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v3.23.1

Segment Information | 3 Months Ended
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Mar. 31, 2023
Segment Reporting [Abstract] |
Segment Information | Segment Information We have aggregated our operating segments into five reportable segments. Retail operating segments are based on the similar characteristics within the regions in which they operate: Northeast, South, West, and Midwest. Our Interactive segment includes all of our online sports betting, iCasino and social gaming operations, management of retail sports betting, media, and the operating results of Barstool (the remaining 64% of Barstool common stock, not already owned by PENN, was acquired on February 17, 2023). The Other category is included in the following tables to reconcile the segment information to the consolidated information. The Company utilizes Adjusted EBITDAR (as defined below) as its measure of segment profit or loss. The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to net income.
|  |  | For the three months ended March 31,
(in millions) |  |  |  |  | 2023 |  | 2022
Revenues: |  |  |  |  |  |  |
Northeast segment |  |  |  |  | $ | 700.5 |  |  | $ | 658.5 |
South segment |  |  |  |  | 314.8 |  |  | 341.4 |
West segment |  |  |  |  | 129.7 |  |  | 140.9 |
Midwest segment |  |  |  |  | 295.3 |  |  | 282.9 |
Interactive segment |  |  |  |  | 233.5 |  |  | 141.5 |
Other (1) |  |  |  |  | 5.8 |  |  | 7.3 |
Intersegment eliminations (2) |  |  |  |  | (6.3) |  |  | (8.3) |
Total |  |  |  |  | $ | 1,673.3 |  |  | $ | 1,564.2 |
Adjusted EBITDAR (3): |  |  |  |  |  |  |
Northeast segment |  |  |  |  | $ | 212.9 |  |  | $ | 205.2 |
South segment |  |  |  |  | 123.6 |  |  | 146.5 |
West segment |  |  |  |  | 49.1 |  |  | 51.2 |
Midwest segment |  |  |  |  | 125.6 |  |  | 125.5 |
Interactive segment |  |  |  |  | (5.7) |  |  | (10.0) |
Other (1) |  |  |  |  | (27.3) |  |  | (23.7) |
Total (3) |  |  |  |  | 478.2 |  |  | 494.7 |
Other operating benefits (costs) and other income (expenses): |  |  |  |  |  |  |
Rent expense associated with triple net operating leases (4) |  |  |  |  | (146.0) |  |  | (60.1) |
Stock-based compensation |  |  |  |  | (16.5) |  |  | (17.0) |
Cash-settled stock-based awards variance |  |  |  |  | 2.9 |  |  | 2.9 |
Gain on disposal of assets |  |  |  |  | — |  |  | 0.1 |
Contingent purchase price |  |  |  |  | (0.3) |  |  | 0.1 |
Pre-opening expenses |  |  |  |  | — |  |  | (1.5) |
Depreciation and amortization |  |  |  |  | (107.5) |  |  | (118.2) |
Insurance recoveries, net of deductible charges |  |  |  |  | — |  |  | 8.8 |
Non-operating items of equity method investments (5) |  |  |  |  | (4.5) |  |  | (1.8) |
Interest expense, net |  |  |  |  | (113.0) |  |  | (161.3) |
Interest income |  |  |  |  | 10.4 |  |  | 0.5 |
Gain on Barstool Acquisition, net (6) |  |  |  |  | 83.4 |  |  | — |
Gain on REIT transactions, net (7) |  |  |  |  | 500.8 |  |  | — |
Other (8) |  |  |  |  | (5.6) |  |  | (48.0) |
Income before income taxes |  |  |  |  | 682.3 |  |  | 99.2 |
Income tax expense |  |  |  |  | (167.9) |  |  | (47.6) |
Net income |  |  |  |  | $ | 514.4 |  |  | $ | 51.6 |
(1)The Other category consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Parks, the Company’s joint venture interests in Freehold Raceway, and our management contract for Retama Park Racetrack. The Other category also includes corporate overhead costs, which consist of certain expenses, such as: payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate or have not otherwise been allocated. (2)Primarily represents the elimination of intersegment revenues associated with our retail sportsbooks, which are operated by PENN Interactive. (3)We define Adjusted EBITDAR as earnings before interest expense, net, interest income, income taxes, depreciation and amortization, rent expense associated with triple net operating leases (see footnote (4) below), stock-based compensation, debt extinguishment charges, impairment losses, insurance recoveries, net of deductible charges, changes in the estimated fair value of our contingent purchase price obligations, gain or loss on disposal of assets, the difference between budget and actual expense for cash-settled stock-based awards, pre-opening expenses, and other. Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (see footnote (5) below) added back for Barstool and our Kansas Entertainment joint venture. Adjusted EBITDAR excludes (i) non-cash gains/losses associated with REIT transactions (including our transactions with GLPI entered into on February 21, 2023 as described in Note 9, “Leases”); and (ii) non-cash gains/losses associated with partial and step acquisitions as measured in accordance with ASC 805 “Business Combinations”(including the Barstool Acquisition). (4)For the three months ended March 31, 2023, pertains to the following operating leases: (i) AR PENN Master Lease; (ii) 2023 Master Lease; (iii) Margaritaville Lease; and (iv) Greektown Lease. For the three months ended March 31, 2022, pertains to the operating lease components contained within the (i) PENN Master Lease (specific to the land and building components associated with the operations of Dayton and Mahoning Valley); (ii) Meadows Lease; (iii) Margaritaville Lease; (iv) Greektown Lease; and (v) Tropicana Lease (which terminated on September 26, 2022). (5)Consists principally of interest expense, net, income taxes, depreciation and amortization, and stock-based compensation expense associated with Barstool prior to us acquiring the remaining 64% of Barstool common stock (see Note 6, “Acquisition s”) and our Kansas Entertainment joint venture. (6)Includes a gain of $66.5 million associated with Barstool related to remeasurement of the equity investment immediately prior to the acquisition date of February 17, 2023 and a gain of $16.9 million related to the acquisition of the remaining 64% of Barstool common stock (see Note 6, “Acquisition s”). (7)Upon the execution of the February 21, 2023 AR PENN Master Lease and the 2023 Master Lease, both effective January 1, 2023, we recognized a gain of $500.8 million as a result of the reclassification and remeasurement of lease components (see Note 9, “Leases”). (8)Primarily relates to unrealized holding losses on our equity securities of $3.2 million and $38.7 million for the three months ended March 31, 2023 and 2022, respectively, which are discussed in Note 15, “Fair Value Measurements.” The table below presents capital expenditures by segment:
|  |  | For the three months ended March 31,
(in millions) |  |  |  |  | 2023 |  | 2022
Capital expenditures: |  |  |  |  |  |  |
Northeast segment |  |  |  |  | $ | 22.8 |  |  | $ | 30.6 |
South segment |  |  |  |  | 13.7 |  |  | 19.7 |
West segment |  |  |  |  | 3.8 |  |  | 1.8 |
Midwest segment |  |  |  |  | 12.7 |  |  | 6.8 |
Interactive segment |  |  |  |  | 7.1 |  |  | 1.1 |
Other |  |  |  |  | 3.1 |  |  | 5.6 |
Total capital expenditures |  |  |  |  | $ | 63.2 |  |  | $ | 65.6 |
The table below presents investment in and advances to unconsolidated affiliates and total assets by segment:
(in millions) | Northeast |  | South |  | West |  | Midwest |  | Interactive |  | Other (1) |  | Total
Balance sheet as of March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |
Investment in and advances to unconsolidated affiliates | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 81.2 |  |  | $ | — |  |  | $ | 5.7 |  |  | $ | 87.0 |
Total assets | $ | 1,997.8 |  |  | $ | 1,220.9 |  |  | $ | 360.7 |  |  | $ | 1,241.0 |  |  | $ | 3,197.7 |  |  | $ | 9,021.9 |  |  | $ | 17,040.0 |
Balance sheet as of December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |
Investment in and advances to unconsolidated affiliates | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 81.5 |  |  | $ | 160.9 |  |  | $ | 6.1 |  |  | $ | 248.6 |
Total assets | $ | 2,231.8 |  |  | $ | 1,191.9 |  |  | $ | 372.4 |  |  | $ | 1,305.5 |  |  | $ | 4,233.7 |  |  | $ | 8,166.8 |  |  | $ | 17,502.1 |
(1)The real estate assets subject to the Master Leases, which are classified as either property and equipment, operating lease ROU assets, or finance lease ROU assets, are included within the Other category.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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