PENN Entertainment, Inc.

Greetings, and welcome to the Penn Entertainment fourth quarter 2025 earnings call. I would now like to turn the conference over to Joe Giaffone, Investor Relations. Please go ahead.

Thank you, Nikki. Good morning, everyone, and thank you for joining Penn Entertainment's 2025 fourth quarter conference call. We'll get to management's comments and presentation momentarily, as well as your Q&A. 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. Good morning, everyone. I'm joined here in Wyoming by Felicia Hendricks and Aaron LaBerge, as well as other members of our senior executive team. I'm pleased to report Penn's diversified retail portfolio delivered another solid quarter during which retail adjusted EBITDA grew year over year after adjusting for poor weather in December. In our interactive segment, we successfully rebranded our U.S. online sportsbook to the score bet on December 1st and achieved positive adjusted EBITDA in December, driven by continued momentum from our iCasino products, disciplined cost management, and strong online sports betting hold rates. 2026 is an exciting year for us in which we expect to generate year-over-year segment adjusted EBITDA growth of 20%. We are well positioned to benefit from the strategic investments we have made over the last several years and are laser focused on improving free cash flow generation, deleveraging, and opportunistically returning capital to shareholders. I want to highlight the foundations that set us up nicely to deliver on our goals for this year and beyond, which are summarized on slide six of our investor presentation. First, our diverse retail business is healthy and growing and generating sustainable free cash flow. In addition to anniversaring much of the new supply in several of our key markets, we will have two more retail growth projects opening by the end of the second quarter this year, and we're seeing continued momentum at the two that we opened last year. Second, we expect our interactive segment to inflect a break-even adjusted EBITDA for the full year, which would represent a $268 million year-over-year improvement. Third, we have right-sized our maintenance capital spends on a go-forward basis, which we'll touch upon more later. And fourth, we will begin to realize synergies from our corporate restructuring and cost optimization initiatives. The new organizational structure we announced in early January will allow us to become a leaner and flatter organization, enabling business leaders to be more empowered and drive greater productivity. All in all, we expect to save over $10 million in annualized run rate expenses for the company as we streamline the organization, which will mostly phase in over the first half of the year. The operational benefits are already in flight. In terms of right-sizing our property maintenance capex, we have done an excellent job over the last six years of upgrading our casinos, refreshing our slot floors, and investing in non-gaming amenities like updated hotel rooms, new retail sports books, new restaurants, and entertainment venues. In addition, our dockside to land-based growth projects are expected to meaningfully reduce our maintenance capex costs going forward. With the improvements we have made to our properties, we feel comfortable with bringing our recurring maintenance capex levels down by $20 million and returning to near pre-COVID level spending. Slide 7 really drives home the significant free cash flow we expect to generate in 2026 and beyond. Importantly, this growth in free cash flow will enable us to delever meaningfully in 2026 and opportunistically return capital to shareholders. In fact, we expect to generate more than $3 per share of free cash flow in 2026 and reduce our lease-adjusted net leverage by more than one turn. Returning now to our results for the quarter, on the retail side, we experienced another quarter of year-over-year growth in theoretical revenue across all rated, worth, and age segments, with our older demographics and VIP play contributing meaningfully to these results. The bad weather in December negatively impacted segment-adjusted EBITDA by approximately $7 million. In addition, our south segment was negatively impacted by new supply, Bossier City and New Orleans, and those markets in Louisiana. And our midwest segment was impacted by new supply in Council Bluffs, Iowa. Core business trends were otherwise stable across the portfolio, with regional strength in Ohio and St. Louis, as well as our LaBerge Lake Charles property. We're seeing continued momentum at our new hotel tower at M Resort in Las Vegas, which is capturing previously unmet demand, including booking two of the largest groups in the property's history recently. In December, the property achieved record gaming volumes, and in January, we generated record net revenue at M. Meanwhile, the new Hollywood Casino Joliet is delivering strong results both from new and reactivated customers, with a nearly 130% year-over-year increase in the number of active players, helping to drive meaningful increases in both gaming and non-gaming revenues. The early performance of these projects provides us continued confidence in the anticipated success from the upcoming openings of the Hollywood Columbus Hotel Tower and the new Hollywood Casino Aurora, in addition to our new Council Bluffs properties scheduled to open in late 2027 or early 2028. As we said previously, we anticipate all these development projects to generate approximately 15% plus cash-on-cash returns. On the interactive side, we experienced record gaming revenue in the fourth quarter, driven by the continued growth of our standalone Hollywood iCasino products and increased cross-sell, as well as improvements in our online sportsbook product offering and operations. Revenue growth, excluding tax growth up of 52% year over year, was primarily attributable to iCasino growth of 40% plus and online sportsbook growth of 73%. including strong revenue and positive adjusted EBITDA in December, our first month operating as the score bet in the U.S. Additionally, adjusted EBITDA improved $70 million year-over-year in the fourth quarter, driven by strong adjusted flow-through of 95%. We are encouraged by the upward trajectory of the interactive business. Our sportsbook is maturing through a more disciplined, regionally-focused marketing strategy that prioritizes iCasino jurisdictions. Our reduced fixed media spend provides us much more marketing flexibility to strategically invest more in Canada, as well as the U.S. hybrid states with both iCasino and online sports betting, and in customer cohorts with more compelling returns, particularly as we look ahead to new market openings like Alberta, which is anticipated later this year in 2026. We've retained users through the ScoreBet rebrand and continue to engage them across our ecosystem. Retention and new user growth will remain our top interactive priorities and the foundation for our long-term growth in that segment. The positive trends in our interactive segment give us confidence to recommit to achieving break-even adjusted EBITDA in 2026. And with that, I'll turn it over to Felicia.

