PENN Entertainment, Inc. [PENN] Filings

10-Q 1 penn-20240630.htm 10-Q penn-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 0-24206

PENN Entertainment, Inc.

(Exact name of registrant as specified in its charter)


Pennsylvania			23-2234473
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification no.)
825 Berkshire Blvd., Suite 200	Wyomissing,	Pennsylvania	19610
(Address of principal executive offices)			(Zip code)

(610) 373-2400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	PENN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

As of August 1, 2024, the number of shares of the registrant’s common stock outstanding was 152,595,704 (including 468,943 shares of a subsidiary of registrant which are exchangeable into registrant’s common stock).

PENN ENTERTAINMENT, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			1
Consolidated Balance Sheets - June 30, 2024 and December 31, 2023			2
Consolidated Statements of Operations - for the Three and Six Months Ended June 30, 2024 and 2023			3
Consolidated Statements of Comprehensive Income (Loss) - for the Three and Six Months Ended June 30, 2024 and 2023			4
Consolidated Statements of Changes in Stockholders’ Equity - for the Three and Six Months Ended June 30, 2024 and 2023			5
Consolidated Statements of Cash Flows - for the Six Months Ended June 30, 2024 and 2023			7
Notes to the Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			38
Item 3. Quantitative and Qualitative Disclosure About Market Risk			55
Item 4. Controls and Procedures			55
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			56
Item 1A. Risk Factors			56
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			56
Item 5. Other Information			56
Item 6. Exhibits			57
Signatures			58

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

PENN ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions, except share and per share data)	June 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	877.6	$	1,071.8
Accounts receivable, net	251.9		319.0
Prepaid expenses	158.3		225.6
Other current assets	45.0		42.6
Total current assets	1,332.8		1,659.0
Property and equipment, net	3,498.1		3,514.0
Investment in and advances to unconsolidated affiliates	86.5		84.9
Goodwill	2,648.2		2,695.1
Other intangible assets, net	1,606.1		1,618.2

Operating lease right-of-use assets	4,110.7		4,264.7
Finance lease right-of-use assets	2,059.6		2,041.0
Other assets	196.0		187.3
Total assets	$	15,538.0	$	16,064.2

Liabilities
Current liabilities
Accounts payable	$	46.1	$	36.6
Current maturities of long-term debt	38.2		47.6
Current portion of financing obligations	42.4		41.3
Current portion of operating lease liabilities	311.6		302.3
Current portion of finance lease liabilities	51.8		40.3
Accrued expenses and other current liabilities	809.5		1,021.9
Total current liabilities	1,299.6		1,490.0
Long-term debt, net of current maturities, debt discount and debt issuance costs	2,722.2		2,718.0
Long-term portion of financing obligations	2,364.9		2,386.1
Long-term portion of operating lease liabilities	3,791.3		3,944.1
Long-term portion of finance lease liabilities	2,089.2		2,062.5
Deferred income taxes	74.2		117.6
Other long-term liabilities	143.7		146.3
Total liabilities	12,485.1		12,864.6
Commitments and contingencies (Note 11)
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, 177,283,486 and 176,719,596 shares issued, and 152,116,584 and 151,552,694 shares outstanding)	1.8		1.8
Exchangeable shares ($0.01 par value, 768,441 shares authorized, 768,441 and 700,393 shares issued, 469,878 and 560,267 shares outstanding)	—		—
Treasury stock, at cost (25,166,902 shares repurchased as of both periods)	(779.5)		(779.5)
Additional paid-in capital	4,487.4		4,436.6
Accumulated deficit	(477.0)		(335.5)
Accumulated other comprehensive loss	(176.8)		(121.3)
Total PENN Entertainment, Inc. stockholders’ equity	3,055.9		3,202.1
Non-controlling interest	(3.0)		(2.5)
Total stockholders’ equity	3,052.9		3,199.6
Total liabilities and stockholders’ equity	$	15,538.0	$	16,064.2

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 June 30,				For the six months ended June 30,
(in millions, except per share data)	2024		2023		2024		2023
Revenues
Gaming	$	1,332.3	$	1,292.8	$	2,590.6	$	2,617.4
Food, beverage, hotel, and other	330.7		382.0		679.3		730.7
Total revenues	1,663.0		1,674.8		3,269.9		3,348.1
Operating expenses
Gaming	871.1		710.6		1,750.6		1,440.1
Food, beverage, hotel, and other	219.6		267.8		470.8		512.1
General and administrative	388.7		380.3		777.6		773.2
Depreciation and amortization	109.1		110.6		217.8		218.1

