For PENN Entertainment, online casino is king now.
Chief Executive Officer Jay Snowden and other executives explained Thursday on a Q1 earnings call why the company is continuing to move away from sports betting to focus on iGaming opportunities and growth.
Earlier on Thursday, the operator of theScore Bet and Hollywood Casino digital platforms reported that its adjusted EBITDA growth in Q1 2026 was driven by a 15% year-on-year increase in iCasino revenue, compared to a 5% rise in online sports betting revenue. Total Interactive segment revenues grew to $358.3m and yielded quarterly segment profits of $172.5m.
“This marks the first full quarter under our realigned digital strategy, which is focused primarily on our U.S. iCasino states and Canada, while operating under a more efficient cost structure,” Snowden told investors and analysts.
Snowden says PENN knows its strengths
On the sports betting front, Snowden suggested that PENN is at least satisfied with the level of retention it has seen since it abandoned its ESPN Bet venture and rebranded its U.S. sportsbook under theScore Bet brand at the start of December, labeling it as “exactly where we expected it to be.”
The renewed focus on that front is on higher-worth customers, Snowden added. “We’ve lost some of the unprofitable and lower worth. That was by design.”
But the CEO detailed that PENN shifted its focus significantly over the last six months, moving away from states that only offer online sports betting to those that offer both that vertical and online casino.
PENN is also placing more emphasis on its standalone Hollywood Casino app. Executive Vice President and Chief Financial Officer Felicia Hendrix said the company saw better-than-expected performance in that particular field, with record quarterly revenue in both Q1 and specifically in March, which she called consistent with PENN Interactive’s strategic priorities.
“Clearly, we were spending a lot more in OSB-only states, which weren’t as profitable for us,” added Chief Technology Officer Aaron LaBerge. “So we’ve shifted that, we’re focused on hybrid states that have both iCasino and sports betting, and standalone is showing a lot of great momentum.”
DC sports betting not worth it for theScore Bet
In one notable example, PENN pulled theScore Bet out of the D.C. market effective late February. Executives branded that as purely a business decision.
“In D.C., we didn’t have much volume, so it didn’t make sense for us there,” noted Snowden. “I would say, generally speaking, that staying in OSB-only markets, if we can get those to be break-even from a contribution margin perspective, is going to make sense for us. But we’re going to continue to look at each market individually.”
He and LaBerge added that, as of now, PENN has no plans to exit from other U.S. sports betting states. “D.C was really the only obvious thing for us to look at and, currently, there are no real plans to change our footprint right now,” added LaBerge.
Snowden also acknowledged that PENN is feeling some pressure on the customer acquisition cost side as it relates to U.S. sports betting, which he partly attributed to prediction market companies and other online gaming companies having stepped up their operations and their marketing in that vertical. Those echoed comments made earlier this month by Adam Greenblatt, CEO of BetMGM, another gaming company that has remained on the event contract sidelines.
“That’s not really a big focus of ours right now,” added Snowden. “I think our story may be a bit unique in that Canada is really driving a lot of our results and Hollywood standalone iCasino in the U.S. is driving results, and OSB is less important overall to the Interactive story.”
PENN sees sports betting as iCasino funnel
There is still certainly a place for sports betting in PENN’s new strategy. While the geographic footprint of online sports betting in the U.S. is much greater than that of online casino based on the regulated markets available, it was evident from the call that PENN executives see sports wagering as a way to continue to drive their prioritized iGaming business.
“As you think about iGaming maybe eventually passing from a legislative perspective in many of these states,your number one feeder into iGaming is the cross-sell from online sports betting. 60% of our online gaming business and the states that offer both came from or sourced from online sports betting initiation. So that’s obviously compelling,” Snowden said.
LaBerge called the ability to cross-sell between online sports betting and online casino in states where both verticals are legal “a nice one-two punch” to pull in new users. For that reason, he added, the company remains focused on ensuring that it can still continue to drive online sports betting in hybrid states, albeit with a lower marketing spend.
“The states that have both OSB and iCasino, we’re going to see much stronger margins than the OSB-only states,” he added. “We’re of the opinion that it’s probably a matter of time before many of these OSB-only states turn to some form of iGaming. We want to stay in the business and be ready when that day comes.”