Thanks, Jay. Our retail segment generated revenues of $1.4 billion in adjusted EBITDA of $456.4 million and segment adjusted EBITDA margins of 32.3%. Inclement weather in December negatively affected retail adjusted EBITDA in the quarter by $7 million with the largest impact in the northeast segment. We expect the combination of our high-quality portfolio plus our new growth projects to generate year-over-year retail net revenue and adjusted EBITDA growth in 2026. For retail net revenues, we forecast a range of $5.7 billion to $5.85 billion, and retail-adjusted EBITDA will range from $1.86 billion to $1.98 billion. As you think about your quarterly modeling, the severe weather in the first quarter thus far has negatively impacted retail-adjusted EBITDA by approximately $5 to $10 million. For the second quarter of 2026, at our new property in Aurora, we expect to have approximately two weeks of downtime as we look to open the new land-based facility. And as you know, our second half results will benefit from the opening of all four of our retail growth projects. All of these items are reflected in our guidance. Our interactive segment in the fourth quarter generated revenues of $398.7 million and including a tax gross-up of $182.7 million and adjusted EBITDA loss of $39.9 million. For 2026, we expect interactive revenues of approximately $1.6 billion, inclusive of an estimated tax gross-up of about $760 million, or a revenue improvement of roughly 20% year-over-year. excluding the tax gross-up. This growth will be a function of the playbook we initiated in December as we transitioned to the Scorebet Sportsbook in the U.S. and shifted our focus and resources to our U.S. iCasino states and Canada with a focus on iCasino and cross-sell. Complementing our revenue growth is a more rationalized cost structure. our marketing expenses will decline significantly year over year as we made our last payment to ESPN in December 2025. We anticipate our marketing spend to come in approximately $150 million lower than in 2025 as we align spending with our revised regional strategy focused on iCasino and Canada. With performance and brand spend fully in our control, we will adjust allocations based on results. Further, we have right-sized our interactive operations to fit our new structure, with payroll and G&A declining proportionately. As a result of our revenue growth expectations and a more rationalized cost structure, we continue to expect our interactive segment to generate break-even adjusted EBITDA in 2026 and note that we will expect all components – U.S. OSB, iCasino, and our Canadian operations – to generate positive contribution margin in 2026. This forecast does not contemplate any new jurisdictions launching in 2026, including Alberta. As we look to full year 2026, we expect U.S. OSB MAUs to decline year over year, given the transition from ESPN bet to the score bet, while U.S. iCasino, as well as Canadian OSB and iCasino MAUs, should increase year over year, reflecting our strategy to realign our digital focus. We expect the OSB and iCasino haul rates to remain around 9% and 3.7% respectively. As for quarterly interactive adjusted EBITDA cadence, the first three quarters of 2026 should generate small adjusted EBITDA losses, and we expect the fourth quarter to be profitable. We expect the other category adjusted EBITDA to be a loss of $119 million for 2026. The table on page 9 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 $190 million of CapEx in the quarter, $85 million was project capex, primarily related to our four development projects. We ended the fourth quarter with total liquidity of $1.1 billion, inclusive of $687 million in cash and cash equivalents. On November 3, 2025, Penn received $115 million in funding from GLPI at a 7.79% cap rate in connection with the second hotel tower construction at the M Resort Las Vegas. In conjunction with the opening of the $360 million Hollywood Aurora in late 2Q, we expect to receive $225 million in funding from GLPI near project opening and the remaining $21 million from the City of Aurora by the end of the year. We have elected not to take GLPI capital in connection with the construction of our Columbus Hotel Tower. The combination of this funding with the strong free cash flow and more optimized CapEx spend Jay discussed earlier will enable us to de-lever nicely throughout the year. Total 2026 CapEx will be $445 million, which includes $225 million of project CapEx down from $408 million in 2025. and $220 million of maintenance capex compared to $239 million in 2025. We expect total cash payments under our triple net leases to be $1 billion in 2026. For 2026 cash interest expense, we project $145 million. For cash taxes, we do not expect to be a cash taxpayer in 2026 given the favorable tax deductions enabled by the One Big Beautiful Bill in addition to our acquired NOLs and various tax credits. Our basic share count at the end of the fourth quarter was 133.2 million shares. After the June 20th repurchases 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 auctions. I will now turn it back to Jay.

All right, thanks, Felicia. In closing, I want to say that I'm proud of what our property, interactive, and corporate teams were able to accomplish in 2025, including the resilience shown on the retail side and the successful rebranding of our OSB product to the score bet. I couldn't be more excited about the many catalysts we have ahead of us in 2026, including the opening of our new Aurora property and the Columbus Hotel, the continued ramp of Joliet and the M Resort Hotel Tower, and achieving breakeven and interactive. I'm also excited to welcome our three new board members, Heather, Jeff, and Fabio, who bring a lot of relevant experience and fresh perspectives to our board. We look forward to this being a year of strong execution at Penn with an emphasis above all on free cash flow generation and deleveraging and transforming our strategic investments into consistent long-term returns and value creation for our shareholders. And with that, can we please open the line for the first question?

