PENN Realigns Digital Strategy as ESPN Alliance Ends—Focus Shifts to iCasino Growth and Share Buybacks
Digital Pivot: From ESPN Alliance to theScore Bet Unification
PENN Entertainment has announced the mutual termination of its U.S. online sports betting agreement with ESPN, effective December 1, 2025. This move brings to an end exclusive OSB marketing arrangements, with PENN rebranding its U.S. sports betting business under theScore Bet. ESPN will retain vested warrants for nearly 8 million shares at a weighted strike price of $28.95, while all unvested and performance warrants are forfeited.
The new strategy unifies the company’s digital operations around theScore Bet, which has shown strong performance in Ontario and will become the flagship sports betting brand in both the U.S. and Canada. TheScore digital sports media app, already boasting about 4 million monthly active users across North America, forms the backbone of PENN’s revamped digital presence. The company also retains a robust user base—2.9 million digital users collected during the ESPN partnership, with 300,000 acquired this football season alone.
iCasino Momentum Surges: Revenue Hits Record, Cross-Sell Drives Engagement
One standout from the quarter is the record-setting growth in PENN’s North American iCasino business. Quarterly gaming revenue from iCasino climbed nearly 40% year-over-year, benefiting from cross-sell opportunities—with 62% of users coming from online sports betting and strong results from both Hollywood and theScore Bet casino apps. This was the third consecutive quarter of rising monthly average users, reflecting successful digital engagement strategies and robust product development.
PENN is leaning further into its iCasino-forward approach, integrating Hollywood-branded iCasino within sports betting offerings and continuing to expand its 33-million-member PENN Play™ loyalty program. The company aims to replace broad media spending with targeted, performance-based marketing tied to its extensive casino footprint, seeking enhanced profitability and stronger unit economics across digital channels.
Stable Casino Performance: Solid EBITDAR Margins and Geographic Diversification
The core casino business continues to deliver stability. Retail property revenues reached $1.4 billion for the third quarter, with segment adjusted EBITDAR at $465.8 million and a margin of 32.8%. Standout regions included the West segment and states like Ohio, Missouri, and Illinois, supported by growing visitation and spend-per-visit. Notably, the company’s diversified regional portfolio insulated results from pockets of increased competition or new supply, and the opening of a new Hollywood Casino in Joliet showed promising early returns.
| Key Q3 2025 Financials | Q3 2025 | Q3 2024 |
|---|---|---|
| Revenues (millions) | $1,717.3 | $1,639.2 |
| Consolidated Adjusted EBITDA (millions) | $194.9 | $193.5 |
| Retail EBITDAR Margin | 32.8% | n/a |
| Net Loss (millions) | $(865.1) | $(37.5) |
| Interactive Revenue (millions) | $297.7 | $244.6 |
| Adjusted EPS | $(0.22) | $(0.25) |
Share Buybacks Accelerate, Financial Flexibility Strengthened
PENN aggressively continued its share repurchase program, buying back over 15 million shares in the first nine months of 2025 at an average price of $17.70, and exceeding its $350 million annual repurchase goal by early November. With nearly $400 million remaining under the current authorization and an additional $750 million buyback program approved for 2026–2028, management is signaling ongoing commitment to shareholder returns.
The company finished the quarter with $1.1 billion in total liquidity, including $660.1 million in cash and cash equivalents. Traditional net debt stands at $2.19 billion. The capital structure was further bolstered by a $150 million funding transaction for the M Resort’s second hotel tower in Las Vegas.
Outlook: Leaner Digital Operation and Strategic Reinvestment
With its digital strategy realigned and an iCasino-first model, PENN plans to shift resources into markets with stronger growth potential, using targeted digital acquisition and deeper cross-sell. This reset in approach, coupled with an expansive loyalty program and ongoing property development—including new hotels and casino openings—could help PENN deliver improved profitability in the evolving North American gaming market.
Key Takeaway for Investors: PENN’s pivot away from ESPN marks a strategic bet on its in-house digital and iCasino assets, reinforced by a proactive capital return policy and solid traditional casino performance. As the digital business evolves, market participants may want to track how theScore Bet’s national rollout and the strengthening of iCasino drive revenue mix, profitability, and user growth over the coming quarters.
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