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 income, 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 $148.9 million for the year ended December 31, 2025 primarily due to an increase in Adjusted EBITDAR from our Interactive segment, partially offset by a decrease in Segment Adjusted EBITDAR from our retail operations.

Investing Cash Flow

Cash used in investing activities for the year ended December 31, 2025 of $351.1 million primarily relates to capital expenditures of $647.7 million, partially offset by proceeds of $280.0 million from sale-and-leaseback transactions in conjunction with our development projects. For the year ended December 31, 2024, cash used in investing activities of $541.2 million was primarily related tocapital expenditures of$482.7 million.

Capital Expenditures

Capital expenditures are accounted for as either project capital (new facilities or expansions) or maintenance capital (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 years ended December 31, 2025, 2024, and 2023, as applicable.

Capital expenditures for the year ended December 31, 2025 were $647.7 million, inclusive of$239.3 million of maintenance capital expenditures and $408.4 million of project capital expenditures. For the year ending December 31, 2026, our anticipated maintenance capital expenditures are approximately $220.0 million, which include capital expenditures required under our Triple Net Leases, which require us to spend a specified percentage of total revenues. Additionally for the year ending December 31, 2026, we anticipate project capital expenditures of $225.0 million, the majority of which are in connection with the PENN Development Projects pursuant to our Master Development Agreement with GLPI (as described in Note 11, “Leases” in the notes to our Consolidated Financial Statements). 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 $350.0 million in aggregate for the Other Development Projects, in accordance with certain terms and conditions set forth in the Master Development Agreement. The PENN Development Projects still under construction 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, which opened on December 1, 2025. We have neither requested nor received any funding from GLPI for the Aurora Project. We did not request or receive any funding from GLPI for the Columbus Project, and GLPI’s funding commitment expired on December 31, 2025.

Financing Cash Flow

For the year ended December 31, 2025, net cash used in financing activities totaled $165.6 million compared to $186.5 million in net cash used in financing activities in the prior year. During the year ended December 31, 2025, net cash used in financing activities primarily related to $354.4 million of common stock repurchases, $223.8 million ofrepurchases ofour Convertible Notes,$53.4 million in principal payments on our finance leases, $43.5 million in principal payments on our financing obligations, $37.5 million in principal debt repayments, $31.1 million in payments on insurance financing, partially offset by net proceeds from our revolving credit facility of $570.0 million.

During the year ended December 31, 2024, net cash used in financing activities of $186.5 million primarily related to $50.3 million in principal payments on our finance leases, $40.8 million in principal payments on our financing obligations,$37.5 million in principal debt repayments,$35.4 million in payments on insurance financing, as well as $30.5 million in indemnification payments.

Debt Issuance and Other long-term Obligations

At December 31, 2025, we had $2.9 billion in aggregate principal amount of indebtedness, including $2.0 billion outstanding under our Amended Credit Facilities, $106.7 million outstanding under our Convertible Notes, $400.0 million outstanding under our 5.625% Notes, $400.0 million outstanding under our 4.125% Notes, and $8.6 million outstanding in other long-term obligations. We had $570.0 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 10, “Long-Term Debt” in the notes to the Consolidated Financial Statements. The Convertible Notes are scheduled to mature in 2026, however, the Company intends to refinance on a long-term basis. As of December 31, 2025 we had conditional obligations under letters of credit issued pursuant to the Amended Credit Facilities with face amounts aggregating to $23.9 million resulting in $406.1 million available borrowing capacity under our Amended Revolving Credit Facility. As of February 25, 2026, the Company had $565.0 million in outstanding borrowings under its Amended Revolving Credit Facility, resulting in $411.1 million of 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 December 31, 2025, the Company was in compliance with all required financial covenants. The Company believes that it will remain in compliance with all of its required financial covenants for at least the next 12 months following the date of filing this Annual Report on Form 10-K with the SEC.

See Note 10, “Long-term Debt” in the notes to our Consolidated Financial Statements for additional information of the Company’s debt and other long-term obligations.

Share Repurchase Authorizations

On December 6, 2022, the Board authorized an additional $750.0 million share repurchase program (the “December 2022 Authorization”), which expired on December 31, 2025. On October 30, 2025, the Board approved a new $750.0 million share repurchase program (the “October 2025 Authorization”), which commenced on January 1, 2026 and expires on December 31, 2028. 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 year ended December 31, 2025, the Company repurchased 20,090,831 shares of its common stock in open market transactions for $354.4 million at an average price of $17.64 per share under the December 2022 Authorization. The cost of all repurchased shares is recorded to “Treasury stock” within the Consolidated Balance Sheets.As of February 25, 2026, the remaining availability under our October 2025 Authorization was $750.0 million.