Thank you. If you would like to ask a question, please press star one on your keypad. To leave the queue at any time, press star two. We ask that you please limit yourself to one question and one follow-up. Once again, that is star and one to ask a question. We'll take our first question from Brad Montour with Barclays. Please go ahead. Your line is open.

Hi, everybody. Thanks for taking my question, and thanks for all the details this morning. Maybe starting off on digital and drilling into that top line 26 target of 20% revenue growth, X growth. Jay, maybe you could put a finer point on that or just flesh it out a little bit. We know that, you know, you're growing iGaming in excess of that. There's more moving pieces on the OSB side with Handledown because of, obviously, the exit of ESPN. And then, of course, hold was probably a benefit or was a benefit here in the recent months. And so we kind of really don't know what the, you know, what the run rate top line OSB is, you know, is at right now. So just, you know, what's growing faster within that 20%? I'm assuming iGaming, but if you could just flesh out, you know, what's going to get you to that 20% and how conservative it is.

Yeah, happy to. And Aaron, feel free to jump in as well. Certainly being driven primarily by growth in iGaming, we've seen really strong growth rates throughout 2025. And I'm happy with what we're seeing so far at the start of 2026. Our product continues to get better on the standalone Hollywood app. We're seeing really, really strong retention. We were before the rebrands, and obviously we weren't affected as much on the iGaming side from the sports betting rebrand of ESPNVet to the ScoreVet. So primarily driven by iGaming growth. We also expect to see NGR growth on the sports betting side despite lower handle. As you can imagine, we've taken a really, you know, I would say refreshed look at our entire database on the interactive side. If you look at, from a retention perspective, across the worth cohorts in the interactive database, we sort of break it down into eight different worth categories, and the top four are virtually unchanged from a retention perspective, both before the rebrand and after the rebrand on a month-over-month basis. So feeling really good about retention at the mid-worth and high-worth segments. And where you're seeing fall off on the retention side is where we're doing that by design is at the lowest worth segments. Most of those are unprofitable customers. And so pulling back on reinvestment at the low worth is going to help on flow through overall. It's going to lower our promotional reinvestment overall. And focusing on our higher worth VIP and mid-worth customers just generates much more efficient business. So you'll see NGR growth despite some handle declines in 2026.

Yeah, not much to add. I mean, iCasino is currently growing faster than 20% right now, which we're happy about. Obviously, OSB is going to continue to go down, but as Jay mentioned, we're going to moderate that with lower promotional expenses to improve flow through. So we feel pretty good right now with what we're looking at for the year.

Okay, that's super helpful, guys. And then over in retail, the promotional environment was a headwind there. In 25, to some extent, there was obviously supply pressure. Can you just talk about those two items? Obviously, they're related into 26 and what you're expecting for the year.

Yeah, we're happy to share that we're seeing less impact. I think there was some sort of initial shock to some changes in reinvestment and some customer shifts and movements in a couple of markets. It's really primarily where we felt it the most is in a couple of markets in Louisiana, really three markets, Baton Rouge, New Orleans, and, of course, Bossier City, which we've talked about, and then in Council Bluffs, Iowa, the combination of new competition, new supply in Omaha, Nebraska, and then another competitor in Council Bluffs where we saw some higher reinvestment levels. We're seeing that all start to sort of fade significantly. And we do lap, finally, we lap the opening of the new supply in Bossier City here this month in February. We're feeling good about trends at our properties in Bossier City now that we've lapped that opening. There'll probably be some residual impact maybe the next month or two, but we should be in the clear, I would say, in mid-Q2 in terms of Bossier City, and I would say Council bluffs There was a pretty major expansion of a new competitor in Omaha. I believe it was April of last year. So by the time you get to mid to late Q2, you've anniversaried the new supply shocks and competitive reactions. So I think the second half of the year should be feeling pretty good in terms of that acting then as a tailwind when you look at it on a year-over-year basis.

Excellent. Thanks, everyone.

All right. Thank you. We will move next to Barry Jonas with Therese Securities. Please go ahead. Your line is open.

Hey, guys. Good morning. Yeah, Jay, why don't I take that second question you gave there and maybe expand it as we think about the guidance range. You know, maybe what are you assuming between the range for new supply impact sounds like more first half versus second, but also any assumptions embedded there for new project growth, anything for one big beautiful build. Just want to get a sense like what the difference is between the high and the low end of the guidance range. Thank you.

