PENN Entertainment's online segment grew revenue in the third quarter, but the gain came from passed-through partner gaming taxes, not from players. The segment now needs a positive fourth quarter to reach a full-year target that has already been lowered.
Other revenues carried the whole of the Interactive segment’s third-quarter gain at PENN Entertainment. Segment revenue rose to $348.4 million from $297.7 million, while the third-party partner gaming-tax amounts booked there climbed to $191.4 million from $139.5 million a year earlier. Online gaming revenue itself fell 2.1% to $126.6 million from $129.3 million, as iCasino growth was offset by lower sports betting handle.
Partner tax pass-throughs, not gaming, drove Interactive growth
This pattern places PENN within the slowing-iGaming-growth story running through this week’s US operator reports.
The nine-month figures show the same reliance on the gross-up. Interactive revenue reached $1,056.0 million, up from $903.9 million. The tax gross-up within it rose to $562.7 million from $405.6 million.
The group as a whole had a stronger quarter. Total revenue was $1,840.0 million. Net income came in at $32.6 million, against a $865.1 million net loss a year earlier. PENN also raised its full-year retail guidance to $5.89 billion in revenue and $1.973 billion in adjusted EBITDAR, increases of $16 million and $10 million.
Cost cuts shrink online losses, but the full-year goal has slipped
Profitability is improving faster than revenue. The Interactive adjusted EBITDA loss for the first nine months shrank to $38.7 million from $227.6 million. PENN attributes that mainly to lower marketing, general and administrative, and labor costs.
Expansion has weighed on the quarter. PENN launched theScore Bet, theScore Casino and standalone Hollywood iCasino apps in Alberta on July 13, 2026. Excluding that third-quarter launch investment, Interactive adjusted EBITDA improved quarter over quarter throughout 2026, management said on the earnings call.
The standalone Hollywood iCasino brand is central to the plan. It posted record quarterly revenue in the second quarter. PENN is now leaning on its US growth, and on steady trends through October, to support the full-year Interactive target. That makes the brand a test for whether a mid-tier US online casino can turn profitable.
The target itself has moved. In February, PENN guided the segment to breakeven adjusted EBITDA for 2026, which it described as a $268 million improvement from 2025. The cost of the Alberta launch is now built into a weaker outlook.
PENN Entertainment CEO Jay Snowden discussed the potential of more Canadian provinces launching iGaming on an earnings call today.
In the last month, Quebec, New Brunswick, and Nova Scotia have all shown interest in exploring commercial online gambling. t.co/8WqAPfw9LY
— Tom Nightingale (@TNightingaming) November 5, 2026
Land-based trends offer some support. CEO Jay Snowden said PENN’s own Pennsylvania gaming revenue in October posted stronger year-over-year growth than in any other month of 2026. Most of that growth came in the second half of the month, after skill games were shut down. In his view, the midterm results could help PENN further by weakening support for skill-game machines.
The online segment still has to deliver. Reaching the revised target depends on Interactive turning its third-quarter loss into positive adjusted EBITDA in the fourth quarter.
Sources
PENN Entertainment, Inc. Reports Third Quarter Results (Form 8-K, Exhibit 99.1) (PENN Entertainment (SEC)) PENN Entertainment, Inc. Reports Third Quarter Results (PENN Entertainment via Business Wire) Pennsylvania State Police Begin Skill Games Enforcement Efforts, Announce Several Operators Have Committed to… (Pennsylvania State Police) BetMGM Q3 2026 Business Update (Entain)PENN’s Interactive revenue rise rests on partner taxes as gaming revenue slips 2.1% ReadWrite.
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