PENN Entertainment, Inc.

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.

Operating Cash Flow

Trends in our operating cash flows tend to follow trends in operating 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 $144.6 million for the nine months ended September 30, 2025, primarily due to an increase in our reportable segments’ Adjusted EBITDAR.

Investing Cash Flow

Cash used in investing activities during the nine months ended September 30, 2025 and September 30, 2024, was $303.3 million and $312.7 million, respectively, and primarily related to capital expenditures of $457.3 million and $261.7 million, respectively. Cash used in investing activities during the nine months ended September 30, 2025 was partially offset by the receipt of the full $130.0 million in committed funding from GLPI for the sale-and-lease back of real estate assets of the new Joliet facility, as discussed below.

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 nine months ended September 30, 2025 and 2024, as applicable.

For the year ending December 31, 2025, we anticipate capital expenditures of approximately $255.0 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 $133.2 million incurred during thenine months ended September 30, 2025. Additionally, for the year ending December 31,2025, we anticipate capital project expenditures of $430.0 million, the majority of which arein connection with the PENN Development Projects pursuant to our Master Development Agreement with GLPI (as described in Note 7, “Leases” in the notes to the unaudited Consolidated Financial Statements). During the nine months ended September 30, 2025, we incurred capital expenditures of $324.1 million primarily 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. On August 1, 2025, the Company received the full $130.0 million in committed funding from GLPI for the Joliet Project which opened on August 11, 2025, and on November 3, 2025, the Company received the full $150.0 million in committed funding from GLPI for the M Resort Project, of which the new hotel tower is expected to open on December 1, 2025. We have neither requested nor received any funding from GLPI for the Aurora Project or Columbus Project.

Financing Cash Flow

For the nine months ended September 30, 2025, net cash used in financing activities totaled $129.0 million, primarily related to repurchases of $223.8 million of our Convertible Notes, repurchases of our common stock of $269.4 million, principal payments of $72.2 million on our finance leases and financing obligations, $27.1 million in payments on insurance financing, as well as $28.2 million in principal payments on long-term debt, partially offset by net proceeds from our revolving credit facility of $510.0 million.

For the nine months ended September 30, 2024, net cash used in financing activities totaled $175.0 million, primarily related to principal payments of $68.0 million on our finance leases and financing obligations, $30.5 million in indemnification payments, $28.6 million in payments on insurance financing, as well as $28.2 million in principal payments on long-term debt.

As of September 30, 2025, we had $2.9 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 had $510.0 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 6, “Long-Term Debt” in the notes to the 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 November 5, 2025, the Company had $500.0 million in outstanding borrowings under its Amended Revolving Credit Facility, resulting in $476.1 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 September 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 6, “Long-Term Debt” in the notes to the 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.

On October 30, 2025, the Board of Directors approved a new $750.0 million share repurchase program (the “October 2025 Authorization”), subject to the finalization of and entry into the Termination Agreement and the Investment Agreement Amendment, both of which are defined and discussed in Note 9, “Commitments and Contingencies” in the notes to the unaudited Consolidated Financial Statements. The October 2025 Authorization commences on January 1, 2026 and expires on December 31, 2028 and will take effect after the Company’s existing $750.0 million share repurchase program 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 nine months ended September 30, 2025, the Company repurchased 15,214,631 shares of its common stock in open market transactions for $269.4 million at an average price of $17.70 per share.

Subsequent to the quarter ended September 30, 2025, the Company repurchased 4,876,200 shares of its common stock at an average price of $17.44 per share for an aggregate amount of $85.0 million. As of November 5, 2025, the remaining availability under our December 2022 Authorization was $395.4 million.

The cost of all repurchased shares is recorded as “Treasury stock” within the unaudited Consolidated Balance Sheets.

Other Factors Affecting Liquidity

ESPN BET Sportsbook Agreement

On November 5, 2025, PENN and ESPN entered into the Termination Agreement, pursuant to which PENN’s exclusive right to use the ESPN BET trademark for online sports betting in the U.S. will terminate on December 1, 2025. The Termination Agreement provides that PENN will pay ESPN a total of $38.1 million in the fourth quarter of 2025 in respect of all remaining fees owed through the Termination Date. In addition, PENN has agreed to pay ESPN a total of $5.0 million following the Termination Date for traditional media to support theScore Bet and/or Hollywood iCasino offerings. The Termination Agreement provides that these payments will settle all outstanding payment obligations from PENN to ESPN under the Sportsbook Agreement. See Note 9, “Commitments and Contingencies” in the notes to the 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 7, “Leases” in the notes to the 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, subject to the GLPI Funding Deadline Extension. Our new Joliet facility opened on August 11, 2025, the new hotel tower at the M Resort is expected to open December 1, 2025, and the new Aurora facility and the Columbus hotel tower are expected to open in the second quarter of 2026. The PENN Development Projects are all subject to necessary regulatory and other government approvals. As of November 5, 2025, the Company has received the full $130.0 million in committed funding from GLPI for the Joliet Project, as well as the full $150.0 million in committed funding from GLPI for the M Resort Project. We have neither requested nor received any funding from GLPI for the Aurora Project or Columbus Project.

