Q2 2025 PENN Entertainment Inc Earnings Call

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Greetings, and welcome to Penn entertainment. Second quarter 2025 earnings call. I would now like to turn the program over to Joe japoni investor relations. Please go ahead.

Thank you, Emma. Good morning, everyone. And thank you for joining Penn entertainment. 2025 second quarter conference call. We'll get to Management's presentation and comments momentarily, as well as your Q&A.

During Q&A, we asked that everyone please limit themselves to 1 question and 1 follow-up.

Now, I'll quickly review The Safe Harbor disclosure

Please note that today's discussion contains forward-looking statements while we're looking statements, involve risks assumptions and uncertainties that could cause actual results to differ materially.

For more information, please see our press release for details on specific risk factors.

Now my pleasure to turn the call over to Penn CEO. Jason Snowden J, please go ahead.

Thanks Joe, good morning, everyone. Uh, joined here in Wyoming. Uh, with Felicia Hendricks, Todd George, Aaron leberge as well as other members of our senior management team. As you can see, from our earnings release and accompanying, investor presentation, our diverse portfolio of retail properties delivered. Another solid quarter, particularly in those markets. Not impacted by new Supply, where we saw Revenue, growth of 4% year-over-year,

For the second quarter, 2025, we reported retail revenue of 1.4 billion and adjusted i-bidder of 490 million and adjusted i-bidder margins of nearly 34%.

Visitation and spend per visit. The first time we we have seen this since q1 of 2022, all of which have remained consistent through July as well.

As you'll see on slide 6 and 7, we have been absorbing the impact of new Supply in a few key, Geographic markets, starting with Chicago land. We are responding with the landside relocations of our Hollywood casinos in Aurora, and Joliet to vastly Superior locations and with new best-in-class best in Market assets,

We're also planning to help mitigate the impact of new Supply in Nebraska with the landside relocation of our Ameristar Casino Council Bluffs property in Iowa, which is currently scheduled to open at the end of 2027, uh, or beginning of 2028.

As we've discussed previously, our Margarita Bill property, is still the market leader, but it has been impacted by the recent new Supply in Boer City Louisiana. This Market has been in Decline for 2 decades now. And the new incremental, Supply not surprisingly has mostly cannibalized, the incumbent operators. Our Focus remains on continuing to enhance the guest experience in part, through property, improvements such as our recently, renovated hotel rooms. We're also updating our hotel lobby lobby bar and adding new non-gaming amenities in addition on June 16th, we were excited to welcome a privately funded 27 acre golf entertainment complex directly. Next door to our property which is part of more than 75 million invested by

Parties and Penn on gaming and non-gaming amenities in and around the property over the last several years.

In Detroit, we expect that the ongoing construction and revitalization of the downtown business Corridor adjacent to our Hollywood Greek Town Casino will help boost visitation and spend in the Greek Town neighborhood. And at our property, the project is funded by a 20 million dollar Grant from the state of Michigan with a focus on revitalizing, public spaces, and improving The Pedestrian. Experience with a more inviting environment including the ability to host Live Events and festivals. In the neighborhood construction around our property is scheduled to be completed in Q3 of this year and the entire project scheduled to be completed in Q2 of 2026.

Turning the slide 8, we are extremely excited for the August 11th opening of Hollywood. Casino Joliet notably. This opening is occurring on budget and nearly 6 months ahead of its originally scheduled timeline.

The the new Hollywood Joliet is part of Rock Run collection. A Super Regional commercial and residential development conveniently located adjacent to the Interstate 80 and Interstate 55 interchange, Southwest of downtown Chicago. From a financial standpoint, there will be no change to our 2025, retail guidance, as it relates to the Juliet relocation as the earlier, opening date will offset the ramp down of the existing facility. The last couple of months to allow for game relocation.

The approximate 2-e closure, and the marketing ramp of the new property, none of which was built into our original guidance for the year.

As you'll see on slide 9, our other development projects remain on schedule and on budget.

our Omni Channel engagement continues to positively impact our results, with our online to retail player, count growing 8% year-over-year and online to retail theoretical Revenue growing 28% year-over-year,

Returns in Pennsylvania and Michigan. Who engage with our Standalone Hollywood. I casino app are increasing their spend across both our retail and online channels in Pennsylvania year to date. We have seen year-over-year increases of 19% and Retail theoretical play and 133% in online theoretical play from this same cohort. Similarly, in Michigan year to date. We have seen year-over-year increases of 28% in retail, theoretical, play, and 242% in online, theoretical play. These are encouraging trends for sure. Having both a retail and digital relationship with your consumers, clearly a major key to success for the industry. Moving forward.

Transitioning to our interactive segment. We achieved record quarterly Gaming revenue in both OSB and I casino and Q2 and while still plenty of work to do, we delivered significant year-over-year. Improvements in adjusted revenue and adjusted ibida. Highlighting the strong yerovi year flow through. We are seen in our business in 2025,

These results include approximately 2.9 Million in Severance costs incurred as part of our strategic Workforce, adjustments to drive efficiencies and support a modern, scalable technology infrastructure, excluding that 1 time expense. We would have come in slightly ahead of the midpoint of our digital Q2 guide and consensus our Standalone call would like casino app. Is continuing to expand its reach with over 70% of Gaming revenue life to date through the second quarter generated by newly acquired retail native or reactivated users which is also encouraging

All of our interactive segment averages have stabilized over the past few quarters and actually increased in Q2 2025 on a year-over-year basis. RPal has also been on an upward trajectory since launch.

We are making great strides in advancing, our in-house risk and trading platform, and expanding our wagering options, including our parlay and in-game products. As a result over the last 2 quarters, our hold rates have continued to improve and we expect this trend to continue as we make further refinements.

Additionally, the continued month of months, sequential growth of our Hollywood Casino Standalone app coupled with our improved OSB. Crosselle efforts are driving material growth and our I Casino users volume revenues and market share the success of our Standalone. App is incremental to our overall, I Casino performance with minimal cannibalization of our in-app. I Casino products.