Total operating expenses	1,588.5		1,469.3		3,216.8		2,943.5
Operating income	74.5		205.5		53.1		404.6
Other income (expenses)
Interest expense, net	(119.4)		(115.6)		(238.5)		(228.6)
Interest income	5.8		9.9		12.9		20.3
Income from unconsolidated affiliates	7.8		7.2		15.0		9.8
Gain on Barstool Acquisition, net	—		—		—		83.4
Gain on REIT transactions, net	—		—		—		500.8
Other	1.0		5.8		(0.3)		4.8
Total other income (expenses)	(104.8)		(92.7)		(210.9)		390.5
Income (loss) before income taxes	(30.3)		112.8		(157.8)		795.1
Income tax benefit (expense)	3.2		(34.7)		15.8		(202.6)
Net income (loss)	(27.1)		78.1		(142.0)		592.5
Less: Net loss attributable to non-controlling interest	0.3		0.3		0.5		0.4
Net income (loss) attributable to PENN Entertainment, Inc.	$	(26.8)	$	78.4	$	(141.5)	$	592.9

Earnings per share:
Basic earnings (loss) per share	$	(0.18)	$	0.51	$	(0.93)	$	3.86
Diluted earnings (loss) per share	$	(0.18)	$	0.48	$	(0.93)	$	3.54

Weighted-average common shares outstanding—basic	152.1		152.8		152.0		153.0
Weighted-average common shares outstanding—diluted	152.1		167.9		152.0		168.2

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 June 30,				For the six months ended June 30,
(in millions)	2024		2023		2024		2023
Net income (loss)	$	(27.1)	$	78.1	$	(142.0)	$	592.5
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment during the period	(19.5)		36.4		(55.5)		44.6
Other comprehensive income (loss)	(19.5)		36.4		(55.5)		44.6
Total comprehensive income (loss)	(46.6)		114.5		(197.5)		637.1
Less: Comprehensive loss attributable to non-controlling interest	0.3		0.3		0.5		0.4
Comprehensive income (loss) attributable to PENN Entertainment, Inc.	$	(46.3)	$	114.8	$	(197.0)	$	637.5

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 June 30, 2024 and 2023
	Preferred Stock			Common Stock						Treasury Stock		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (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 April 1, 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
Share-based compensation arrangements	—	—		154,428	—		—	—		—		14.2		—		—		14.2		—		14.2



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

Exchangeable share conversions	—	—		87,296	—		(87,296)	—		—		—		—		—		—		—		—
Investment Agreement warrants (Note 11)	—	—		—	—		—	—		—		14.4		—		—		14.4		—		14.4
Currency translation adjustment	—	—		—	—		—	—		—		—		—		(19.5)		(19.5)		—		(19.5)
Net loss	—	—		—	—		—	—		—		—		(26.8)		—		(26.8)		(0.3)		(27.1)
Other	—	—		—	—		—	—		—		(1.2)		—		—		(1.2)		—		(1.2)
Balance as of June 30, 2024	—	$	—	152,116,584	$	1.8	469,878	$	—	$	(779.5)	$	4,487.4	$	(477.0)	$	(176.8)	$	3,055.9	$	(3.0)	$	3,052.9

Balance as of April 1, 2023	354	$	11.8	154,136,908	$	1.8	560,758	$	—	$	(679.5)	$	4,333.6	$	669.0	$	(160.4)	$	4,176.3	$	(1.2)	$	4,175.1
Share-based compensation arrangements	—	—		23,391	—		—	—		—		19.7		—		—		19.7		—		19.7

Share repurchases	—	—		(3,791,258)	—		—	—		(99.8)		—		—		—		(99.8)		—		(99.8)

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

Exchangeable share conversions	—	—		370	—		(370)	—		—		—		—		—		—		—		—
Currency translation adjustment	—	—		—	—		—	—		—		—		—		36.4		36.4		—		36.4
Net income (loss)	—	—		—	—		—	—		—		—		78.4		—		78.4		(0.3)		78.1
Other	—	—		—	—		—	—		(0.4)		(0.4)		—		—		(0.8)		—		(0.8)
Balance as of June 30, 2023	354	$	11.8	150,373,466	$	1.8	560,388	$	—	$	(779.7)	$	4,353.0	$	747.4	$	(124.0)	$	4,210.3	$	(1.5)	$	4,208.8