Yeah, we anticipated and contemplated all of the factors that you just highlighted. Barry, I do think that as I look at what consensus looks like by quarter, we probably feel stronger about the second half of the year than the first half. There's some weather impacts here in the first quarter that Felicia highlighted between 5 and 10 million impacts. We built that into our full-year guide, so that's no change to the full-year guide. But in terms of the cadence from Q1 to Q2, Q3, and Q4, there's a little bit of noise in Q2 in that we'll be opening our Aurora property. And you'll recall that when we opened Joliet, we had to shut the property down for two weeks. And so there's obviously a cost headwind to not generating revenue but still having the cost flow through the P&L as we get ready to open Aurora. The second half of the year, we really feel like we're in the clear. We're going to have all four of our growth projects that we've been talking about for the last several years will be open, two of them fully ramping, the ones that we opened in 2025, and feeling pretty good about launching the other two. They're likely to open at the very end of Q2. The current construction schedule has us opening early. the Columbus Hotel, as well as the Aurora property, really at the tail end of Q2, call it end of June. We'll firm that up in the next probably month or month and a half publicly, but that's the way I would model it. And as you think about same store versus new, when you look at the EBITDA projection or guide for 2026, We look at our same store, including the markets with new supply as being basically flat year over year from an EBITDA perspective. And then the upside you see on a year over year basis, the 3% growth overall is being driven by the four growth projects.

Got it. And then wanted to follow up on Interactive. Really nice to see the breakeven guidance this year. But at least conceptually, how should we be thinking about the maybe profitability scenarios for the segment in the years ahead? Clearly, new iGaming legalization will be a major factor, but it does seem like the royalties are a major positive today that could tell off at some point. Thank you.

Yeah, the only market we're aware of that is going to launch new this year is Alberta. That will happen, we believe, sometime around mid-year. That hasn't been firmed up yet, but that's what we're anticipating. That should be a good market for us. Obviously, our strongest market I've highlighted before has been Ontario from a market share and a contribution margin perspective. So we expect Alberta to be a good market, reasonable tax rates similar to Ontario's, both online sports betting and online casino. There'll be some investment that goes into that market similar to when we launched Ontario, but we would expect to have similar market share results in that market as well. The SCORE brand really does carry across the country. It's not just specific to the province of Ontario. Feeling pretty good about that. And I think to answer your question of, you know, how does break even in 26, what does that look like? How does that bridge to 27, 28? We just need, I think, another couple of quarters to see, you know, what is the revenue trajectory both on the iGaming side as well as in OSB? How does the launch go in Alberta? Look, we're in control of all of the levers. That's a great feeling as we head into 2026 here, and we feel really comfortable with being able to achieve break-even. There's different paths to getting there, which would impact what your 27 and 28 outlook is. So we just need a little bit more time under our belt. We're feeling good about the first couple of months post-rebrand. We provided you some KPIs in the slide presentation for what December and January look like on a combined basis, and feeling pretty good about that. It's Actually quite rare that when you go through a rebrand and, you know, you're making assumptions, obviously you're building out what your assumptions are and then making adjustments on the fly. We've been really close to what we assumed we would be, both from a retention as well as a new user perspective. There's been, you know, little tweaks here and there that we've made, but overall feeling pretty good about what we anticipated and what we're seeing in the business.

Great. Thanks, Jay.

Thanks, Eric.

Thank you. We will move next to Jordan Bender with Citizens. Please go ahead. Your line is open.

Hi, everyone. Good morning. I want to start on the casino side. So the bulk of the project CapEx is coming to an end in the coming months outside of Council Boss. Jay, you might not be able to say anything definite today, but how do you view the development pipeline in the casino business over the next coming years?

Yeah, I'll answer it. I guess sort of internally looking, if that's where you're headed directionally, I'm happy to answer thoughts on externally. But within Penn, we do have a few more projects that we're analyzing right now. I've mentioned before on our other calls that we've got some other aging riverboats in markets like Louisiana, Mississippi, and one more actually in Illinois that actually, you know, as we do the analysis, the return profile looks quite similar to what we're seeing in Joliet real-time and in M-Resort. Now, that one's hotel expansion, but we'll anticipate with Aurora the water-to-land conversion. So, I would say stay tuned on that. We've been analyzing these for some time, and I think you should expect to hear more about that here in 2026. But you're right in terms of Project CapEx. It was really at its peak in 2025 at over $400 million, and Felicia highlighted the first half of this year as we sort of finish up at Columbus and Aurora, another $225-ish million. So there will be some Council Bluffs spent as we get to the end of 2026 and head into 2027. We anticipate that property opening up sometime toward the end of 2027. It might leak into early 2028. Anything else that we have planned, as long as it pencils and we've got the support locally, which are all the things that we're working on right now, you should anticipate hearing more about that in the coming quarters.

Great, thank you. And then on the follow up for the interactive guide, a lot of positive comments around kind of what's going on following the rebranding. But the guidance, I believe you guys did go from break even the positive to just break even, can you kind of just flush out what you're seeing in real time that's caused that shift?

Yeah, look, you have to take a midpoint when you're putting out a guide. And so I think that just feels comfortable right now. Again, we were positive EBITDA in December, feel good about the business result in January. We're still in the middle of February. Super Bowl overall actually worked out in our favor. We did well, not so much on the money line wagers, but player props definitely worked in our favor and same game parlay most of the star players did not score touchdowns in that game. So overall, Super Bowl was good. The other sports in February have been okay. So hold has been, I'd say, pretty close to where we anticipated through the first two months of the year on a combined basis. So just, you know, we built our budget from the bottom up, and it told us that, you know, we felt comfortable putting break-even out there, and we're delivering against that now. We'll obviously continue to update all of you on our quarterly calls as to how the year is progressing. But in terms of, you know, being two and a half months, close to three months post-rebrand, we're right where we wanted to be.