The sale-and-lease back of real estate assets related to the new Joliet facility to GLPI for $130.0 million and the new M Resort tower for $150.0 million resulted in increased annual rent under the 2023 Master Lease by $10.1 million, and $11.7 million, respectively. These increases are subject to annual escalation in accordance with the terms of the 2023 Master Lease.

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 7, “Leases” in the notes to the 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:

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. Other than discussed below, there have been no significant changes in our critical accounting estimates during the nine months ended September 30, 2025.

Interactive goodwill

During the quarter ended September 30, 2025, management identified a goodwill impairment triggering event and, as such, performed a quantitative analysis. See Note 5, “Goodwill and Other Intangible Assets” in the notes to the unaudited Consolidated Financial Statements for further discussion.

For our quantitative goodwill impairment test, an income approach, in which a discounted cash flow (“DCF”) model was utilized, and a market-based approach using guideline public company multiples of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) from the segment’s peer group was utilized in order to estimate the fair market value of the reporting unit. The Company compared the fair value of the segment’s reporting unit to its carrying amount. As the carrying amount of the reporting unit exceeded the fair value, an impairment was recorded equal to the amount of the excess, which was $825.0 million.

The evaluation of goodwill requires the use of estimates about future operating results of the reporting unit to determine the estimated fair value of the reporting unit. The Company must make various assumptions and estimates in performing its impairment testing. The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions which represent the Company’s best estimates of the cash flows expected to result from the use of the assets including their eventual disposition. Significant assumptions utilized in the estimation of future cash flows for the reporting unit include forecasted revenues, forecasted operating expenses, the discount rate used in the valuation, and the terminal year EBITDA exit multiple. These significant assumptions are complex and subjective. They are sensitive to changes in underlying assumptions and can be affected by a variety of factors, including external factors, such as industry, geopolitical and economic trends, and internal factors, such as changes in the Company’s business strategy, which may re-allocate capital and resources to different or new opportunities which management believes will enhance its overall value but may be to the detriment of the Interactive reporting unit. Changes in estimates, increases in the Company’s cost of capital, reductions in transaction multiples, changes in operating and capital expenditure assumptions, or application of alternative assumptions and definitions could produce significantly different results. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the Company’s estimates. If our ongoing estimates of future cash flows are not met, we may have to record further impairment charges in future periods. Our estimates of cash flows are based on the current regulatory and economic climates, recent operating information, and budgets of the reporting unit. These estimates could be negatively impacted by changes in federal, state, provincial, or local regulations, economic downturns, or other events affecting our Interactive segment.

Forecasted cash flows can be significantly impacted by the local economies in which our Interactive reporting unit operates. Increases in unemployment rates, inflation and/or interest rates can also result in decreased customer activity and/or lower customer spend. Additionally, increases in gaming taxes approved by state and provincial regulatory bodies can negatively impact forecasted cash flows.

The goodwill at our Interactive reporting unit was subject to a sensitivity analysis to determine the potential additional impairment loss:

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For information with respect to new accounting pronouncements and the impact of these pronouncements on the unaudited Consolidated Financial Statements, see Note 3, “New Accounting Pronouncements” in the notes to the 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,” “look forward to,” 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, the Company’s expectations regarding the rebranding of our U.S. OSB product to theScore Bet and the future success of theScore Bet, Hollywood iCasino and its other digital offerings; 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; 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 retail and online gaming and sports betting, entertainment and sports content 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 realize the anticipated benefits of our iCasino forward strategy and the rebranding of our U.S. online sports betting product to theScore Bet; our ability to attract and retain user adoption of theScore Bet and Hollywood iCasino apps in a rapidly evolving and highly competitive market; the impact of the termination of the Sportsbook Agreement; the outcome of any legal proceedings that may be instituted against the Company, or its respective directors, officers or employees; the ability of the Company 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.