Table of Contents


	Six Months Ended June 30, 2024 and 2023
	Preferred Stock			Common Stock						Treasury Stock		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (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, 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	—	—		401,398	—		—	—		—		26.1		—		—		26.1		—		26.1



Common stock issuance	—	—		4,055	—		—	—		—		0.1		—		—		0.1		—		0.1
Exchangeable share issuance	—	—		—	—		68,048	—		—		—		—		—		—		—		—
Exchangeable share conversions	—	—		158,437	—		(158,437)	—		—		—		—		—		—		—		—
Investment Agreement warrants (Note 11)	—	—		—	—		—	—		—		28.7		—		—		28.7		—		28.7
Currency translation adjustment	—	—		—	—		—	—		—		—		—		(55.5)		(55.5)		—		(55.5)
Net loss	—	—		—	—		—	—		—		—		(141.5)		—		(141.5)		(0.5)		(142.0)
Other	—	—		—	—		—	—		—		(4.1)		—		—		(4.1)		—		(4.1)
Balance as of June 30, 2024	—	$	—	152,116,584	$	1.8	469,878	$	—	$	(779.5)	$	4,487.4	$	(477.0)	$	(176.8)	$	3,055.9	$	(3.0)	$	3,052.9

Balance as of January 1, 2023	581	$	19.4	152,903,708	$	1.7	620,019	$	—	$	(629.5)	$	4,220.2	$	154.5	$	(168.6)	$	3,597.7	$	(1.1)	$	3,596.6
Share-based compensation arrangements	—	—		171,830	—		—	—		—		36.2		—		—		36.2		—		36.2
Share issuance in connection with acquisitions	—	—		2,442,809	—		—	—		—		80.8		—		—		80.8		—		80.8
Share repurchases	—	—		(5,438,221)	—		—	—		(149.8)		—		—		—		(149.8)		—		(149.8)
Preferred stock conversions	(227)	(7.6)		226,800	—		—	—		—		7.6		—		—		—		—		—
Common stock issuance	—	—		4,055	—		—	—		—		0.1		—		—		0.1		—		0.1
Exchangeable share issuance	—	—		—	—		2,854	—		—		—		—		—		—		—		—
Exchangeable share conversions	—	—		62,485	—		(62,485)	—		—		—		—		—		—		—		—
Currency translation adjustment	—	—		—	—		—	—		—		—		—		44.6		44.6		—		44.6
Net income (loss)	—	—		—	—		—	—		—		—		592.9		—		592.9		(0.4)		592.5
Other	—	—		—	0.1		—	—		(0.4)		8.1		—		—		7.8		—		7.8
Balance as of June 30, 2023	354	$	11.8	150,373,466	$	1.8	560,388	$	—	$	(779.7)	$	4,353.0	$	747.4	$	(124.0)	$	4,210.3	$	(1.5)	$	4,208.8

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 six months ended June 30,
(in millions)	2024		2023
Operating activities
Net income (loss)	$	(142.0)	$	592.5
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	217.8		218.1
Amortization of debt discount and debt issuance costs	4.3		4.1
Non-cash interest expense	22.0		16.8
Non-cash operating lease expense	156.2		154.8


Gain on Barstool Acquisition, net	—		(83.4)
Gain on REIT transactions, net	—		(500.8)
Holding loss (gain) on equity securities	5.4		(3.1)

Loss on sale or disposal of property and equipment	8.9		—

Gain on Hurricane Laura	(2.7)		(13.6)
Income from unconsolidated affiliates	(15.0)		(9.8)
Return on investment from unconsolidated affiliates	16.0		16.8
Deferred income taxes	(44.2)		111.6
Stock-based compensation	26.1		36.2
Investment Agreement warrant expense	37.5		—


Changes in operating assets and liabilities, net of businesses acquired
Accounts receivable	64.2		7.2

Prepaid expenses and other current assets	29.0		(21.7)
Other assets	(23.2)		(9.9)
Accounts payable	9.3		(4.1)
Accrued expenses	(89.0)		(50.8)
Income taxes	26.5		21.0
Operating lease liabilities	(145.5)		(157.1)
Other current and long-term liabilities	(90.3)		(7.8)
Other	10.4		6.7
Net cash provided by operating activities	81.7		323.7
Investing activities

Capital expenditures	(129.6)		(132.8)
Consideration paid for Barstool, net of cash acquired	—		(314.6)
Proceeds from sale of property and equipment	3.5		0.1
Hurricane Laura insurance proceeds	1.7		8.8