Great. Thanks, Jeff.

Thank you. We will move next to Dan Pulitzer with JP Morgan. Please go ahead. Your line is open.

Hey, good morning, everyone. Thanks for taking my question. I wanted to follow up just on regionals. I know you called out the first quarter. You've seen a little bit of weather impact, but perhaps the other side of that. Have you started to see any of the stimulus benefits, the tax refunds start to flow through? And historically, you know, what is the relationship between those tax refunds and maybe the uplift that you would see in your properties?

Yeah, it's a good question, Dan. It's really hard for us to know when we see, you know, really good volumes on a weekend how much of that is there's been a break in the weather, how much of that is that there's, you know, tax refunds are starting to flow and they're, you know, higher than people anticipated. So, I think the answer is that we're seeing some of all of that. I would tell you that as bad as the weather was in January, and that really hit us across every one of our segments, regional segments, other than the west, but even hit us in the south. You'll recall the storm was really across the country. And then in February, Midwest weather has actually been fine. It's the northeast where we've gotten beat up. We had to shut down a couple of our properties early this week. So there's definitely noise there, but I would tell you that When the weather breaks, whether it's a weekday or certainly on the weekends, we're seeing really strong volumes. We're seeing really strong spend per customer when they visit. And I think that's probably going to continue now that the tax dollars are starting to flow through into people's accounts. We would anticipate finishing up February strong. The weather looks good in the 10-day forecast really across the country. And, you know, March is set up to be a good month. The calendar doesn't work in our favor as well in Q1. Something else to keep in mind, we had an extra weekend day this year in January, which is the weakest month of the three. Last year you had an extra weekend day in March, which is the strongest month of the three. So something to keep in mind, again, just in terms of your quarterly modeling. Q1, maybe not as strong as maybe you would anticipate, relatively speaking, but it's going to get stronger throughout the year, especially for Penn as we have the second half of the year, the four growth projects all open and starting to hit a run rate that we're comfortable with.

Got it. That makes sense. And then just submitting the capital allocation, I think your slide that you refer to as capital return optionality, one, it is a two-parter. Is there a number for the full year for the repurchases that you ended up doing? I'm not sure if there was any incremental versus when we got the update the last call. And then how are you thinking about that capital return as you referenced the optionality with returning to shareholders versus, you know, reducing debt versus some of those growth investments that might be on the horizon?

Yep. Thanks, Dan. Yeah. So in 2025, as you know, we set out to purchase 350 million shares. And as we discussed in our last quarter, we ended up buying back 354 million for 2025. And just putting that into context, that's about 14% of our shares outstanding in 2025. And then since 2022, we repurchased $1.1 billion of stock or 25% of our shares outstanding. So You know, we've demonstrated share repurchases are an important part of our capital allocation strategy and continue to be so, but also delevering and investing in our development pipeline where we expect to generate 15% cash-on-cash returns are also important parts of our capital allocation strategy. So, you know, we talked about earlier that we expect to generate $3 per share of free cash flow this year, and then you couple that with the $225 million in funding we should receive from GLPI for Aurora before the end of the second quarter, and then the remaining $21 million that we'll receive from the city of Aurora before the end of the year. All that's going to enhance our liquidity and reduce our leverage. Really, Dan, at the end of the day, it's about our balance, right? And we'll remain focused on all three of those components, buybacks, de-levering, and investing in our growth throughout the year.

Got it. Thanks so much.

Thank you. We will move next with Joe Stoff with South Kweihana. Please go ahead. Your line is open.

Thanks. Good morning, Jay. Felicia. I wanted to ask... maybe a couple questions to dig in a little further on the early returns, obviously, Juliet and Resort. And, you know, just kind of lessons and how we think about the ramp from here. You know, we can all see the Juliet kind of win per unit per day somewhat flattening out. I don't know if that's a function of weather or, you know, maybe there are some marketing campaigns that you are thinking about, but And also in M-Resort, obviously you have a lot more capacity. You talked about record gaming volumes in December and January. So I was wondering, is that a function of higher capacity, higher visitation? What are you seeing there in terms of maybe de-risking, say, the 15% cash-on-cash return going forward?

