PENN Entertainment, Inc.

Greetings, and welcome to the Penn Entertainment Third Quarter 2025 Earnings Call. I would now like to turn the conference over to Joe Giaffone, Investor Relations. Please go ahead.

Thank you, Risa. Good morning, and thank you for joining Penn Entertainment's 2025 Third Quarter Conference Call. We'll get to management's presentation and comments momentarily, as well as your questions and answers. During the Q&A session, we ask that everyone please limit themselves to one question and one follow-up. Now I'll review the Safe Harbor Disclosure. Please note that today's discussion contains forward-looking statements. Forward-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. It's now my pleasure to turn the call over to the company's CEO, Jay Snowden. Jay, please go ahead.

Thanks, Joe, and good morning to everyone. I'm joined here in Why I'm Missing by Felicia Hendricks, Todd George, Aaron LaBerge, and other members of our senior management team. Earlier this morning, we issued a joint announcement with ESPN regarding our mutual and amicable decision for an early termination of our exclusive online sports betting marketing agreement on December 1st. I want to start off by saying that we are grateful for the exhaustive and collaborative efforts by our friends at ESPN and the Penn Interactive team to compete for a podium position in the highly competitive OSB space. Although we made significant progress in improving our product offering and building a cohesive ecosystem with ESPN, we were unable to establish ESPN Bet as a scale player. It is the right time to realign our interactive focus, prioritizing our digital assets in Canada and our Hollywood iCasino product to further leverage our core retail casino business and overall omnichannel business model. This shift emphasizes cross-sell opportunities across our ecosystem and enhances connectivity with our 33 million plus PenPlay customer database. Going forward as of December 1st, pending final regulatory approvals, our U.S. and Canadian OSB brands will be the score bet, which as you know has been delivering strong results for years in Ontario, one of North America's largest and most competitive online markets. Aaron LaBerge and his best-in-class team are currently working on a seamless customer experience that includes the current app being automatically updated to the score bet when you open it on the date of transition. All account information, balances, betting history, pending bets, marketing offers, and promotions transfer over automatically. There will be no new app to download or new registration process to go through. Our digital realignment will free up resources to strategically invest in the North American markets and customer cohorts with the strongest return potential, which we expect will drive enhanced unit economics and profitability. We will also continue to build our digital database in states with a Penn retail property in order to leverage cross-sell opportunities and prepare for the potential legalization of iCasino in those markets down the road. Lastly, the transition to the score bet will present an opportunity to optimize our digital business and operate more efficiently, including replacing fixed media spend with performance-based and regionally targeted marketing that complement our retail and iCasino footprint. Digital engagement with current and potential new customers is essential to our company's long-term success. 64% of our total company player database growth since 2019 has come from our digital channels. This has allowed us to attract a much younger customer demographic and to create significant and unique cross-sell opportunities and experiences for them. Our data shows that customers who play with us across multiple channels are significantly more valuable than single-channel customers and have much higher retention, which is critical as the industry continues to evolve rapidly. Our North America iCasino business achieved its highest quarterly gaming revenue to date, an improvement of nearly 40% year-over-year, driven by record cross-sell from OSB of 62%, and strong growth from our standalone Hollywood and the Scorebet iCasino apps in the third quarter. Going forward, OSB will remain a strong top-of-funnel customer acquisition driver for Hollywood iCasino, which will continue to be embedded into our OSB offering in states where it is legal, and Hollywood iCasino will also continue to operate as a standalone app. As highlighted on slide 8 of our investor presentation, the introduction of our standalone app, along with improved cross-sell from online sports betting, has led to a 79% increase in iCasino MAUs during the third quarter. It is worth noting that as encouraging as our iCasino results were in Q3, we set new all-time monthly records for MAUs, GGR, and NGR again in October. The momentum is continuing to build in this exciting growth channel. As you'll see on slide 11, over the last year, we have significantly improved the velocity of our product innovation in order to drive results in key areas of our interactive business, with a particular focus and significant year-over-year improvement in the area of customer retention. Let me wrap up our digital update by sharing that our interactive financial goals for 2026 of being break-even or better have not changed. We will have complete control over our digital cost structure and marketing budget for 2026, which will primarily focus on the highest margin markets and customer cohorts. We will provide a more detailed earnings guide on our Q4 earnings call in February. Shifting to our core regional casino business, as you'll see on slide 12, our talented teams across the country executed very well and demand was stable across gaming and non-gaming amenities during the quarter. particularly at our properties not impacted by new supply and increased competitor promotional activity in those same markets. We saw particularly strong results in our West segment at our properties across Ohio, as well as in St. Louis and Illinois. Similar to Q2, we also saw increases in theoretical revenue across all of our rated worth segments of our retail database, along with overall growth in both total visitation and spend per visit in the aggregate across the portfolio. The fourth quarter is off to a solid start, and we are encouraged by early trends at our new Hollywood casino in Joliet, which is driving both impressive volumes and database growth through its best-in-market offering, consistent with our long track record of delivering solid returns on our regional gaming investments across the country. We are also pleased to share that revenue from Joliet so far has been almost entirely incremental to our Hollywood Aurora property. We've seen a 42% increase in our active database at Joliet since opening, and more than 50% of that growth was from previously inactive customers, showing the benefits of the much improved product and location. And our new offering has also been highly efficient at activating digitally native customers in Illinois. Meanwhile, our other previously disclosed development projects remain on track. In Henderson, Nevada, the second hotel tower at M Resort is scheduled to open on December 1st. Our Hollywood Columbus Hotel Tower and New Hollywood Aurora Casino relocation are scheduled to open in late Q2 of 2026, subject to final regulatory approvals, and the relocation of Hollywood Council Bluffs is anticipated to open in late 27 or early 28. And with that, I'll now turn it over to Felicia.