Consideration paid for gaming licenses and other intangible assets	(17.2)		(11.7)
Other	(4.5)		(12.7)
Net cash used in investing activities	(146.1)		(462.9)

Table of Contents


	For the six months ended June 30,
(in millions)	2024		2023
Financing activities




Principal payments on long-term debt	(18.8)		(18.8)
Debt issuance costs	(2.6)		—

Payments of other long-term obligations	(10.1)		(0.7)
Principal payments on financing obligations	(20.2)		(19.4)
Principal payments on finance leases	(24.8)		(23.3)

Proceeds from exercise of options	1.2		1.1
Repurchase of common stock	—		(149.8)


Payments on insurance financing	(17.5)		—

Indemnification payments	(30.5)		—
Other	(5.3)		(3.2)
Net cash used in financing activities	(128.6)		(214.1)
Effect of currency rate changes on cash, cash equivalents, and restricted cash	(0.9)		1.0
Change in cash, cash equivalents, and restricted cash	(193.9)		(352.3)
Cash, cash equivalents, and restricted cash at the beginning of the year	1,094.4		1,644.2
Cash, cash equivalents, and restricted cash at the end of the period	$	900.5	$	1,291.9


Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$	877.6	$	1,271.6
Restricted cash included in Other current assets	21.7		19.1
Restricted cash included in Other assets	1.2		1.2
Total cash, cash equivalents, and restricted cash	$	900.5	$	1,291.9

Supplemental disclosure:
Cash paid for interest, net of amounts capitalized	$	212.4	$	207.4
Cash payments related to income taxes, net	$	0.9	$	66.0

Non-cash activities:


Accrued capital expenditures	$	33.5	$	15.0

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,” the “Company,” “we,” “our,” or “us”), is North America’s leading provider of integrated entertainment, sports content, and casino gaming experiences. As of June 30, 2024, PENN operated 43 properties in 20 states, online sports betting in 19 jurisdictions and iCasino in five jurisdictions, under a portfolio of well-recognized brands including Hollywood Casino®, L’Auberge®, ESPN BET™, and theScore BET Sportsbook and Casino®. In August 2023, PENN entered into a transformative, exclusive long-term strategic alliance with ESPN, Inc. and ESPN Enterprises, Inc. (together, “ESPN”) relating to online sports betting within the United States. PENN’s ability to leverage the leading sports media brands in the United States (ESPN) and Canada (theScore) is central to our highly differentiated strategy to expand our footprint and efficiently grow our customer ecosystem. The Company’s focus on organic cross-sell opportunities is reinforced by our market-leading retail casinos, sports media assets, and technology, including a proprietary state-of-the-art, fully integrated digital sports and iCasino betting platform and an in-house iCasino content studio. PENN’s portfolio is further bolstered by our industry-leading PENN PlayTM customer loyalty program, which offers our approximately 31 million members a unique set of rewards and experiences across business channels.

The majority of the real estate assets (i.e., land and buildings) used in our operations are subject to triple net master leases; 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 8, “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, 2023.

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

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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. Interactive includes all of our online sports betting, online casino/iCasino and social gaming (collectively referred to as “online gaming”) operations, management of retail sports betting, media, and in the prior year, the operating results of Barstool Sports, Inc. (“Barstool” or “Barstool Sports”). We owned 36% of Barstool common stock prior to the February 17, 2023 Barstool Acquisition (as defined in Note 5, “Acquisitions and Dispositions”) pursuant to which we acquired the remaining 64% of Barstool common stock. On August 8, 2023 we entered into a stock purchase agreement with David Portnoy (the “Barstool SPA”), and we sold 100% of the outstanding shares of Barstool common stock. See Note 15, “Segment Information” and Note 8, “Leases” for further segment and lease structure information, respectively. For financial reporting purposes, we aggregate our operating segments into the following reportable segments:

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	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
1st 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.

(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 (“NASCAR”) and includes the Company’s 50% investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns Hollywood Casino at Kansas Speedway.

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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 June 30,				For the six months ended June 30,
(in millions)	2024		2023		2024		2023
Food and beverage	$	54.9	$	54.8	$	108.4	$	109.1
Hotel	35.3		35.8		69.3		65.7
Other	2.7		3.2		5.4		6.3
Total complimentaries associated with gaming contracts	$	92.9	$	93.8	$	183.1	$	181.1

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 $32.1 million and $33.1 million as of June 30, 2024 and December 31, 2023, respectively, and consisted principally of the obligation associated with the loyalty points. Our loyalty point obligations are generally settled within six months of issuance. 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) m