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 OSB in the U.S. terminated on December 1, 2025. The company paid $155.6 million during the year ended December 31, 2025 related to the Sportsbook Agreement. As of December 31, 2025, all outstanding payment obligations from PENN to ESPN under the Sportsbook Agreement have been settled. See Note 12, “Commitments and Contingencies” in the notes to our 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 AR PENN Master Lease, 2023 Master Lease, and Pinnacle Master Lease (as such terms are defined in Note 11, “Leases” in the notes to our Consolidated Financial Statements, and collectively referred to as the “Master Leases”) with GLPI. We refer to the Master Leases, VICI Master Lease, Margaritaville Lease (prior to December 4, 2025), Greektown Lease (prior to December 4, 2025), and 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 December 4, 2025, the Company entered into a triple net master lease with VICI Properties Inc. (NYSE: VICI) (“VICI”) (“VICI Master Lease”) which amended and restated the Margaritaville Lease and the Greektown Lease (both as defined in Note 11, “Leases” in the notes to our Consolidated Financial Statements) into a single combined lease. The VICI Master Lease has an initial term through May 23, 2034, with four subsequent five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. Upon execution of the VICI Master Lease, initial annual rent was set at $80.7 million, representing the aggregate annual rent under the Margaritaville Lease and the Greektown Lease in effect immediately prior to December 4, 2025. Annual rent will increase by 1.0% to $81.5 million effective June 1, 2026 and, thereafter, will be subject to an annual escalator of up to 1.0% each June 1, depending on a minimum coverage floor ratio of Net Revenue to Rent to be determined over the performance period from June 1, 2025 to May 31, 2026 (as defined within the VICI 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. As of December 31, 2025, we are required to make total annual minimum rent payments of $986.3 million, of which$970.0 million relates to our Triple Net Leases. Additionally, our Triple Net Leases are subject to annual escalators and periodic percentage rent resets, as applicable. See Note 11, “Leases” in the notes to our 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:

(1)As discussed in Note 11, “Leases,” prior to December 4, 2025, lease payments made to VICI related to the Margaritaville and Greektown individual triple net leases; effective December 4, 2025, lease payments made to VICI relate to the VICI Master Lease.

Other Contractual Cash Obligations

The following table presents our other contractual cash obligations as of December 31, 2025:

(1)Excludes the liability for unrecognized tax related benefits and indemnification obligation of $80.0 million, as we cannot reasonably estimate the period of cash settlement with the respective taxing authorities.

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, economic uncertainty, and geopolitical uncertainty; (ii) that our anticipated earnings projections will be realized; (iii) that we will realize the anticipated benefits of our iCasino forward strategy and the rebranding of our U.S. OSB product to theScore Bet; 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 “Risk Factors—Risks Related to Our Capital Structure” within“Item 1A. Risk Factors,” of this Annual Report on Form 10-K for more information on additional financing risks.

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.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For information on new accounting pronouncements and the impact of these pronouncements on our Consolidated Financial Statements, see Note 3, “New Accounting Pronouncements” in the notes to our Consolidated Financial Statements.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Consolidated Financial Statements in accordance with GAAP requires us to make estimates and judgments that are subject to an inherent degree of uncertainty. The nature of the estimates and assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain factors or the susceptibility of such factors to change. The development and selection of critical accounting estimates, and the related disclosures, have been reviewed with the Audit Committee of our Board. We believe the current assumptions and other considerations used to estimate amounts reflected in our Consolidated Financial Statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our Consolidated Financial Statements, the resulting changes could have a material adverse effect on our financial condition, results of operations, and cash flows.

Leases

The reassessment of the lease classification of the land and building components within the 2023 Master Lease, in connection with the August 1, 2025 and November 3, 2025 lease modifications, and the VICI Master Lease modification (as described in Note 11, “Leases” in the notes to our Consolidated Financial Statements) required management to apply significant judgment and make critical estimates and assumptions. These estimates and assumptions included (i) the fair value of the land and building assets; (ii) the lease term, including the determination of whether renewal options are reasonably certain of being exercised; and (iii) the discount rate applied over the lease term, which is based on our collateralized incremental borrowing rate.

Goodwill and other intangible assets

As of December 31, 2025, the Company had $1.8 billion in goodwill and $1.4 billion in other intangible assets, netwithin its Consolidated Balance Sheets, represen ting 12.5% and 9.8% of total assets, respectively. These intangible assets require significant management estimates and judgment pertaining to: (i) the valuation in connection with initial purchase price allocations and (ii) the ongoing evaluation for impairment. Our annual goodwill and other indefinite-lived intangible assets impairment test is performed on October 1st of each year, or more frequently if indicators of impairment exist.