On top of the Q2, momentum July marked, our highest ever. I Casino ggr in both Pennsylvania and Michigan.

Turning to slide 14. We continue to enhance our ESPN bet. Offering by introducing engaging new features such as the ability for customers to evaluate player statistics in relation to player prop bets.

The benefits of the continued roll out of our new offerings is driving engagement. Since the spring, we have seen strong and consistent year-over-year growth in first-time betters which are most recently up over 50% year-over-year in July. Similarly, first-time, deposits, have more than doubled year-over-year in July. Notably our promotional expense as a percentage of handle has remained stable in the low single digits.

Further as as we announced earlier this week, this football season will Mark the launch of fan Center and exciting feature, which leverages our connectivity with the ESPN ecosystem to enable players to bet on their favorite teams players and fantasy lineups. In ESPN bet.

It's dedicated Hub, powered by account linking technology, with ESPN creates the ultimate interconnected media, betting and fantasy experience. In addition to Fantasy related markets, within fan Center, a new find, a bet icon on the ESPN fantasy. App will allow players to view, ESPN bet markets related to their roster and add selections directly to their ESPN, bet slip.

Last year. ESPN Fantasy Football set. An all-time marked with more than 13 million playing the game?

Opportunities like this to leverage the nation's number 1 fantasy. App is a big part of why we did the deal with ESPN and we look forward to continuing to work together to unleash the full value of this partnership. And with that, I'll turn it over to Felicia. Thanks Jay. As Jay mentioned, our diverse portfolio of retail properties delivered. Another solid quarter, particularly in markets, not impacted by new Supply, our interactive segment generated 2q adjusted revenues excluding the skin tax. Grows up of 178 million and interactive adjusted ebita of a loss of 62 million record. Quarterly Gaming revenue for both OSB and I Casino was driven by higher holds and continued momentum on Standalone. I Casino

corporate expense is 38.7 million included, 9.4 million of legal and advisory costs in connection with our annual meeting of shareholders.

The table on page 7 of our earnings release summarizes. Our cash expenditures in the quarter including cash payments to our Reit, landlords cash taxes, cash interest on traditional debt and total capex.

Of our total $159 million. Capex in the quarter, 100 million dollars was Project capex related to our 4 development projects

We ended the second quarter with total liquidity of 1.2 billion. Inclusive of 672 million in cash and cash, equivalents

In the second quarter, we repurchased. 90 million of shares at an average price of $15.47 per share, which takes us to 115 million of shares. Repurchased in the first half of the year at an average price of $15.90 per share.

We expect to repurchase at least 300 million 350 million of shares in this in 2025, which implies share repurchases, equivalent to 9% of our current market cap over the last 5 months of the year,

Additionally, on June 20th, we repurchased roughly 70% of our convertible notes. Due 2026 for 235, 2333.5 million, which eliminated approximately 9.6 million potentially dilutive shares that were associated with the convertible notes. This transaction is incremental to our 350 million, share, repurchase Target for the year. I will now provide an update on our guidance for the remainder of the year.

Ranges and drivers we provided in our earnings call in February. The new Joliet property opening is now included in our guidance, and Jay covered the financial puts and takes related to that project. Earlier on Interactive, we continue to expect sequential quarter-over-quarter adjusted EBITDA improvement for both the third quarter and the fourth quarter, with the fourth quarter inflecting positively. We are updating our 2025 Interactive guidance to reflect $10 million of incremental costs related to the OSB launch in Missouri in December, which was not contemplated in our prior guidance, and the impact of legislative tax increases in Illinois, New Jersey, Louisiana, and Maryland. Our new guidance also better aligns with our current volumes and market share trends.

Our average MAUs increased in the second quarter year-over-year, and we now forecast modest year-over-year growth in market share for the remainder of the year. We now forecast our OSB handle market share, excluding New York, of 3.4% in the third quarter and 4% in the fourth quarter. For iCasino GGR share, we expect 3% in the third quarter and 3.2% in the fourth quarter.

Somewhere offsetting these lower volume assumptions, are an expectation for slightly higher sports book. Hold rates in the second quarter, we're modeling in the mid 9% range for the third and fourth quarter. We have been closing the Gap with the market leaders, from a hold rate perspective, given improvements in our risk and trading functions as well as solid execution of our parlay. Same game, parlay and Inplay offerings further as a function of our strategic Workforce adjustments. We anticipate run rate Savings in GNA of approximately 20 million dollars or roughly 10 million dollars in the second half.

For the third quarter, 25 are interactive Revenue. Guidance range is 295 million to 335 million including a 125 million skin tax, gross up and our adjusted ebit. Guidance range is a loss of 65 million to a loss of 45 million.

Our 32 interactive adjusted ebit da guidance represents a year-over-year Improvement of roughly 36 million at the midpoint.

for the fourth quarter of 25, we expect interactive adjusted ebit da of approximately 5 million dollars assuming normal holds

Other segments, adjusted evitar continues to be challenging to forecast this year due to the cost of ongoing litigation. However, with the bulk of our advisory and proxy related expenses behind us, I can provide you with some metrics to help you with your modeling by running through the various moving parts.

In February we initially provided other segments. Adjusted ebit or guidance, which includes corporate expense of 121 million.

Before incremental legal and advisory costs related to this year's AGM. This forecast is unchanged as we look to the remainder of the year. We may incur incremental legal expenses in the second half of the Year given the ongoing shareholder litigation while we cannot project at this time, the magnitude of the legal expenses we could incur in the second half of the year. We do expect that they will be significantly below the 17.1 million of legal and advisory costs we occur incurred in the first half.

Transitioning to our retail growth projects. As of today, we've received the full 130 million in funding from glpi for the 185 million Hollywood, Joliet project at a cap rate of 7.75%.

As you know, for the 36060 million Aurora project, we have already committed to take 225 million of funding from glpi at a cap rate of 7.75% and we will draw from glpi closer to the opening of Aurora.