Yeah, good questions, Joe. Let me take a step back for a second just in terms of the hotel expansion projects versus the water-to-land conversions. The hotel project expansions, you see really a more – impact positively to incremental revenues and incremental EBITDA. And the reason for that, I think, is relatively intuitive, which is that, you know, you're adding a hotel, there's not a whole lot of labor add. You know, you've obviously got housekeeping, front desk, bail valet. The Columbus property and the M Resort property were built for more hotel rooms, right? In the case of Columbus, built for a hotel in terms of restaurant capacity, entertainment venue capacity, gaming floor. We didn't have to invest in expanding any of those areas as part of those projects. So we knew that we had a lot of unmet demands that we couldn't handle at the M Resort. And we were sort of cultivating these relationships with many of these groups and conventions that would come through. And then it would just outgrow us because we only had 390 rooms. We've essentially almost doubled the capacity pretty close to 750 total rooms at M now. And so we've got groups both coming back and new large groups coming in for the first time. We can deliver a level of service and personalization that they just won't find on the strip because those hotels are so large and those groups sort of can get lost. So, yeah, Feeling really good. I mean, if you look at the M Resort results, which we do every day, and you look at occupancy and you look at ADR, you almost don't even realize we added, we doubled the number of rooms because the occupancy has been almost as strong as it was prior year with half the room, same thing on an ADR basis. So we're feeling really good about M Resort. The return profile gets us even more excited about Columbus. Columbus, believe it or not, this is kind of an odd stat, but it's our number one property in the portfolio from a cross-property visitation standpoint, and that's with no hotel today. So we obviously are feeling really good about being able to generate much stronger VIP cross-sale from other markets, both in Ohio and outside of Ohio. It is a destination for us. especially during the Ohio State football season. So that's kind of the hotel expansion wrap-up. I would say, as it relates to Joliet, we're feeling really good because remember, and you've been there, Joe, you were there for the grand opening, that property was really the first location or amenity or offering to open up in what is a very large mixed-use development called Rock Run. There's actually a 250-plus residential development that's opening up right next to our parking garage later this year. There's a 285-room flagged hotel that's opening up within walking distance of our property sometime in 2027 there's a number of restaurants and entertainment venues i mean it this is a it's a real mixed-use development for those of you that have been to st charles missouri close to the ameristar property there it's the same developer And we expect to have a similar critical mass when all is said and done over the next couple of years. So Joliet, as good as the start has been, and the way I sort of summarize the demand figures at Joliet, we've seen our active database, which we covered on the call earlier, 130% growth from pre to post. We see daily visitation has doubled. Our table volumes have doubled. Our non-gaming revenue has doubled. And our slot revenue is between 40% and 50% growth. And so I think there's an opportunity to still grow that slot business higher than that base of 40% to 50%. Anything above that just makes the return profile that much stronger. And the difference, again, between the hotel expansions versus these water to land casino conversions is that when we first opened, like we did at Joliet, the first few months, you've got a lot of slot lease product on your floor, figuring out what your customers are gravitating toward from a slot content perspective. You have all of your restaurants open every day, all of your bars, and a lot of entertainment programming. You're figuring out what works. And so your margins are going to be lower those first, call it, couple of quarters post-opening. And then you start to fine-tune. And I think we're the best in the business at doing that. And so you should expect the margins for Joliet over the next couple of quarters continue to improve. And by the time you hit the one-year anniversary, you're really cranking up. from a top line and a bottom line perspective, I would expect the same sort of cadence from, you know, quarter one to quarter four post-opening for Aurora as well. Whereas Columbus, you're going to see a more immediate impact both on the top line, bottom line, as well as in your margins.

Thanks for that. And just to follow up, is the Aurora property, the newer property, obviously, is that also opening up? I hadn't been there. in a mixed-use development as well, similar to Juliette?

It is not, but we stand to benefit that we literally sit next to, immediately adjacent to the Chicago premium outlets. And when you're entering and exiting that mall, which is, you know, I don't have the stats in front of me. It's millions and millions of vehicles and people per month. And when you're exiting the Chicago Outlet Mall, you're at a stoplight. You turn left to go on the interstate or you go straight and you roll right into our parking garage. So I would say it's actually a little bit better in the sense that just from a timing perspective, it's already developed better. and already has critical mass on a daily basis. And so we stand to benefit. The Chicago Premium Outlets really don't have any sort of mid-tier or higher-end restaurant offerings, and that's something that we will have. Remember, though we don't have a hotel at our Aurora property today on the water, we will have a hotel. We'll have a spa, outdoor entertainment, lots of restaurants. It's sort of a bigger, more higher-end amenity mix, version of what you saw at Joliet. So we're feeling really good about being able to feed off of the Chicago Premium Outlet Mall there as well.

Thanks, Jay.

Thank you. We will move next to Sean Kelly with Bank of America. Please go ahead. Your line is open.

Hi. Good morning, everyone, and thank you for taking my questions. Jay or Felicia, maybe if you could just remind us on the kind of size or scope around the Alberta launch costs. Ontario was quite a while ago, and I can't actually remember if it was done under the sort of more of the score moniker before your acquisition. But just kind of if you could help us put some parameters around if that market goes. I know the timing is a little uncertain, but if that market does open this year, what's the kind of range of J-curve investment you guys might expect to make there? That would be helpful.

Yeah, we're still sort of finalizing our marketing launch plans there and taking the best of in terms of what works with our Ontario launch and eliminating the things that didn't work. So I would say it's going to be probably somewhere in that $15 to $20 million range. But give us another quarter to fine-tune our marketing plans and get back to you. On that, obviously, it's a really important market. And we've all learned through the years that, you know, those initial signups you get, those are the most valuable customer cohorts that you end up with. And so we've got to make sure that we launch successfully in Alberta like we did in Ontario. And when you do, you tend to hold on to your market share much more effectively. So I would say stay tuned. But generally speaking, that's probably the range.

Perfect. Thanks. And then, you know, sort of as a strategic follow-up, you know, Jay, you know, last quarter you had I think some really defined views as it related to, you know, the broader prediction market landscape. We continue to see a lot of sequential growth in that business. I'm kind of curious on twofold. One, you know, any identification you guys have on just your kind of core business on handle metrics as to, you know, any impact you might be seeing. But I think much more importantly, you know, just your kind of – as this continues to evolve, we continue to see, you know, spinoffs of more and more – Gaming-like mechanics, you know, where do we sit today, you know, from where we were three months ago on your view, and how do you think the industry is kind of coming together here, you know, as it relates to this? Because we have seen, obviously, the CFTC come in with some pretty public remarks blessing these markets and continue to see a lot of people moving forward here.

