and ESPN to terminate the Sportsbook Agreement between the companies; the ability of the Company and ESPN to agree to extend the initial 10-year term of the Sportsbook Agreement on mutually satisfactory terms, if at all, and the costs and obligations of such terms if agreed; the outcome of any legal proceedings that may be instituted against the Company, ESPN or their respective directors, officers or employees; the ability of the Company or ESPN to retain and hire key personnel; the impact of new or changes in current laws, regulations, rules or other industry standards; the impact of activist shareholders; adverse outcomes of litigation involving the Company, including litigation brought by activist shareholders; our ability to maintain our gaming licenses and concessions and comply with applicable gaming law, changes in current laws, regulations, rules or other industry standards, and additional factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the U.S. Securities and Exchange Commission. The Company does not intend to update publicly any forward-looking statements except as required by law. Considering these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q may not occur.