Regarding the M Resort Tower and Hollywood Columbus. We will provide funding updates as we get closer to those openings.

The acceleration of previously, unadvertised RNA expenses and the utilization of an interest expense carrier, carryover generated 1-time benefits for this tax year. In addition, the 100% bonus depreciation represents a meaningful benefit. Given our recurring annual capex and are active growth project pipeline. We expect the enactment of the big big, beautiful Bill, to continue to be favorable to us in future years, based on what we know today for 2026, we currently anticipate recognizing approximately 50 million less in cash taxes. In each of 2026, and 2027 our basic share count at the end of the second. Quarter was 145.55 Million shares. After the Redemption of the convertible notes, we now have 4.5 million. Potential dilutive shares from the remaining convertible notes, stub and about 1 million dilutive shares from rsus and stock options and now I'll turn it back to Jake. All right. Thanks Felicia in closing. I want to

Reiterate that our core retail businesses remain strong and are growing in the aggregate. We believe the recent Federal Law changes around Salt deductions as well as taxes on tips over time and Social Security benefits could provide to be Tailwind for pain. In addition to anniversary the new Supply and key markets later here in 25 and an early 26. We're eagerly awaiting. The August 11th opening date next week of the first of our growth projects which we believe will collectively enhance our portfolio. Grow our

Free cash flow profile, reduce leverage and serve as a catalyst for pens, retail segment and our overall Omni channel strategy.

On the interactive side, we're excited about all the new product enhancements. Our teams have been our teams have been making, including the upcoming launch of fan Center. Their type of integration with ESPN, is what sets ESPN bet apart from our competitors, and we can't wait for football season to Showcase it.

We're very appreciative of the hard work, strong partnership and long hours from our friends at ESPN and particularly, as we collectively prepared, for the start of this football season over the last several months, we're excited and optimistic about our new products enhancements. However, we we do still maintain strategic optionality as discussed previously in the digital business, as we head into 2026,

As I said on our q1 call, we are nearing an inflection point with our digital business, and we anticipate each quarter of 2025 delivering a lower loss sequentially throughout the year and our interactive division to be profitable in the fourth quarter of 25. And the full year of 26 and Beyond, this is still the case.

The significant investments in interactive are undoubtedly behind us. Our Focus for the balance of this year. And going forward remains operational execution and Transforming Our strategic investments into consistent, long-term returns and value creation. For our shareholders. We believe our share price is undervalued and will be even more active in buying back shares and returning Capital to shareholders in the second half of the year as covered previously. Bye, Felicia.

And with that Emma, we can open up the line for our first question.

At this time, if you'd like to ask a question, please press star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2.

Once again, that is star 1 to ask a question and we will take our first question from Barry Jonas with Jewish securities.

Hey guys, good morning. Um, a lot going on with ESPN between the coming launch and its DTC products, and the announced deal with the NFL. How should we be thinking about potential upside for ESPN with both, on top of your continuing product enhancements like Fan Center? Thanks.

Yeah, um, obviously it's been a really busy week this week for ESPN. Um, they announced the launch date of their direct to Consumer streaming offering. And then, of course, earlier this week, they announced the partnership with, uh, WWE. And then inquiring the NFL media assets, uh, from the NFL so very busy. Um, we we really don't have anything to comment on beyond what Disney ESPN has shared publicly and on their earnings call. I I would just say and maybe this is stating the obvious that we think those are all, um, just going to continue to, um, solidify ESPN's position as the worldwide leader in sports and all those, all of those announcements are good for the entire ESPN ecosystem, of which ESPN bet is certainly part of that. And as we've met,

Mentioned, before the launch of the direct to Consumer offering is going to be deeply integrated with sports. Betting ESPN bet.

And that's going to be the first time that we've seen anything like that in the space. So we're, um, we're interested to see what that means for the sports fans of ESPN and our ability to continue to provide a great betting option for people uh through those deep Integrations throughout their digital and streaming ecosystem.

This is a follow-up on retail, you know, Topline Trends and you said pretty strong at plus 4 outside of new Supply markets. Just wanted to get your thoughts on what you think is driving this, uh, uh, and to what degree it's sustainable. Thank you. I'll, I'll mention a couple things Todd. I'm sure you'll want to jump in as well. Um, I think it's, it's, you know, there there's been less new Supply hitting us in a number of markets. If you look at, you know, the last 12 months, it's uh, certainly there. As we mentioned in both your city um somewhat in Chicago then although some of that is just us, you know, moving assets from Joliet old location to new locations. I wouldn't overly read into the Midwest, uh, Council, Bluffs. I think our property is responded really well. It's a battle but we're grinding their. Um, and I would say overall um and we've said this before, there's really 1 true macroeconomic um factor that has a tight correlation to our business, which is employment and employment has been strong, uh, Americans.

Have jobs Americans, spend money. It's really quite simple as it relates to the regional gaming business, at least as long as I've been doing this. And you know, gas prices have been low and and they've stayed low. So those are all helpful Tailwind consumer confidence, seems to at least be stable, it's, you know, a bit volatile, uh, month-to-month, but I would say, overall, pretty stable and seems to be moving in the right direction. And I think people to some extent have probably been putting off those destination vacations and trips to Vegas and they're staying closer to home.

Um, so all of that, of course, would benefit us in the regional markets, taught anything to add. Yeah, perfect. Like I said, Jay and I, I would only add um, some of the trends we're seeing, it's not just in the Gaming revenue side. We're also seeing, uh, this in the food and beverage side, the hotel side. So to Jay's point about people staying, you know, for a station that that obviously is a sign that that's working and then I think, with some of our Capital deployment around the company, um, and the country. Um, we're, we're getting a return on that. So the improvements we've made to our property, whether it's keeping our gaming floors, fresh, or our our non-gaming options fresh, uh, really starting to to see that payoff. So, super excited about the opening of Juliet next week. And then on the heels of that, the next 3 growth projects, as well as the announcement we made with Shake Shack. So I think we we continue to innovate and upgrade our offerings. It's interesting too just 1 last point. I think the entire uh retail operations team across the country is really done a great job this past

Quarter when you think about there was some elevated pockets of promo spend, I think that was well documented throughout the quarter in the space uh ggr you know looked higher. And you know how much of that was was flowing through to to ngr and to ibadan. I think our teams did a great job um you know just staying disciplined and making sure that we're investing in the right customers at the right levels and not getting you know thrown into any sort of uh marketing battles again. I think that'll die down quickly but it was certainly it was certainly a thing in the second quarter.

