PENN interactive revenue up 17% in 3Q26 as segment eyes fourth-quarter profit
PENN Entertainment’s interactive segment arrowed its losses sharply in the third quarter, as growth in US icasino and Canada was offset by weaker online sports betting (OSB) results.
According to its latest results, interactive revenue rose 17% yearly to US$348.4 million in the three-month period ending 30 September, while the segment’s adjusted EBITDA loss shrank to US$18.3 million from US$76.6 million a year earlier.
Interactive revenue included US$191.4 million in tax gross-ups, up from US$139.5 million in 3Q25. Excluding gross-ups, segment revenue was broadly flat at around US$157 million.
US icasino growth was “driven by the strength of standalone Hollywood iCasino, supported by efficient user acquisition and reinvestment,” noted CEO and President Jay Snowden.
In Ontario, more users and higher revenue per user lifted both icasino and online sports betting revenue, while PENN’s newly launched Alberta operations also posted encouraging early results.
Speaking on the earnings call, Snowden said PENN’s Alberta online sports betting market share was approaching its low-double-digit share in Ontario, while its Alberta icasino share was about half its Ontario level. He added that the Alberta icasino market appeared larger than the company had expected.
The growth was offset by lower US online sports betting and integrated icasino volumes, as well as customer-friendly sports results, according to CFO Felicia Hendrix.
Igaming now accounts for roughly half of interactive revenue excluding skin-related revenue, according to Snowden.
PENN expects the segment to turn profitable in the fourth quarter, guiding to interactive revenue of US$445 million, including US$242 million in tax gross-ups, and adjusted EBITDA of US$18.7 million.
That would leave the segment with a full-year adjusted EBITDA loss of around US$20 million, including US$20 million invested in the Alberta launch, compared with a US$227.6 million loss over the first nine months of 2025 alone.
“2027 will be profitable for the year,” Snowden said of the interactive business, while cautioning that unusually low sports betting hold or investment in new markets could still affect individual quarters.
Group revenue rose 7.1% to US$1.84 billion, with the retail segment posting record third-quarter revenue of US$1.5 billion, up 5%.
Dig Deeper
Related stories
2025/11/06: Penn Entertainment and ESPN terminate agreement; operator’s OSB business to rebrand at theScore Bet
2025/02/28: Penn Entertainment revenue rises in fourth quarter
2026/08/07: Record retail revenue of US$1.5 billion for PENN Entertainment in 2Q26
2025/08/08: Penn Entertainment’s igaming segment reports 35.9% year-over-year increase in second-quarter earnings
2025/11/06: Penn Entertainment and ESPN terminate agreement; operator’s OSB business to rebrand at theScore Bet
2025/02/28: Penn Entertainment revenue rises in fourth quarter
2026/08/07: Record retail revenue of US$1.5 billion for PENN Entertainment in 2Q26
2025/08/08: Penn Entertainment’s igaming segment reports 35.9% year-over-year increase in second-quarter earnings
The Backstory
A digital reset after the ESPN Bet experiment
PENN Entertainment’s latest interactive results land at a turning point for a company that has spent much of the past several years trying to convert a regional casino base into a national digital gambling business. The third-quarter numbers show progress on losses, growth in icasino and stronger Canadian momentum, but they also follow a strategic reversal: PENN is moving on from ESPN Bet and returning its U.S. online sportsbook to theScore Bet brand.
That shift matters because PENN’s online strategy has been defined by expensive brand partnerships and repeated resets. The company tried to accelerate its sports betting ambitions through Barstool Sports, then pivoted to ESPN in 2023 in a bid to become a top-tier U.S. sportsbook. By late 2026, management concluded the ESPN relationship was not delivering the needed market share trajectory. As Complete iGaming reported in its coverage of PENN’s termination of the ESPN agreement and rebrand to theScore Bet, Chief Executive Jay Snowden told investors the company and ESPN had found a path forward that served both sides, with PENN keeping the customer database built during the partnership.
The termination reframes the third-quarter interactive performance. PENN is no longer chasing scale in online sports betting at almost any cost. Instead, it is trying to emphasize areas where it sees a clearer return: standalone Hollywood icasino in the U.S., Canadian sports betting and casino through theScore and cross-selling younger digital customers into its land-based casino network.
From headline deals to narrower spending
The ESPN exit was not just a branding decision. It was a cost and capital allocation decision. PENN had been paying for access to one of the strongest sports media brands in the U.S., but its market share gains lagged the original ambition. Snowden said the company had been assessing the issue for months and decided not to extend a strategy that was unlikely to meet its targets by the third anniversary of the deal.
That opened the door for a rapid industry reshuffle. ESPN quickly moved to a new partner, with Complete iGaming reporting that DraftKings reached an agreement to become ESPN’s official sportsbook and odds provider, effective Dec. 1. The move underscored the competitive challenge PENN faced. DraftKings already operates at far greater scale, with a broader customer base and a deeper digital sports betting footprint.
For PENN, the ESPN breakup removes a high-profile marketing engine but also reduces fixed financial drag. Analysts cited in the DraftKings-ESPN report described the split as a positive for PENN because the ESPN arrangement was costly and had become a distraction from the company’s steadier land-based business. That view aligns with PENN’s current message: The company wants a digital business that can be measured and managed with more precision, not one dependent on an external media partner to keep pace with FanDuel, DraftKings and other leaders.
