PENN Entertainment, Inc.

Previous wording

PENN Entertainment, Inc., together with its subsidiaries (“PENN,” or the “Company”), is North America’s leading provider of integrated entertainment, sports content, and casino gaming experiences. As of the date of this filing, PENN operated in 28 jurisdictions throughout North America, with a broadly diversified portfolio of casinos, racetracks, and online sports betting, and iCasino offerings under well-recognized brands including Hollywood Casino®, L’Auberge®, ESPN BET™, theScore BET Sportsbook and Casino®. PENN’s ability to leverage its partnership with ESPN, Inc. and ESPN Enterprises, Inc. (together, “ESPN”), the “worldwide leader in sports,” and its ownership of theScore®, the top digital sports media brand in Canada, is central to the Company’s highly differentiated strategy to expand its footprint and efficiently grow its customer ecosystem. PENN’s focus on organic cross-sell opportunities is reinforced by its market-leading retail casinos, sports media assets, and technology, including a proprietary state-of-the-art, fully integrated digital sports and iCasino betting platform and an in-house iCasino content studio (PENN Game Studios). The Company’s portfolio is further bolstered by its industry-leading PENN Play™ customer loyalty program, offering its over 32 million members a unique set of rewards and experiences.

Current wording

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.

Previous wording

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”).

Current wording

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.

Previous wording

The Master Development Agreement contains additional rent (together with the 2023 Master Lease base rent, the “2023 Master Lease Rent”) equal to (i) 7.75% of any project funding received by PENN from GLPI for an anticipated relocation of PENN’s riverboat casino and related developments with respect to Hollywood Casino Aurora (“Aurora” and the related developments, the “Aurora Project”) and (ii) a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for certain anticipated development projects with respect to Hollywood Casino Joliet (“Joliet”), Hollywood Casino Columbus (“Columbus”), and the M Resort Spa Casino (“M Resort,” collectively the “Other Development Projects,” and together with the Aurora Project, the “PENN Development Projects”). The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon our request, up to $350.0 million in the aggregate for the Other Development Projects, in accordance with certain terms and conditions set forth in the Master Development Agreement. These funding obligations of GLPI expire on January 1, 2026. We expect our new Joliet facility to open in the fourth quarter of 2025, and the new hotel tower at the M Resort, the new Aurora facility, and the Columbus hotel tower to open in the first half of 2026. As of the date of this filing, the Company has neither requested nor received any funding from GLPI for the PENN Development Projects.

Current wording

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.

Previous wording

On April 24, 2025, the Company announced a new development project to relocate its Ameristar Council Bluffs riverboat casino operations to a new, state-of-the-art land-based property to be rebranded as Hollywood Casino Council Bluffs. Under the proposed plan, the new Hollywood Casino Council Bluffs 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 million and $200 million and is expected to take 18-24 months to complete following the design and permitting approval process. The Company is entitled to obtain financing for the project from GLPI of 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.

Current wording

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.

Previous wording

We believe that our portfolio of assets provides us with the benefit of geographically-diversified cash flow from operations. We expect to continue to expand our gaming operations through the implementation and execution of a disciplined capital expenditure program at our existing properties, the pursuit of strategic acquisitions and investments, and the development of new gaming properties. In addition, the acquisition of theScore 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.

Current wording

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.

Previous wording

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 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.

Current wording

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.

Previous wording

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 months ended March 31, 2025 and 2024” section below for discussions on our results of operations by reportable segment.

Current wording

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.

Previous wording

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, low consumer confidence, global hostilities, political or social unrest, and the effects of pandemics. In addition, visitation and the volume of play have historically been negatively impacted by significant construction surrounding our properties, adverse regional weather conditions, and natural disasters. In all instances, such insights are based solely on our judgment and professional experience, and no assurance can be given as to the accuracy of our judgments.

Current wording

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.

Previous wording

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 three months ended March 31, 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.

Current wording

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.

Previous wording

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, Adjusted EBITDA margin, Adjusted EBITDAR, and Adjusted EBITDAR margin; as well as a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDAR and related margins.

Current wording

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.

Previous wording

(1)The Other category, included in the tables to reconcile the segment information to the consolidated information, consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Park, the Company’s joint venture interests in Freehold Raceway (which ceased operations on December 28, 2024), and our management contract for Retama Park Racetrack. Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property. The Other category also includes corporate overhead expenses, which consist of certain expenses, such as: payroll, professional fees, travel expenses, and other general and administrative expenses that do not directly relate or have not otherwise been allocated. Corporate overhead expenses were $36.0 million and $24.9 million for the three months ended March 31, 2025 and 2024, respectively, and include $7.7 million of legal and advisory costs related to our response to a purported proxy campaign in connection with our 2025 annual meeting of shareholders in the current year quarter.