Yeah, it's a fully loaded question on a really controversial topic. I laid out a lot of my thoughts on the last call. I would say those thoughts really haven't changed. What has continued to evolve is that it's really clear as mud today in terms of where this is going from a legal perspective. You've got regulators and attorneys general that are suing prediction markets, and then you have the prediction markets that are suing regulators and trying to beat them to the punch. It's obvious to anybody who's ever been in the gambling business and even those who aren't that sports betting is gambling. I don't know how you can defend that that is not. And I know regulators have taken that view. It really puts, you know, the pens and the MGMs and the Caesars of the world in a very awkward position. We have our land-based businesses that generate tremendous cash flow. We employ thousands and thousands, tens of thousands of team members across the country. We're big contributors to our communities. And, you know, those gaming licenses are the most valuable assets we have. We're not going to put those at risk. So when regulators say this is illegal gambling, don't do it. We don't do it. But there are those that are able to do it and are doing it in other states and so it's just, it's very, it's confusing. I would say the impact overall in terms of what we're seeing today on our sports betting business, we can't really tell what the impact is. We all see the handle trends. I think there's lots of variables that impact handle. Prediction markets certainly are one of those. How much, we don't know today. This really can't get in front of the U.S. Supreme Court fast enough. I mean, that would be my ultimate perspective and answer, because we're just going to keep seeing this get delayed and delayed and delayed, and the businesses get bigger and broader, and what are they doing? We don't know the answers to some of those questions, but we're obviously not going to put our licenses at risk. We're going to stay very close to our regulators. I do think, as I said on the last call, that we as an industry of land-based casinos that aren't able, aren't allowed to participate in prediction markets, we've got to, you know, I think the best defense is offense, and we've got to figure out how to play more offense here. And I've got ideas. I've shared that with some of my counterparts. And we continue to discuss those ideas with our regulators as well as lawmakers on how we can play more offensive in industry and turn this into a win for them, meaning the states, and also for the operators like us.

I would say on the Sportsbook side, you're seeing a lot more competition on the marketing side going after sports bettors directly. So, you know, we are seeing that versus, you know, going after investors. They're going after sports bettors, so.

um that's that's become pretty evident uh over the short of the short term here thank you thank you thank you we'll move next to chad baynon with macquarie please go ahead your money's open hi good morning uh thanks for taking my question i wanted to ask about the main uh i gaming bill that was passed um obviously unique in terms of the partners that are there. You guys have a good database and could potentially partner with somebody. Can you talk about if this bill goes into existence in terms of operations, maybe your opportunity to benefit economically in that market? Thanks.

Sure, Chad. I can't answer that one today only because we're still in discussion. But I would just, you know, taking a step back. What happened in Maine is... Mind-blowing. We've been operating as a casino entity there for two decades. We've invested hundreds of millions of dollars. We've employed hundreds of Mainers. We're great. We're as involved in the community as you're going to find any business leader. And the governor in Maine decides to hand a monopoly to a third party that's never invested a dollar in the industry. I don't understand that. It doesn't make sense to me. It shouldn't happen. That said, it's being challenged legally, as it should be, and we'll see where it goes. If it ends up standing, then we're going to do our best to figure out a way to compete in that market. But the way that this was done was not popular publicly, and that's very evident, and I'm not sure how the governor concluded that was the best course. But it is what it is. We'll figure out a way to compete if it does end up standing legally.

Okay. Thanks, Jay. And then separately on the retail guide, looks like margins are going up by a few basis points, 45% flow through at the midpoint. You guys are going to benefit from the new properties. You talked about the returns there. But just as we think about the same store expenses, maybe labor, utilities, et cetera, you know, the non-tax items, do you have high confidence that there's not going to be much inflation in 26, and if you hit those revenue targets, at least at the midpoint, that you can hit on that flow-through? Thanks.

Yeah, from what we can see today, Chad, I would say yes. We have a couple of labor negotiations in 2026 that, you know, we feel like we've got a pretty good handle in terms of what the outcomes, the range of outcomes will be. Got a good handle on, you know, utility and insurance expenses, things of that nature. So it really is more of a think about it as a first half of the year. You're still going to feel some impact there. from those new supply markets that we haven't anniversaried yet or are in the process of anniversaring. You've got the Aurora opening, which, again, will hurt margins at least for the first quarter, maybe two quarters. The other three growth projects that we'll be ramping at Joliet, margins will be in a really good place certainly the second half of the year. M Resort margins are in a great place right now. Columbus will be out of the gate in a great place. So that's sort of the impact. Just think about it maybe as a first half of the year, maybe not as much upside, same store, whereas the second half of the year, you'll probably start to see more upside in terms of margin growth at the same store level.

Thanks, Jeff. Appreciate it.

Thank you. We will move next to Jeff Stenshal with Stifel. Please go ahead. Your line is open.