The rebrand to theScore Bet is therefore less a retreat from online gambling than a narrowing of the field of battle. PENN owns theScore technology, brand assets and Canadian operating history. It also owns Hollywood Casino, a more casino-focused digital brand that has become central to the company’s icasino push. The current results show why management is leaning into those owned assets.
Canada becomes a bigger part of the thesis
Canada has moved from a supporting role to a key pillar in PENN’s interactive strategy. Ontario gave theScore Bet a regulated market in which the brand already had recognition, and Alberta’s launch added another province with early signs of demand. In the latest quarter, PENN said Ontario benefited from more users and higher revenue per user across icasino and online sports betting, while Alberta delivered encouraging early performance.
That buildout began earlier in the year. In its second-quarter update, Complete iGaming reported that PENN launched theScore Bet, theScore Casino and Hollywood icasino standalone apps in Alberta on July 13. The same report noted that PENN’s retail segment generated record second-quarter revenue of US$1.5 billion, giving the company a profitable land-based base as it funded online expansion.
Alberta is important because PENN is spending into a new market while trying to prove the broader interactive segment can turn profitable. The company said its full-year interactive loss would include about US$20 million tied to the Alberta launch. Snowden’s latest comments that Alberta sports betting share is approaching Ontario levels, while icasino appears larger than expected, suggest management sees that spending as a targeted investment rather than a return to open-ended national sportsbook subsidies.
The Canadian focus also fits with the post-ESPN marketing plan. PENN has said lower ESPN-related spending will allow it to redeploy dollars toward markets and customer groups with stronger returns, particularly Canada and U.S. states where online casino is legal. That is a notable contrast with the U.S. sports betting market, where promotions, taxes and entrenched leaders continue to pressure challengers.
Online casino changes the revenue mix
PENN’s recent interactive performance shows the strategic value of icasino, which typically offers steadier engagement and stronger economics than sports betting. The company said igaming now accounts for roughly half of interactive revenue excluding skin-related revenue. That mix helps explain why management can talk about fourth-quarter profitability even as U.S. online sports betting volumes remain weaker.
The trend was visible before the third quarter. Complete iGaming reported earlier that PENN’s interactive revenue rose 35.9% year over year in the second quarter, supported by record online sports betting and online casino gaming revenue. At the time, Snowden credited product enhancements and the company’s omnichannel ecosystem. The segment still posted a sizable adjusted EBITDAR loss, showing that revenue growth alone was not enough. But the online casino gains gave PENN a more credible route to sustainable digital economics.
The fourth-quarter picture from the prior year also pointed in that direction. Complete iGaming reported that PENN Interactive’s fourth-quarter revenue rose sharply year over year, while the company cited disciplined promotional strategies and accelerated online casino growth. Those improvements came despite customer-friendly sports betting outcomes, a recurring reminder that sportsbook results can swing materially from quarter to quarter.
That volatility remains part of the story. PENN’s latest quarter was affected by lower U.S. online sports betting and integrated icasino volumes, along with sports results that favored customers. The company’s fourth-quarter outlook assumes a rebound large enough to produce positive adjusted EBITDA, but management has cautioned that hold percentages and new-market investment can still move quarterly results.
Retail casinos anchor the risk
PENN’s digital strategy is easier to understand against the scale of its retail casino business. While investors have focused heavily on ESPN Bet, Barstool and online market share, PENN’s regional casinos have continued to produce the bulk of revenue and cash flow. The company reported record retail revenue in both the second and third quarters of 2026, giving it a financial base that many digital-only rivals do not have.
That base also supports the company’s omnichannel argument. PENN says one purpose of its online sportsbook and casino database is to refresh the customer funnel for physical properties. The ESPN partnership helped lower the average age of the database, according to management, and PENN retains those customers after the split. If it can move some of them into its casinos, hotels and loyalty ecosystem, the digital effort may create value beyond direct sportsbook profit.
The stakes are still high. PENN has invested heavily, changed brands multiple times and faced investor skepticism over whether it can compete digitally without sacrificing the profitability of its traditional business. The latest results suggest a more disciplined model is emerging: less emphasis on U.S. sportsbook market share, more focus on owned brands, icasino and Canada and a firmer push toward positive interactive EBITDA.
Prediction markets add a new uncertainty
Even as PENN restructures its digital gambling business, the competitive landscape is shifting again. Snowden has warned that prediction markets pose a major threat to regulated gaming operators, arguing that they offer sports-related products without the same state-level gambling rules, responsible gaming standards or customer protections. His comments show that PENN’s challenge is not only against licensed sportsbooks but also against newer products testing the boundaries of federal and state oversight.
That uncertainty raises the stakes for PENN’s profitability push. A leaner, owned-brand strategy may help the company manage costs, but it does not eliminate regulatory and competitive pressure. The third-quarter results indicate the interactive segment is closer to break-even than it was a year earlier. Whether that becomes a durable profit stream will depend on execution in icasino, retention after the ESPN rebrand, Canadian growth and how quickly regulators respond to new forms of sports-linked wagering.