Current wording

(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.

Previous wording

(3)The total is a mathematical calculation derived from the sum of reportable segments (as well as the Other category). As noted within “Non-GAAP Financial Measures” below, Adjusted EBITDAR, and the related margin, is presented on a consolidated basis outside the financial statements solely as a valuation metric.

Current wording

(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.

Previous wording

(4)Pertains to the following operating leases: (i) AR PENN Master Lease; (ii) 2023 Master Lease; (iii) Margaritaville Lease; and (iv) Greektown Lease.

Current wording

(5)Pertains to the following operating leases: (i) AR PENN Master Lease; (ii) 2023 Master Lease; (iii) Margaritaville Lease; and (iv) Greektown Lease.

Previous wording

Consolidated comparison of the three months ended March 31, 2025 and 2024

Current wording

Consolidated comparison of the three and six months ended June 30, 2025 and 2024

Previous wording

Gaming revenuesfor the three months ended March 31, 2025 increased by $40.0 million compared to the corresponding prior year period, primarily due to an increase in online gaming revenue at our Interactive segment, partially offset by a decrease in gaming revenues within our Northeast, South, and Midwest segments. The increase in online gaming revenues within our Interactive segment was due toiCasino growth and decreased promotional expense related to ESPN BET. Retail gaming revenues decreased as newsupply continues to impact visitation in certain retail property segments.

Current wording

Gaming revenuesfor 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 toiCasino 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 newsupply continues to impact visitation.

Previous wording

Food, beverage, hotel, and other revenues for the three months ended March 31, 2025 increased by $25.6 million compared to the corresponding prior year period. The increase for the period primarily relates to gaming tax reimbursement amounts related tothird-party online sports betting and/or iCasino partners for online sports betting and iCasino market access of $11.6 million compared to the prior year.

Current wording

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 tothird-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.

Previous wording

See“Segment comparison of the three months ended March 31, 2025 and 2024” below for more detailed explanations of the fluctuations in revenues.

Current wording

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.

Previous wording

Gaming expenses primarily consist of gaming taxes, payroll, marketing and promotional, and other expenses associated with our gaming operations. Gaming expenses for the three months ended March 31, 2025 decreased by $25.7 million compared to the corresponding prior year period due to additional marketing expenses supporting our initial launch of ESPN BET within our Interactive segment during thethree months ended March 31, 2024. Gaming expenses at our retail properties decreased in the current period due to the decrease in gaming revenues within our Northeast, South, and Midwest segments as described above.

Current wording

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 thecorresponding 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.

Previous wording

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. Food, beverage, hotel, and other expenses for thethree months ended March 31, 2025 increased$13.7 million compared to the corresponding prior year period, primarily due to increases in gaming tax reimbursement amounts related tothird-party online sports betting and/or iCasino partners for online sports betting and iCasino market access.

Current wording

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. Food, beverage, hotel, and other expenses for thethree 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 tothird-party online sports betting and/or iCasino partners for online sports betting and iCasino market access.

Previous wording

Interest expense, net decreased by $8.3 million for the three months ended March 31, 2025, compared to the corresponding prior year period, primarily due to an increase in capitalized interest related to the PENN Development Projects.

Current wording

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.”

Previous wording

Interest income decreased by $3.9 million for the three months ended March 31, 2025, respectively, compared to the corresponding prior year period, primarily due to a decrease in the amount invested in money market funds, which we use for short term investing.

Current wording

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.

Previous wording

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 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,” 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.

Current wording

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 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.

Previous wording

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. Equity securities were provided to the Company in conjunction with entering into multi-year agreements with sports betting operators for online sports betting and iCasino market access across our portfolio. For the three months ended March 31, 2025, other income primarily consisted of an unrealized holding gain of $0.8 million, as compared to an unrealized holding loss of $1.5 million for the three months ended March 31, 2024.

Current wording

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.

Previous wording

Income tax expensewas $47.7 million for the three months ended March 31, 2025, compared to income tax benefit of $12.6 million for the three months ended March 31, 2024. The effective tax rate (income taxes as a percentage of income from operations before income taxes) including discrete items was 26.2% and 14.8% for the three months ended March 31, 2025 and 2024, 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 months ended March 31, 2025, as compared to the corresponding prior period was primarily due to (i) excluding certain foreign losses for which no tax benefit can be recognized in our worldwide effective tax rate calculation, (ii) non-deductible permanent items offset against tax credit utilization, (iii) state taxes, and (iv) changes to the valuation allowance. See Note 7, “Income Taxes” to our unaudited Consolidated Financial Statements for additional details.

Current wording

Income tax expensewas $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.