Great, thank you so much.

Thanks.

We'll take our next question from V. Montour with Barclays.

Comment on the 2q, you know, we saw, um, a pretty outstanding, hold quarter in the, in June, uh, specifically in June and some of your peers, showed some upside, uh, uh, in the sports, um, in the sports divisions. You know, we're not. We don't really see that in your results. I'm curious if there's something about your mix or or the volumes that you saw on the quarter with why you didn't really participate in that.

Yeah, it was a cutting out a little bit at the beginning, but I think I got the question their brand on the second quarter and um, hold percentage for the for the space. Um, we we saw a nice hold result. Uh, as well, our hold percentage is continuing to really close the gap between where we've been and where the top tier of operators are, uh, we held in the mid to high 9 so I don't have exactly in front of me for the second quarter, um, when at 9.8 versus, uh, an estimate of 9%. So we, we, we held fine. Um, we've been battling obviously on the on the handle side of things and we will continue to uh, we're seeing really nice pickup in terms of first-time betters and first-time deposits, and really gearing up for football season with a lot of new deep Integrations with fantasy that we covered during

And our prepared remarks. Um, so we feel like we've got we've got nice momentum. Um, we also obviously had the negative impact of the severance cost of around million dollars for the quarter. But I I think you should expect to see our hold percentage sort of in that you know, upper tier. Um we've seen that for the last several months really since the, the early spring to where we are now.

So overall feeling good about hold percentage, we just got to continue to, you know, get more and more people into the top of funnel and I know Aaron and team. Um, barely touching, who just joined us as our chief product officer, working really hard to just eliminate friction as we did a deep dive on what, you know what's worked well for us. And the things that haven't, I think, you know, eliminating friction between the people clicking on Integrations within the ESPN ecosystem and coming over to ESPN bet. Uh, same thing for people, you know, click on or, or go to the, um, uh, the, the Apple Store and download our apps, and register, and just go through the whole process. We're just, we're working really hard to get that flow to be, um, you know, frictionless. And so we're feeling like we're in a good spot, every quarter is getting better. Um, we still got work to do so I think that's the clear message, but going into football, we feel like we've got a chance to really start to make some progress. Um, the last, the last thing I would say is if you look at

Handle share on OSB, there is still some pretty aggressive um Pro promo in by a couple of the private operators and so we've been you know, really paying more attention to our ggr share and even more. So our ngr share and we feel like we're making a lot of progress on the ngr side, both here in the US as well as in Canada which we're we're pleased with. So we just got to, we just got to keep grinding and keep going, but Aaron, feel free to jump in with anything. No, that was good.

Okay, thanks for that. Um, hopefully you can hear hear me, apologies for my connection. Uh, the second question is, is is still an interactive. Um, I think if I heard Felicia's, um, guidance commentary correctly, you guys are aiming for around 200 million laws for the year, which is right at the low end of the prior range. Uh, I also, I mean, I know you called out lower volumes. The question I guess is is, is that really the sort of main driver of that and and or is there any sort of incremental promos that you guys are planning around Fan Center and or ESPN regarding their launch?

Yeah, it it incorporates everything that you mentioned their brand. We want to make sure that we have a successful launch of fan center. It's a really um, bespoke unique feature. Um, remember also that we for the first time on, on this guidance and Incorporated, now that we have a launch date for Missouri, that was not in our guidance previously. Uh, we have tax increases in 4 States, the second half of the year. So we're just truing all of those things up. Uh, in addition to, as we laid out for you, our, uh, OSB handle share, um, hasn't year to date been, where we estimated it. We're still anticipating, we'll grow our handle, share in Q3 and then even more. So in Q4, same thing for our our eye Casino ggr share, um, but we want to make sure we've got realistic targets out there that we've got the ability to, um, you know, make sure that we're showcasing what the new features are. And we think that this allows us to do that and hopefully it turns out to be a little bit conservative.

But it feels like the right approach at this stage in the year heading into football season with so many new things coming.

Makes sense. Thanks Jay.

We'll take our next question from Sean Kelly with Bank of America.

Hey, good morning everyone and thank you for taking my questions. Um, you know, Junior Felicia, just maybe we could zoom out on. Um, ESPN bet for a second and just think about, uh, 2026. I think in general, the idea has been that, you know, we could get to um, uh, profitable in that business for the full year. Is that, is that Target still on track? And, you know, is it incumbent upon further Improvement, or especially on the core OSB side? Or can we kind of do that on? Let's let's call it a combination of run rate, you know, as you exit this year and um, you know, just continued market growth in that business.

Yeah, I I think it's very much dependent, Sean as us, hitting our targets, for the remainder of the year and exiting 2025, um, on the path that we just laid out. It's not, you know, these these aren't Herculean targets. But, you know, we, we got to continue to prove it out and uh, grow our share, not just on handle but of course on ggr and ngr and make sure that we're reinvesting at the right levels. Um, consistent with what we have been the last several quarters and then continuing to see progress again, nothing Herculean built in built out into our assumptions.

For 2026, we just want to see Q3 this year, you know, stronger, uh, market share results. And I gaming than we did in Q2, uh, with the progress we're making, we think that that's realistic. We've got a really strong product. Offering, we're enhancing the experience all the time, both in OSB, and I Casino. So,

And we would build on that every quarter in 2026 as well. So, those are the set of assumptions now. As I've mentioned before, I think, you know, our focus—and you can imagine we’ve got all sorts of different sensitivity models on, you know, there are a lot of variables at play as we go into 2026. And so, we’re going to be ready for whatever strategically it is that we’re doing and to make sure that we deliver on profitability in 2026. That’s where we’re laser focused on that.

Perfect, thank you. And then as my follow-up, I want to go back to the beginning and I know you comment on this, but I think it just kind of fits strategically here, which is, um, you know, about the sort of ESPN NFL deal and just like, you know, at its highest level. Um, it would seem like the Strategic importance of having sort of a, a, a betting option here, as we think about sort of what DTC could mean, um, you know, or a DTC launch, could mean, would would be pretty Paramount strategically? So does this open up, you know, your strategic options or dialogue with them? I mean, obviously there's a very large fixed cost here, but 1 thing that was unique about the way ESPN and NFL was structured was around Equity uh, without, uh, you know, at least as our read is an ongoing fee structure. So, just trying to think out of the box a little bit, but, you know, to the extent, uh, you could talk about, it would be helpful.

Yeah and um Sean it's a great question, I'd imagine that. Um we're all going to have more information on exactly the you know the details that was what was announced was not the definitive documents. I think it was more of where they are currently on the term sheet. So things, who knows things might change a little bit again, I'm not in those discussions But as time goes I think we'll be. We'll have certainly more to share. Um, we found out about it obviously when, you know, when the world did this week when it was publicized. And so, um, we've talked to ESPN, they're really excited and, you know, they're very excited about the role that ESPN bet plays in terms of fan engagement, and uh, the overall experience, whether you're talking in their direct to Consumer launch. Uh, how they think about their relationship with all all of their, uh, Sports League partners and, um, you know, they see in their own ecosystem as we've shared before that those that are, uh, part of the the linked program with ESPN bet, there's a high level of Engagement, uh, higher than average and so,

Um, we would expect that to continue to be the case in the NFL news and WWE as well. We think just strengthen uh overall where we are in our relationship with ESPN but also strengthen. Um, their position as the worldwide leader in sports. Yeah, I would just add, you know, more football is better for fans and for Bettors and to point out fan Center is going to launch this year with Native integration to ESPN's fantasy platform. So if you're linked user and you're already linked, when you draft a team or more than 1 team,

Those teams automatically show up in ESPN bet in a way for you to bet it very creatively and easily. We are also going to be on the launch of their DDC platform with betting, integrated through ESPN bet into the video experience. And so you would imagine, you know, those football assets show up in those video experiences. They've announced that they're going to combine ESPN's fantasy platform with the NFL's, which will make that massive. And again fan Center is a fantasy integration. So I think all of those things are just going to be good, not only for fans, but for, for our business, and our partnership.

Thank you so much.

We'll take our next question from Joe Stock with Scena.

Uh, thank you. Good morning. Um,

I wanted to maybe just follow up.

on ESPN that, uh, maybe for a different angle, you know, as as we, you know, as it gets switched on on August 21st, obviously, in the beginning of the football season and, you know, all the good seasonal factors associated with that, would you expect to see you know, a, a pretty big spike or ramp in at least the top of the funnel

um,

in terms of like experimentation and so forth.

Yeah. I mean I and Aaron you'll have thoughts on this. Um, I would say that

Seamless process, uh, when when they download, when they register when they go through the whole process and we think we're in a much stronger position this year to execute on that and that we keep them the retention. We're going to be paying very close attention to every day every week as we move forward, we've got to be able to keep the folks that come in and test us or try us out for the first time or come in on a reactivated basis.

Yeah, I would just add, look ESPN's fantasy platform. I think Jay mentioned it in his opening remarks had 13 million people playing fantasy football last year. My guess is they're setting records. This year, um, fan Center alone is natively integrated, not only into the ESPN fantasy app, but into ESPN bet. So there's a, a, a huge top of funnel audience that gets new exposure. Um, to what is going to be a really cool feature. If you're a fantasy player that you're going to want to try and so when you think about reactivation, um when you think about retention, and when you think about new user acquisition, um, fan Center is going to drive all of those and then

ESPN is launching the direct-to-consumer product with which we're integrated. I won't speak to what level or what the product looks like, because that product hasn't launched yet. However, we also think that's going to be something that people will see and want to experience and be part of because of the way it's implemented. It's very cool and very compelling, and that will also be a driver of interest. We believe it's ultimately going to be good for top of funnel.

Understood, thank you. And then if I could follow up on the retail side

you know, um, before markets the competitive markets you referenced in the slide deck,

You know, Jay, I believe you sort of mentioned, hey, you know, we kind of anniversary this, uh, the impact of this fully maybe in the early part of '26. But just trying to think about maybe the new tailwind that you get from your...

4 new projects, um, you know, that'll be placed in service.

Um,

later this year starting in August uh wondering if if you think, you know, say the competitive headwinds from those 4 markets,

Um, are offsets, you know, possibly from those four new projects? Could that occur earlier than 2026, or just given the nature of those projects? A lot of them are hotel expansions, so maybe it takes a little bit longer.

Yeah, I mean I I I would say um let's we're going to know a lot soon. Um we're going to be opening. Joliet awesome, property, been there several times Todd and I are the last, the last several weeks. Um great location. Right off of, I 80 and I 555 tremendous Ingress egress. It just roll right into our property from the from the major um uh roads there. So feel great about that and um the rest of our projects are on time and on budget which we're very proud of our design and construction teams.

Executed great, uh, despite a lot of tariff noise. Uh, the hotels, you know, topped out at the right time. We weren't buying tons of steel until after the tariffs were in place. And so, um, we we, we, we were, we were done with that before the tariffs were in place. So we feel really good about that. And I think the, you know, the headwinds that we've been facing for the last, you know, I don't know. A lot of years, feels like it's been forever. Um, those start to slow down and once you get past anniversary and what happened is the new opening in Boer City, Louisiana, really everything from that point on that we can see is Penn. And so, um, yeah, I would say that the, the the Tailwind should more than offset headwinds. Headwinds should slow down Tailwind speed up. And um, we feel like we've got a good setup here and we have a really nice growth story on the retail side and of course on the interactive side as well.

Thanks very much.

We'll take our next question. From Dan pitzo. JP Morgan.

Uh, mid teens returns, uh or free cash flow Returns on those 4 projects over the next 4 months is is there any way maybe you could parse that out or rank follow some of those returns just giving, you know, the the projects do vary in in scope, uh, and obviously costs. But you know what, which ones are your most excited about? And where do you see? Maybe the greatest returns? Thanks.

Uh, here on on Monday. So we're very anxious and curious to see how that goes, of course. Um, we're going to have another 1 of those with a hotel in our Aurora market, which is also very exciting. Uh, right now, right next to the Chicago Premium Outlet. When you're exiting the Chicago Premium Outlet, you're literally at a stoplight staring at our parking garage. And it turns green, you can go straight into our garage or turn left to get on the interstate. So we've got a really nice setup in the

The hotels in Vegas and Columbus, um, we've needed those for a really long time, and for a variety of reasons, uh, we didn't break ground until we did. But, uh, we think the return profile for those is also looking good. We've, in the case of Las Vegas at the M Resort, over the years, um, we've had a lot of demand for group business. We take great care of people; we can provide them a lot of attention and personalization because of us being off-strip and a little smaller. But then, they outgrow us and they leave. And so, we've got a lot of groups, uh, that are coming back to the M after having left, now that we're doubling the size of the hotel there. So, I don't want to rank them, um, but we do feel good about all four.

Okay, fair enough. And then, um, I I suppose I want to interact with um, you know, obviously this is your your second NFL kickoff with a fully, you know, from the from the get-go. And now it seems like you have kind of more Tools in your tool belt and certainly more more experienced there. I guess versus last year. What what are you looking to do differently? Um, that maybe, you know, it will improve your Market position. Obviously, you have a better product but like are, you know,

A strategic or promotional standpoint are there any changes that you're thinking of making versus, you know, the prior go round. Thanks.

Yeah, I mean I look the we're going to be paying very close attention to the kpis that you would imagine. We will be which is what is the top of funnel demand? Look like, what is the the flow through from people clicking on Integrations and getting them to, you know, register download and register the app, make a deposit and make a wager. Uh, We've eliminated a lot of friction. I can't stress that enough that we think is going to have really positive results without us needing to go, spend more in marketing. It's just making the folks that are interested in these Integrations and interested in betting making it a lot easier for them to get through and and get to the point where they can do exactly what they intended to do. And you know, we had some sort of basic level uh fantasy Integrations last year. This is as Aaron described and I mentioned in the prepared remarks, this is a whole different level and we're going to be doing things.

Similar to the Integrations on direct to consumer that haven't been done before. So, um, the idea that you can be in the fantasy app, you set your roster and then you've got um, personalized player pop uh, parlays that are there for you based on your lineup and you can you know basically decide what you want to do and bet on within fantasy. Um, click move over to ESPN, bet and place your wager is very powerful. So I would say it's less about, you know, how much we're spending in promo and how much we're spending in marketing.

Different. Um, we're going to be, I think, you know, discipline as we have been, we'll make sure that uh, you know, the word gets out about fan Center because it's a really cool new feature and it's differentiated. Um, but it's more about our ability to execute at a different level and the experiences that we're offering and Integrations, we're offering being at a different level than we were last year. Yeah, I mean, I would add also, you know, we have much improved kyc. We have real personalization this year that not only flows through the app but flows into fan Center. Um, we do have better brand marketing. We have a truly differentiated feature that no other sports book has no, nobody else is a partner with ESPN fantasy. The biggest fantasy platform in the US.

That is integrated with our product and it's going to be clear in our marketing messaging that this is a feature that if you're a fantasy player that you might want to try out where last year, we were marketing, the brand of ESPN bet, but we didn't have something distinct enough to hook on to to make that compelling. We think that's going to matter. Um, we've got improved CRM, efforts, we can Target cohorts Now by fantasy players by people that play with us, actively that people need to be reactivated. So we're much smarter and how we're we're targeting people in terms of that. So there's just a lot of Improvement almost in every operational Channel um this year um than last. So we're we're pretty excited about about the start of the season.

Got it. Thanks so much.

We'll take our next question from Chad ban with markway.

Hi, good morning. Thanks for taking my question.

So, land-based margins have been down uh first and second quarter Felicia, you reiterated the the retail guide for the year. Um, so Todd or J. Can you can you talk about why this why we didn't see better flow through in Q2. And then, more importantly, as we look into the back half of the year for retail, could we start to see margins increase, uh, give it all the the the, the supply kind of wears off and, and uh, the unrated is is working in your favor. Thank you.

Yeah, I'll tackle the first part and talk. You certainly can tackle the second part in terms of go forward. I mean, as we look at the at the quarter, there's really 2 factors. Um, 1, the new Supply is, uh, impacting us Boger City, really impactfully. Um, and so that, you know, hurts your overall margins. Whereas if you look at the portfolio outside of those markets, being impacted by new Supply, the flow through um, on the top line revenue was strong, but we're definitely still in the pain in Boer City more so than we are in the other new Supply markets and filling it some pain in uh, in all of those new Supply markets. And then, as I mentioned earlier, we were battling some higher Promos, in the markets. Uh, many of our markets on the regional side, we stayed the course. Um, we had to do, you know, protecting on the VIP side, which you would always do. But we stayed the course we stayed disciplined. I think margins came in for the quarter, just shy of 34%, despite the higher promo, uh, in the competitive zones. So we feel

Feel good about our execution, I think that, that higher sort of elevated promos, uh, in the market that should I, I'd imagine that will die down and it doesn't usually deliver good returns in in these really, uh, mature markets. And so overall, we feel like the, the flow through for the quarter with those factors. Uh, if you remove those factors was very strong but those were factors in the second quarter.

Yeah, I would, I would only add J and you know, Jay and I have talked about this a lot. We did have some table game, hold percentage challenges that some of our bigger properties in the quarter. Um, you know, no, 1 players, VIP players, um, but you know, that always comes back. And then, uh, to your point about going forward, uh, listen Q4 traditionally, uh, year in year out is always 1 of the lower margins. You're, you're bumping up against, uh, uh, a lot of holiday competition, uh, but that's baked into our guidance. And then, when you look at the ramp of of Juliet, that's in there, so we'll look for a good trajectory there. Um, but we, we can do very comfortable that we've identified the issues J spoke to them, um, but I, I also were already starting to see kind of a more rational reinvestment and promotional environment across the board, uh, we think that'll continue and then, uh, having to tell winds behind us the properties that that were opening, the 2 new

Properties in Illinois as well as the hotel Towers. Our properties were built specially for the expansion to have these. So all the infrastructures in place, the restaurants are in place. The gaming positions are in place. So these become, uh, very margin accretive. And then with the new properties moving from a 3-story traditional Riverboat to a 1 story, uh, land-based Casino, you just build in such efficiencies. So we feel good about uh the you know, the starting Monday really. So starting Monday and then forward into the first half of next year, some really good Tailwind behind us. Yeah, we just you know, obviously with the openings you're going to um not see the stronger, margins immediately out of the gate. You want to make sure that you're supporting all of the open pre-opening efforts, get the word out. Uh, make sure your customers have a great time, but as I said, earlier, the puts and takes that Juliet wash out for the year given we're opening earlier. Um, and we had to close and there was the whole relocation of games that.

Impacted Us in June and July from a top line and bottom line perspective but uh overall clearly All 4 of those projects. LED Todd said, very well are going to be margin of creative for us. You just need a little bit of ramp time.

Okay, great, thank you. And then on the, um, on the growth in, in Maus, in the in the Omni Channel Journey. Um, how does how do predictive marked, uh, markets kind of fit in into this strategy? Is that something that that you could explore or is that something that that you were against and and you're you're looking for for that to be shut down uh which could potentially help, uh, market share, thank you.

Uh, embraced and and and legalized and regulated. Uh, of course it's something that we would, we would stay very close to and take a look at and, um, but I, I wouldn't expect us to be a first mover there. We want to see how this plays out. There's there's a lot going on right now in the courts as well as with The Regulators across the country.

Thanks Jack, appreciate it.

Everyone good morning in your slides. You pointed out that there was a record cross sell rate into the Standalone app in June, which is good to see there. Are you able to talk about either the reactivation strategy of the existing players, as well as kind of what's working to get new players into the, uh, cross world into that Standalone app? Thank you.

I think probably the the number 1 factor is the fact that we have a uh, Casino first brand on that app. And um, it's really really targeting slot players even more so than table game players. So the the Hollywood Casino within ESPN vet a little bit more table game focused uh Hollywood Standalone a little bit more of a slot Focus. We're seeing that in our slot mix which is I believe highest in the industry in the states where it's tracked. Um, so very pleased, it's obviously, from a marketing perspective, you can be a lot more successful and, uh, targeting, uh, your retail database, with a brand that they're used to seeing, uh, same brand that's on all of their

Marketing materials and on top of the building that they're walking into. So that's why I think you're seeing so much incrementality. It's more of a retail customer or a new customer, um, reactivated customer. And, um, in the case of, of branding certainly, that's that's a strength that, you know, we, we did struggle with trying to get slot players at our retail properties to download ESPN bet to play Slots. It just doesn't really resonate and so we've been a lot more successful at, uh, bringing them in and the retention results have been strong. Um, you can see the, the 2 States where we have a retail footprint. Uh, we've seen really strong market share growth less. So in a state like New Jersey, where we don't, we're we did launch a New Jersey, but we've got work to do there because it's a more mature market and we don't have a retail footprint. So, Pennsylvania and Michigan are certainly, um, leading the efforts for us. In terms of picking up market share in a, in a relatively short period of time,

Yeah, I would, I would only add um, a few years back. We actually rebranded, Greek Town to Hollywood at Greek Town to help with that conversion. And I, I think to all of Jay's points, the the Standalone, because, you know, app customer looks a lot like our retail slot player. And so we're, we're seeing Great Migration. And crossplay between the 2

But also the cross sell between sports book and I casino is has been very, very healthy and so all the things we talked about that are going to drive new users top of funnel into. Um ESPN bet is also going to be very very good focusing of business as well.

Great. Thank you. And then just a quick follow-up. Um, could or would the timing of Alberta in 2026 impact your 2026 profitability target?

It would not. Um when I say profitable in 26, we know that Alberta is going to launch at some point. And we think early 26 from what we've been told so that's built into our assumptions. We're targeting right now q1, which is the best information we have.

Great. Thank you.

We'll take our next question from Ben. Check in with Missoula.

Hey thanks. Um maybe just stepping back maybe you could further flush out the opportunities you see to grow share in our game, I gaming over time just what is what is the lowest hanging? Maybe the largest opportunity and then then unrelated on um to back on Felicia's commentary on 2026. Did you say it'd be 50 million less cash taxes in 26 and 27 or were you saying the cash taxes were 50 million? Thanks.

Just to start with that, um, in 2026, our cash taxes will be lower by $50 million in each of 2026 and 2027.

Got the right value proposition there in the Loyalty program, mainly for slot players because we know table play as as, as more common coming from with, with the cross sale from within the sports betting app. Um, feel free to jump in if you have anything. Yeah. No, that and again, I don't know if you tracked the fact that a few months ago we launched a free-to-play game called spin it, which is brought uh, a lot of users into the platform to try, you know, to try to, you know, gaming which is ultimately led to more cash players, um, starting to play. So that's going to continue to ramp. Um, we're going to continue to get smarter about marketing and reactivation. Um, we have a lot more automation coming as it relates to how we distribute offers and and the target, the targeted groups at which we distribute those to. So we just feel um, you know, we're really just getting started here. I mean, we we got a fast start because of our retail database and we're starting to engage them directly through through digital mechanisms. And those are, those are working really well and we're just

Going to continue to do that.

We'll take our next question from John decree with CBRE.

Hi, good morning everyone. Uh maybe for J or Felicia kind of a financing question. You uh took 130 million from glpi at 73 quarters for Juliet. Could you give us some insight as to kind of how you evaluated that versus other Alternatives? You know whether it was cash on hand or revolver? Um, and then I know you said you prepared remarks so kind of update us as you get closer to Columbus and M and how you'd fund those. But um if you could kind of, give us some insight into the guide post and how you're evaluating that in the context of

Share repurchases and so on and so forth.

Yeah, thanks John. Um, and you know, implicit to your question is, you know, we do balance all of those things when we make these decisions. Um, you'll see. Um, you know, when we file our 10q after the close today, um, you know, we have John on our revolver um, versus the first quarter. Um you know, mainly covering our our share repurchases but also the repurchase of our convertible notes. Um you know? So our options for Juliet and our decision was, you know, again, to further draw on the revolver, like you said, cash on hand or, you know, go into the, um, you know, open markets or to use gpi's balance sheet and for us, um, using GL GL peas, balance sheet um, was

Really the, you know, the the best and you know, most prudent option that we um, you know, considered at this point in time, um, you know, we also, you know, like I mentioned before for M and Columbus. We also have the optionality around how to finance those projects and, you know, we'll approach that um, you know, each 1 of those as we get closer. Um, and then for Aurora, as you know, we're committed to glpi.

Thanks Felicia, that's helpful, maybe um you know, 1 more kind of in a similar capacity. We've gotten a couple questions about pain and your Market access fees, you know boy it had a unique transaction with FanDuel and and as part of that monetized, some Market access fees um is that, you know, a consideration or discussions. I know, you know, that was unique situation but um, you know, in terms of uh, kind of a unique asset that you have so that's something that um would be a possibility.

Um no nothing to share on that right now John we we have um skin agreements that all are in, you know, that 10 to 20 year time frame um, from when they were signed. And so we feel like we're in a good spot right now. Uh, if there's something that we could do to monetize and it made sense strategically and both parties wanted to engage on that. Of course, we would entertain and consider that. Um, but nothing nothing to share on that front right now.

Alright, thanks Jay. I appreciate that.

1 more question, Emma.

We'll take our final question from Jeff. Daniel with stifel

Hey, good morning everyone. Thanks for squeaks Us in 2, 2 questions for almost 1 to high level strategic. And then 1 bit more technical, maybe starting off with with the more strategic question. Um, recognize. It's only been a few months, but Jay, I'd love to just get any initial thoughts on on some of the governance changes and in particular maybe some of the insights uh, that that Johnny has been able to bring to the table to help inform interactive strategy at what is, you know, clearly a a sort of pivotal inflection point right now and and if there are any sort of specific examples, you can share to to add some color. That would be appreciated as well. Thanks,

The 2 new board members, Carlos Rey, Sanchez and Johnny Hartnett um, they joined our board in June as as, you know, after the AGM. And um, we've had several sessions with them, you know, getting them, uh, up to speed answering a lot of questions and also engaging on the business, which is great. It's always nice to have fresh eyes and perspectives. Um, and I think specifically as it relates to Johnny, um, we've had a couple of calls meetings with him obviously really talented, uh, very accomplished and just, you know, brings a great perspective. And so we value that. It's great having um, discussions at the board level, and people that bring different skills to the table. We've always valued that at Penn and I think Johnny and Carlos are bringing skills to the board that um, are different than other uh, board profiles. So uh, I would say overall really good, um, nothing that I can share. Obviously in terms of what we discussed with our board members on a on this call. But I would just say that there is engaged as you would expect them to be and we're having really

Good conversations, and we would expect that to continue as we move forward.

That's great. Thanks Jay. And then and maybe stick it on interactive, uh, you know, some of the data out of the states and I recognize it's not a perfect example. But the data out of the states that report um, you know, promotional level disclosure seems to suggest that you your promotional reinvestment on the sports side of things. Um, came in a bit Q2 and looks to be much lower and more rational than, than sort of Market why levels will sort of the nominal now. And then also, how much

Decline by on a year-on-year basis. So, um, there or Todd can you just sort of unpack this a little bit more? Is this sort of a function of user acquisition volumes and maturation in the velocity of ESPN? That kind of you know continues to ramp? Is it more efficiencies related? Is there some element of um, you know, I guess you know ramping and allocation of promo and bonuses. Moreover, I can see, you know, from Sports just sort of any any color on that would be helpful because I think it is. Um, an interesting Trend. Thanks.

Yeah, I I mean, I would say, overall we we really intend to be, you know, at Market both with regard to OSB, as well as I Casino. Um, you know, La last year, we were in a different situation. And, um, this year, I think you've seen us, uh, really settle into that, you know, right around 3%, maybe a little south of 3%, most months, and most quarters on the OSB side, and on the I gaming side, it's it's a lot more. I would say just, you know, stable, um, you don't see the irrational, uh, spending as much as you do at times on the OSB side from, you know, 1 or 2 different competitors. We think we're at a, a good level of reinvestment right now with everything else that we have going on. And, um, as I mentioned earlier, we have seen our ngr share continue to grow, even though handle share has been more stable and, uh, that's obviously important for us as it flows through the pnl. Yeah. And we, we run these businesses together and when I casinos started to get a little traction, we kind of shift around. We're going to

Low Sports season the last few months. And so we've got to be creative and how we deploy our marketing resources. And so, um, you know, that's part of the, the, the decline you saw in OSB,

Great, thank you both.

All right, thanks, Jeff. And thank you everybody for joining us on the call. Look forward to speaking with you again, uh, in November. Or if you're joining us for the Joliet opening, we'll see you all next week. Thanks.

This does conclude today's program. Thank you for your participation, and you may disconnect items.