PENN Entertainment (NASDAQ:PENN) executives highlighted improving profitability trends across both the company’s retail casino portfolio and its interactive segment during the company’s fourth quarter 2025 earnings call, while also outlining expectations for meaningful free cash flow generation and deleveraging in 2026.
Chief Executive Officer Jay Snowden said the company’s “diversified retail portfolio delivered another solid quarter,” noting that Adjusted EBITDAR grew year-over-year after adjusting for poor weather in December. Chief Financial Officer Felicia Hendrix added that inclement weather in December reduced retail segment Adjusted EBITDAR by approximately $7 million, with the largest impact in the Northeast segment.
For the fourth quarter, Hendrix reported retail segment revenue of $1.4 billion and Adjusted EBITDAR of $456.4 million, representing a 32.3% segment Adjusted EBITDAR margin.
Snowden said theoretical revenue increased year-over-year across all rated worth and age segments, with older demographics and VIP play contributing meaningfully. He also pointed to regional strength in Ohio and St. Louis, as well as at L’Auberge Lake Charles.
Management discussed competitive pressures in certain markets, including new supply in Baton Rouge, New Orleans and Bossier City, Louisiana, and in Council Bluffs, Iowa. Snowden said those pressures were beginning to fade, and noted the company would lap the Bossier City supply impact in February, with residual effects potentially lasting another month or two.
Snowden highlighted continued momentum at the M Resort in Las Vegas following the opening of its new hotel tower. He said the property achieved record gaming volumes in December and record net revenue in January, and described strong group demand that the prior room count could not accommodate.
At Hollywood Casino Joliet, Snowden said the property is producing “strong results” from new and reactivated customers, including a nearly 130% year-over-year increase in active players. He also provided additional operating comparisons, saying daily visitation and table volumes have doubled, non-gaming revenue has doubled, and slot revenue is up 40% to 50%.
Looking ahead, Snowden said early performance at M Resort and Joliet supports confidence in upcoming openings, including the Hollywood Columbus hotel tower and the new Hollywood Casino Aurora, as well as a new Council Bluffs property expected to open in late 2027 or early 2028. He reiterated the company’s expectation that its development projects will generate approximately 15%+ cash-on-cash returns.
Hendrix said Aurora is expected to have roughly two weeks of downtime in the second quarter of 2026 as the company transitions to the new land-based facility. She added that the second half of 2026 is expected to benefit from all four retail growth projects being open.
On the digital side, Snowden said the company successfully rebranded its U.S. online sportsbook to theScore Bet on December 1, and achieved positive Adjusted EBITDA in December. He attributed the improvement to iCasino momentum, disciplined cost management, and strong sports betting hold rates.
For the fourth quarter, Hendrix reported interactive segment revenue of $398.7 million, including a tax gross-up of $182.7 million, and an Adjusted EBITDA loss of $39.9 million. Snowden said the interactive segment posted record gaming revenue in the quarter, supported by growth in standalone Hollywood iCasino products, increased cross-sell, and improvements in sportsbook operations. He also said Adjusted EBITDA improved $70 million year-over-year in the quarter, driven by 95% adjusted flow-through.
Management reiterated its expectation that the interactive segment will reach break-even Adjusted EBITDA for the full year 2026, which Snowden said would represent a $268 million year-over-year improvement. Hendrix said the company expects all components—U.S. online sports betting, iCasino, and Canadian operations—to generate positive contribution margin in 2026.
In response to analyst questions, Snowden and Chief Technology Officer Aaron LaBerge said the company’s interactive growth expectations are driven primarily by iCasino, while sports betting net gaming revenue is expected to grow despite lower handle as promotional reinvestment is reduced, particularly among lower-worth and unprofitable cohorts. LaBerge added that the company is not trying to compete aggressively in OSB-only states “vis-a-vis a FanDuel or DraftKings,” focusing instead on iCasino-led hybrid states and Canada.
Hendrix provided 2026 outlook details for both segments. For retail, she forecast net revenues of $5.7 billion to $5.85 billion and Adjusted EBITDAR of $1.86 billion to $1.98 billion. She also said severe weather in the first quarter of 2026 has negatively impacted Adjusted EBITDAR by approximately $5 million to $10 million so far, which management said is reflected in guidance.
For interactive, Hendrix said the company expects approximately $1.6 billion in 2026 revenue, inclusive of an estimated $760 million tax gross-up, and about 20% year-over-year revenue improvement excluding the gross-up. She said marketing expense is expected to decline significantly, with spend about $150 million lower than 2025 following the final ESPN payment in December 2025. Hendrix said the company has also right-sized interactive operations, with payroll and G&A declining in line with the new structure.
Snowden also discussed corporate restructuring and cost optimization, stating the new organizational structure announced in early January is intended to create a “leaner and flatter” organization. He said the company expects to save over $10 million in annualized run-rate expenses, mostly phasing in over the first half of the year.
On capital spending, management said maintenance capital levels have been “right-sized” after several years of property upgrades. Snowden said the company is bringing recurring maintenance CapEx down by $20 million and returning to near pre-COVID levels, aided by dockside-to-land-based projects that should reduce maintenance needs. Hendrix guided to total 2026 CapEx of $445 million, including $225 million of project CapEx and $220 million of maintenance CapEx.
Hendrix said PENN ended the quarter with total liquidity of $1.1 billion, including $687 million in cash and cash equivalents. She also outlined expected funding from Gaming and Leisure Properties (GLPI), including $225 million near the opening of the $360 million Hollywood Aurora project and an additional $21 million from the City of Aurora by year-end. She said the company elected not to take GLPI capital for the Columbus hotel tower.
Snowden said the company expects more than $3 per share of free cash flow in 2026 and plans to reduce lease-adjusted net leverage by more than one turn. He also emphasized a balanced approach to capital allocation across share repurchases, deleveraging, and development investments. Discussing prior activity, Snowden said the company repurchased $354 million of stock in 2025, representing about 14% of shares outstanding, and has repurchased $1.1 billion of stock since 2022, or 25% of shares outstanding.
During Q&A, Snowden addressed the evolving landscape for prediction markets, describing the legal framework as “clear as mud” and emphasizing the company’s focus on protecting its gaming licenses by staying aligned with regulators. He also criticized Maine’s iGaming legislative outcome as “mind-blowing,” saying it granted a monopoly to a third party and noting the situation is being challenged legally; he said PENN will evaluate ways to compete if the structure stands.
On potential new market expansion, Snowden said Alberta is the only new jurisdiction the company is aware of that may launch in 2026. When asked about launch costs, he estimated Alberta marketing investment could be in the range of CAD 15 million to CAD 20 million, while noting plans are still being finalized. Hendrix also clarified that the company’s 2026 forecast for interactive does not contemplate any new jurisdictions launching, including Alberta.
Snowden closed the call by pointing to upcoming catalysts in 2026, including the Aurora opening, the Columbus hotel tower launch, continued ramp at Joliet and M Resort, and achieving interactive breakeven, while keeping the company’s stated focus on free cash flow generation and deleveraging.
PENN Entertainment, Inc (NASDAQ: PENN) is a leading operator of gaming and racing facilities in the United States. The company’s business activities encompass land-based casinos, pari-mutuel racetracks, off-track wagering, and ancillary amenities such as hotels, restaurants and entertainment venues. In August 2022, the company rebranded from Penn National Gaming to PENN Entertainment to reflect its expanding footprint across digital and traditional segments of the gaming industry.
The company’s portfolio includes well-known properties under the Hollywood Casino and Ameristar Casino brands, located across multiple states including Pennsylvania, Ohio, Missouri and West Virginia.