Hey, good morning, Jay, Felicia, Aaron. Thanks for taking our questions. Maybe starting off on the interactive business, we have been seeing a bit of an uptick in the promotional environment this quarter on the sports side of things. The private operators continue to spend quite aggressively, and then some of the larger operators have come out with parlay insurance and other initiatives like that. Jay or Aaron, whoever wants to take this, is this something where you're noticing an impact on retention in sports that you can actually pinpoint in the quarter? Are you fast-following any of these parlay-focused generosity initiatives? And if you could just help us think about, I guess, overall sensitivity in the projections to the promotional environment, specifically in sports, just given the shift in strategy, that would be helpful.

Thanks. Yeah. We are seeing that in sports, although, as you know, our strategy has really shifted to focusing on iCasino and hybrid states. and in Canada. So when we're looking at OSB-only states, we're taking a much more methodical look at our promo dollars and users that we're trying to retain and attract. So we have great retention at the high end of value. Kind of the promo chasers and the people that are looking for, you know, gimmicks and promos in the low end tend to be churning out, which is what we expected. And then we use that money to reinvest in hybrid states where there's iCasino and Sportsbook. So it is happening, but we are not necessarily competing in that market anymore as a vis-a-vis a fan dealer or DraftKings. We don't see ourselves – in that realm, although we do try to find opportunities to provide value where they don't. But your observation is true that it is getting competitive, but we're kind of staying out of that right now.

That's great. Thanks, Aaron. And then maybe staying on the interactive business, Felicia, in the past, you've given us some frameworks for just thinking about market share across the two verticals, you know, maybe without having to get into specific numbers this time. Can you just talk directionally on how you think about overall market growth relative to market share expansion on the casino side that's sort of embedded in the 26 guide? Thanks.

Yeah, I'll grab that one. This is Jay. I would say that we expect, and we've essentially said it already, we would expect to continue to grow our market share on the iCasino side and see that our handle share will shrink on the OSB side. That's the best way to think about it. We're really focused on retention and driving profitable new users as first-time bettors into the ecosystem. So, You know, Aaron mentioned it. We're hyper-focused on the states that offer both online casino and OSB. OSB-only states were likely to have a different new sign-up offer. We actually already deployed that differentiation between OSB-only versus hybrid. And so that's where it's going to be in 2026. We feel we also have a great opportunity on reactivation. People that, you know, over the last several quarters and years have been registered and signed up and made deposits to maybe take advantage of a promotion. And they're either inactive, dormant, or they're not as frequent players with us or gamblers with us as we would anticipate. So we're really focused on reactivation as well. And all of that just feeds into the P&L story for this year. It's going to be a much more efficient approach to the business and one that we think will generate a much higher return long term.

Great. Thanks very much.

Thank you. We'll take our next question from David Katz with Jefferies. Please go ahead. Your line is open.

Hi. Good morning, everybody. I appreciate you taking my questions. I wanted to just talk about the land-based or retail, you know, portfolio. You've made some, you know, obviously very effective investments and, you know, Do you have a pipeline of more of those? Should we expect to see, you know, more of those kind of upgrade projects? Clearly the retail landscape has gotten much more competitive, you know, post COVID.

Yeah. I mentioned earlier, David, we do have some more opportunities in states like Louisiana, Mississippi, and actually one more of our water-based facilities in Illinois. So we're analyzing the return profiles on those projects, working with, uh, local leaders, lawmakers, community leaders, and figuring out which of those may make sense for us as long as they hit our return profile that we're comfortable with, which would be that 15 plus percent cash on cash. We've got others that we believe will fit that return profile. We just have to make sure that everything else lines up. And I would say stay tuned for more on that here in 2026.

I appreciate it. If I could just follow up to that end, I don't expect you to give us a number, you know, today and in this forum, right? But, you know, is it, you know, a majority of the portfolio, right? Is it, you know, two to three properties, three to five properties, you know, any order of magnitude I think would be helpful here. Thank you.

It would be certainly, you know, low single digit, less than a handful. But, yeah, there's across those three states I mentioned, you know, call it three or four projects that we're looking at right now.

Okay. Good enough. Thank you very much.

Thanks, David. And, Nikki, we'll take one more question, please.

And it looks like we show – oh, actually, we show no further questions in queue at this time. All right. That works out perfectly. Hold on one second. Yes, we do have a question comes from the line of Stephen Grambling with Morgan Stanley. Please go ahead. Your line is open.

Oh, thank you for sneaking me in here. This should be maybe a quick one. Just I know that you gave a guide that implies kind of an OpEx growth rate on the property side. Just curious if you could provide any more details on some of the puts and takes that maybe underpin that. Thanks.

Yeah, I would say pretty typical year of OpEx growth. We're comfortable with the flow through on the incremental revenues that we're showing there at around 45%. Could end up being a little bit better than that. But you're going to have typical growth in your labor number primarily, you know, annual merit increases there. Like I said, we have a couple of labor negotiations that we're working through. So primarily there. We don't anticipate strategically any changes in our marketing reinvestment overall. You're going to have some natural growth in areas like insurance, sometimes utilities. But that would be driving the lion's share of it, Stephen. Thank you so much. All right. Thanks, everyone, for joining. We look forward to catching up with you again next quarter.

Thank you. This brings us to the end of today's meeting We appreciate your time and participation You may now disconnect