During the second quarter of 2025, we identified an indicator of impairment on our trademark at Ameristar Council Bluffs and performed tests to assess for impairment, which resulted in an impairment charge of $15.0 million. During the third quarter of 2025, we identified an indicator of impairment related to goodwill within our Interactive segment. Accordingly, we performed an interim goodwill impairment test, which resulted in the recognition of an $825.0 million goodwill impairment charge. As a result of our annual test completed during the fourth quarter of 2025, we recognized $7.0 million in impairment charges on our goodwill in our South segment, $88.3 million in impairment charges on our gaming licenses in our Northeast and South segments, and $10.0 million in impairment charges on our trademarks in our South and West segments. For further discussion, see Note 8, “Goodwill and Other Intangible Assets” to our Consolidated Financial Statements.

Once an impairment of goodwill or other intangible asset has been recorded, it cannot be reversed. Since the Company’s goodwill and other indefinite-lived intangible assets are not amortized, there may be volatility in reported net income or loss because impairment losses, if any, are likely to occur irregularly and in varying amounts. Intangible assets that have a definite life are amortized on a straight-line basis over their estimated useful lives or related service contract. The Company reviews the carrying amount of its amortizing intangible assets for possible impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the carrying amount of the amortizing intangible assets exceed their fair value, an impairment loss is recognized.

Revenue and earnings streams within our industry can vary significantly based on various circumstances, which in many cases, are outside of the Company’s control, and as such are difficult to predict and quantify. We have disclosed several of these circumstances in“Item 1A. Risk Factors” of this Annual Report on Form 10-K.

Interactive reporting unit goodwill

The Interactive reporting segment constitutes a single reporting unit for purposes of goodwill impairment testing and had a goodwill balance of $774.8 million as of December 31, 2025. For our interim quantitative goodwill impairment test for the segment’s goodwill, an income approach, in which a discounted cash flow (“DCF”) model and a market-based approach used 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, 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 PENN’s 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 additional 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 as of the September 30, 2025 testing date:

Gaming licenses

We consider our gaming licenses as indefinite-lived intangible assets that do not require amortization based on our future expectations to operate our gaming properties indefinitely as well as our historical experience in renewing these intangible assets at minimal cost with various jurisdictional commissions. Rather, these gaming licenses are tested annually for impairment, or more frequently if indicators of impairment exist, by comparing the fair value of the recorded assets to their carrying amount. If the carrying amounts of the gaming licenses exceed their fair value, an impairment loss is recognized.

We assess the fair value of our gaming licenses using the Greenfield Method under the income approach, which estimates the fair value of the gaming license using a DCF model assuming we built a new casino with similar utility to that of the existing casino. The method assumes a theoretical start-up company going into business without any assets other than the intangible asset being valued. As such, the value of the gaming license is a function of the following assumptions:

•Projected revenues and operating cash flows (including an allocation of the projected payments under any applicable Triple Net Lease);

•Estimated construction costs and duration;

•Estimated pre-opening expenses; and

•Discounting that reflects the level of risk associated with receiving future cash flows attributable to the license.

In general, as it pertains to the Triple Net Leases, such amounts are allocated based on the reporting unit’s projected Adjusted EBITDAR as a percentage of the aggregate estimated Adjusted EBITDAR of all reporting units subject to each of the Triple Net Leases, as applicable.

The evaluation of gaming license intangible assets requires the use of estimates about future operating results of each reporting unit to determine the estimated fair value of the gaming license indefinite-lived intangible assets. The Company must make various assumptions and estimates in performing the impairment testing. The implied fair value includes estimates of future cash flows (including an allocation of the projected payments under any applicable Triple Net Lease) 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. 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 additional 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 various properties where it conducts operations. These estimates could be negatively impacted by changes in federal, state, or local regulations, economic downturns, or other events affecting our properties.

Forecasted cash flows (based on our annual operating plan as determined in the fourth quarter) can be significantly impacted by the local economy in which our reporting units operate. Increases in unemployment rates, inflation and/or interest rates can also result in decreased customer visitation and/or lower customer spend per visit. Additionally, increases in gaming taxes approved by state regulatory bodies can negatively impact forecasted cash flows.

Assumptions and estimates about future cash flow levels, discount rates and multiples by individual reporting units 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 PENN’s overall value but may be to the detriment of an individual reporting unit.

Reporting units with gaming licenses which were identified during our 2025 annual impairment assessment, performed as of October 1, 2025, as having less than a substantial passing margin, were subject to a sensitivity analysis to determine the potential impairment losses: