Penn Entertainment (PENN -0.59%), a major U.S. regional gaming and online betting operator, released its Q2 2025 financial results on August 7, 2025. The standout news was a revenue beat: $1.765 billion in GAAP revenue, up 6.1% from a year earlier and outpacing the $1.73 billion analyst consensus. Despite clear progress on core growth and digital platform engagement, Penn posted a GAAP EPS loss of $(0.12), missing consensus expectations and highlighting persistent cost pressures. Overall, the quarter reflected ongoing traction in core retail casinos and digital gaming, counterbalanced by uneven profitability and elevated legal and advisory costs.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $0.10 | $(0.01) | $(0.18) | n/m |
| EPS (GAAP) | $(0.12) | $(0.18) | n/m | |
| Revenue | $1.77 billion | $1.73 billion | $1.66 billion | 6.1 % |
| Adjusted EBITDA | $236.1 million | $212.1 million | 11.3 % | |
| Interactive Segment Revenue | $316.1 million | $232.6 million | 35.9 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Penn Entertainment: Business Overview and Recent Strategic Focus
Penn Entertainment runs one of the largest portfolios of regional casinos, racetracks, and digital gaming platforms in North America. The company serves millions of customers across 28 jurisdictions in North America, with offerings spanning traditional casino gaming, online sports betting, and digital casino ("iCasino") apps.
Recent efforts have centered on expanding its digital footprint—especially via ESPN BET, a sports-betting app leveraging the ESPN brand, and the Hollywood iCasino app, which offers online casino games. The company also relies on its PENN Play loyalty program, integrating online and in-person experiences to boost engagement and cross-sell between platforms. Success depends heavily on deepening customer loyalty, leveraging its brand alliances, managing a significant real estate lease portfolio, and executing in a complex regulatory landscape.
Quarter Highlights: Top-Line Growth, Digital Expansion, and Margin Pressure
Penn reported a 6.1% year-over-year increase in GAAP revenue to $1.765 billion in Q2 2025. This beat expectations driven by both steady retail casino performance and surging digital sales. CEO Jay Snowden noted, "Customer demand in our core business was stable, as properties not impacted by new supply grew revenue by nearly 4% year-over-year in Q2 2025." On the property side, revenue gains were posted in all regional segments except the Midwest, which registered a slight dip—a region that also faced impairment charges this quarter.
Property-level adjusted EBITDAR (a metric approximating cash operating profits before rent, interest, taxes, and depreciation) for retail properties remained strong at $489.6 million, delivering a 33.8% margin in Q2 2025. This business segment remains a foundational profit driver, though margin pressures persist in the South and Midwest where costs rose or new competition emerged. Online-to-retail cross-promotion continues to pay off: the number of digital players visiting physical properties climbed 8% year-over-year, with their "theoretical revenue" contribution (a figure estimating predicted average earnings per player) jumped 28% year-over-year.
Penn's Interactive segment, which covers digital sports betting and iCasino, posted $316.1 million in revenue—a 35.9% year-over-year increase. The division’s adjusted EBITDA loss narrowed to $62.0 million from a $102.8 million deficit a year ago. More than 70% of life-to-date gaming revenue from the Hollywood iCasino app came from customers who were new, retail-native, or reactivated (life-to-date through June 30, 2025), indicating most online business growth is incremental rather than cannibalizing its traditional casinos. Product innovation drove momentum, including new ESPN BET features like Player Insights and the upcoming FanCenter, which aims to bridge fantasy gaming and betting.
Cost pressures remained prominent. Non-recurring legal and advisory fees totaled $9.4 million, linked to ongoing activist shareholder activity, while severance costs added another $2.9 million. Corporate overhead increased to $38.7 million, up by $14.2 million from the prior year. The company also booked a $15.0 million impairment charge in the Midwest segment. Despite this, Penn continued share buybacks, repurchasing $115.3 million in shares year-to-date at an average price of $15.90 per share, and further reduced convertible note liabilities, taking out $233.5 million in principal and removing about 9.6 million in potential share dilution. Total traditional net debt was $2.1 billion, with $1.2 billion of liquidity at quarter-end.
The company’s triple net lease structure, a major financial commitment requiring payments for real estate owned by third-party real estate investment trusts, resulted in $240.0 million in cash lease payments. Lease-adjusted net leverage improved slightly to 7.1x trailing twelve-month EBITDAR as of June 30, 2025, down from 7.3x as of December 31, 2024, though net debt climbed on a traditional (non-lease-adjusted) basis as Penn continues to invest in new projects.
On the product front, Penn highlighted several enhancements: ESPN BET benefited from deeper integrations with ESPN content and account linkage through ESPN Mint Club. These features increased customer engagement, with Mint Club users logging in more frequently and betting more often each week than non-linked users. The rollout of the Hollywood iCasino standalone app helped drive omni-channel engagement—meaning customers are more likely to use both online and retail options. The company emphasized that omnichannel theoretical revenue rose 28% year-over-year among online-to-retail players, suggesting ongoing growth potential as platform integration deepens.
Looking Forward: Guidance and Key Issues for Investors
Management reaffirmed its full-year outlook for both its retail and Interactive businesses. For 2025, Penn projects positive Interactive EBITDA (non-GAAP) in Q4 and for the full year 2026. Capital expenditures guidance remains at $730 million for 2025, with project spending accounting for $490 million. The company expects net cash interest expense of $150 million and net cash taxes of around $70 million for 2025. Free cash flow positivity is projected for 2025 and the future.
No changes in forward guidance were issued this quarter, and no dividend is paid to shareholders. Penn’s areas to watch in the upcoming quarters include continued progress on digital profitability, expense control—especially legal and regulatory costs—and the execution of major property development projects scheduled to open through next year. Management also flagged the importance of further enhancements within ESPN BET and ongoing regulatory changes, like legislation on skill games in Pennsylvania and potential iGaming laws in Ohio, as factors that may affect future results.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