Previous wording

Our effective income tax rate can 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. Certain of these and other factors, including our history and projections of pre-tax earnings, are considered in assessing our ability to realize our net deferred tax assets.

Current wording

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.

Previous wording

The West segment’s revenues for the three months ended March 31, 2025 increased by$0.9 million, compared to the prior year period, primarily due to anincrease in visitation at the West segment’s properties’ hotels, partially offset by adecrease in gaming revenues.

Current wording

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 anincrease 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.

Previous wording

The South segment’s revenues for the three months ended March 31, 2025 decreased by $10.2 million compared to the corresponding 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 hotel and food and beverage revenues.

Current wording

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.

Previous wording

For the three months ended March 31, 2025, the South segment’s Adjusted EBITDAR decreased $10.2 million, and Adjusted EBITDAR margin decreased to 35.8%, respectively, primarily due to the decrease in gaming revenues as described above.

Current wording

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.

Previous wording

The Midwest segment’s revenues for the three months ended March 31, 2025 decreased by$8.3 million compared to the corresponding prior year period, primarily due to a decrease in gaming revenues as severe weather events and increased competition negatively impacted visitation at several of our properties.

Current wording

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.

Previous wording

For the three months ended March 31, 2025, the Midwest segment’s Adjusted EBITDAR decreased $3.2 million and Adjusted EBITDAR margin remained flat at 40.2% primarilydue to the decreases in gaming revenues discussed above and an increase in labor costs, partially offset by decreased general and administrative costs.

Current wording

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 Adjusted EBITDAR margin decreased to 41.0% and 40.6%, respectively, primarilydue to the decreases in gaming revenues discussed above, and increased labor costs.

Previous wording

The Interactive segment’s revenues for the three months ended March 31, 2025 increased by $82.4 million compared to the corresponding prior year period, primarily due to an increase in gaming revenues. Gaming revenues were positively impacted byiCasino growth anda decrease in promotional spend. Other revenues are inclusive of gaming taxamounts related tothird-party online sports betting and/or iCasino partners for online sports betting and iCasino market accessof $128.2 million and $116.6 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

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 byiCasino and online sports betting growth driven by ongoing product enhancementsanda decrease in promotional spend. Other revenues are inclusive of gaming taxamounts related tothird-party online sports betting and/or iCasino partners for online sports betting and iCasino market accessof $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.

Previous wording

For the three months ended March 31, 2025, the Interactive segment’s Adjusted EBITDAR and Adjusted EBITDAR margin increased primarily due to the increase in gaming revenues and decrease in marketing expense, as discussed above.

Current wording

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.

Previous wording

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 fees, travel expenses, and other general and administrative expenses that do not directly relate to or have not otherwise been allocated. Revenues for the three months ended March 31, 2025 decreased slightly compared to the prior year period, primarily due to fluctuations in racing revenues. Corporate overhead expenses were $36.0 million and $24.9 million for the three months ended March 31, 2025 and 2024, respectively, and include $7.7 million of legal and advisory costs related to our response to a purported proxy campaign in connection with our 2025 annual meeting of shareholders in the current year quarter.

Current wording

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 fees, 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.

Previous wording

Changes in Adjusted EBITDAR for the three months ended March 31, 2025 primarily relate to increased general and administrative costs, inclusive of the $7.7 million of legal and advisory costs as described above, and labor costs.

Current wording

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.

Previous wording

In addition to GAAP financial measures, management uses Adjusted EBITDA, Adjusted EBITDAR, Adjusted EBITDA margin, and Adjusted EBITDAR margin 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.

Current wording

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.

Previous wording

We define Adjusted EBITDA as earnings before interest expense, net; interest income; income taxes; depreciation and amortization; stock-based compensation; debt extinguishment charges; impairment losses; insurance recoveries, net of deductible charges; changes in the estimated fair value of our contingent purchase price obligations; gain or loss on disposal of assets; the difference between budget and actual expense for cash-settled stock-based awards; pre-opening expenses; loss on disposal of business; non-cash gains/losses associated with REIT transactions as described in Note 6, “Leases” to our unaudited Consolidated Financial Statements; 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. We define Adjusted EBITDA margin as Adjusted EBITDA divided by consolidated revenues.

Current wording

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.

Previous wording

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 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.

Current wording

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

Previous wording

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, as well as related margins:

Current wording

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:

Previous wording

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 $110.6 million for the three months ended March 31, 2025, primarily due to an increase in our reportable segments’ Adjusted EBITDAR and receipt of income tax refunds.

Current wording

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.

Previous wording

Cash used in investing activities during the three months ended March 31, 2025 and March 31, 2024, was $135.9 million and $47.3 million, respectively, and primarily related to capital expenditures of $125.2 million and $41.4 million, respectively.

Current wording

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.