PENN’s Interactive revenue rise rests on partner taxes as gaming revenue slips 2.1%

PENN Entertainment reported a rise in Interactive segment revenue for the third quarter, but the growth was primarily driven by partner taxes, not by player activity. The segment must achieve a positive fourth quarter to meet an already lowered full-year target. Other revenues contributed to the Interactive segment's third-quarter gains.

Online gaming revenue dropped 2.1% to $126.6 million, while partner gaming taxes increased from $139.5 million to $191.4 million. This reliance on partner taxes aligns with a larger trend of slowing iGaming growth in the US operator reports this week. Despite this, PENN's overall revenue increased to $1,840 million, and net income improved to $32.6 million, up from a $865.1 million net loss the prior year.

The company also raised its full-year retail guidance to $5.89 billion in revenue and $1.973 billion in adjusted EBITDAR, both increases of $16 million and $10 million respectively. PENN's Interactive adjusted EBITDA loss for the first nine months fell to $38.7 million, down from $227.6 million a year earlier. The company cites cost cuts as the main reason for this improvement, particularly in marketing, general, and administrative expenses, as well as labor costs.

PENN launched new iCasino apps in Alberta in July 2026, which are central to their growth plan. The standalone Hollywood iCasino brand posted record quarterly revenue in the second quarter. PENN now relies on US growth and steady trends through October to achieve its full-year Interactive target. The target has been adjusted, with PENN now aiming for breakeven adjusted EBITDA in 2026, marking a $268 million improvement from 2025.

The launch of iGaming in Canadian provinces is also being monitored, as it could impact PENN's outlook. Pennsylvania has seen strong growth in land-based gaming, which may help offset challenges in the online segment.