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Significant Accounting Policies (Tables) | 9 Months Ended
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Sep. 30, 2023
Accounting Policies [Abstract] |
Schedule of Operating Segments Within Reportable Segments | For financial reporting purposes, we aggregate our operating segments into the following reportable segments:
| Location |  | Real Estate Assets Lease or Ownership Structure
Northeast segment |  |  |
Ameristar East Chicago | East Chicago, Indiana |  | Pinnacle Master Lease
Hollywood Casino Bangor | Bangor, Maine |  | AR PENN Master Lease
Hollywood Casino at Charles Town Races | Charles Town, West Virginia |  | AR PENN Master Lease
Hollywood Casino Columbus | Columbus, Ohio |  | 2023 Master Lease
Hollywood Casino at Greektown | Detroit, Michigan |  | Greektown Lease
Hollywood Casino Lawrenceburg | Lawrenceburg, Indiana |  | AR PENN Master Lease
Hollywood Casino Morgantown | Morgantown, Pennsylvania |  | Morgantown Lease (1)
Hollywood Casino at PENN National Race Course | Grantville, Pennsylvania |  | AR PENN Master Lease
Hollywood Casino Perryville | Perryville, Maryland |  | 2023 Master Lease
Hollywood Casino at The Meadows | Washington, Pennsylvania |  | 2023 Master Lease
Hollywood Casino Toledo | Toledo, Ohio |  | 2023 Master Lease
Hollywood Casino York | York, Pennsylvania |  | Operating Lease (not with REIT Landlord)
Hollywood Gaming at Dayton Raceway | Dayton, Ohio |  | AR PENN Master Lease
Hollywood Gaming at Mahoning Valley Race Course | Youngstown, Ohio |  | AR PENN Master Lease
Marquee by PENN (2) | Pennsylvania |  | N/A
Plainridge Park Casino | Plainville, Massachusetts |  | Pinnacle Master Lease
South segment |  |  |
1 st Jackpot Casino | Tunica, Mississippi |  | AR PENN Master Lease
Ameristar Vicksburg | Vicksburg, Mississippi |  | Pinnacle Master Lease
Boomtown Biloxi | Biloxi, Mississippi |  | AR PENN Master Lease
Boomtown Bossier City | Bossier City, Louisiana |  | Pinnacle Master Lease
Boomtown New Orleans | New Orleans, Louisiana |  | Pinnacle Master Lease
Hollywood Casino Gulf Coast | Bay St. Louis, Mississippi |  | AR PENN Master Lease
Hollywood Casino Tunica | Tunica, Mississippi |  | AR PENN Master Lease
L’Auberge Baton Rouge | Baton Rouge, Louisiana |  | Pinnacle Master Lease
L’Auberge Lake Charles | Lake Charles, Louisiana |  | Pinnacle Master Lease
Margaritaville Resort Casino | Bossier City, Louisiana |  | Margaritaville Lease
West segment |  |  |
Ameristar Black Hawk | Black Hawk, Colorado |  | Pinnacle Master Lease
Cactus Petes and Horseshu | Jackpot, Nevada |  | Pinnacle Master Lease
M Resort Spa Casino | Henderson, Nevada |  | 2023 Master Lease
Zia Park Casino | Hobbs, New Mexico |  | AR PENN Master Lease
Midwest segment |  |  |
Ameristar Council Bluffs | Council Bluffs, Iowa |  | Pinnacle Master Lease
Argosy Casino Alton (3) | Alton, Illinois |  | AR PENN Master Lease
Argosy Casino Riverside | Riverside, Missouri |  | AR PENN Master Lease
Hollywood Casino Aurora | Aurora, Illinois |  | 2023 Master Lease
Hollywood Casino Joliet | Joliet, Illinois |  | 2023 Master Lease
Hollywood Casino at Kansas Speedway (4) | Kansas City, Kansas |  | Owned - Joint Venture
Hollywood Casino St. Louis | Maryland Heights, Missouri |  | AR PENN Master Lease
Prairie State Gaming (2) | Illinois |  | N/A
River City Casino | St. Louis, Missouri |  | Pinnacle Master Lease
(1)Upon termination of the Morgantown Lease, ownership of the constructed building and all tenant improvements will transfer from the Company to GLPI. (2)VGT route operations. (3)The riverboat is owned by us and not subject to the AR PENN Master Lease. (4)Pursuant to a joint venture with NASCAR and includes the Company’s 50% investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns Hollywood Casino at Kansas Speedway. The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to net income (loss).
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2023 |  | 2022 |  | 2023 |  | 2022
Revenues: |  |  |  |  |  |  |
Northeast segment | $ | 687.0 |  |  | $ | 685.4 |  |  | $ | 2,075.5 |  |  | $ | 2,028.8 |
South segment | 308.2 |  |  | 329.8 |  |  | 931.3 |  |  | 1,009.8 |
West segment | 135.1 |  |  | 156.5 |  |  | 394.8 |  |  | 451.2 |
Midwest segment | 293.4 |  |  | 298.4 |  |  | 882.0 |  |  | 877.6 |
Interactive segment | 196.3 |  |  | 158.7 |  |  | 687.3 |  |  | 455.1 |
Other (1) | 4.5 |  |  | 4.2 |  |  | 16.5 |  |  | 17.4 |
Intersegment eliminations (2) | (5.1) |  |  | (8.0) |  |  | (19.9) |  |  | (23.8) |
Total | $ | 1,619.4 |  |  | $ | 1,625.0 |  |  | $ | 4,967.5 |  |  | $ | 4,816.1 |
Adjusted EBITDAR (3): |  |  |  |  |  |  |
Northeast segment | $ | 208.3 |  |  | $ | 217.9 |  |  | $ | 638.5 |  |  | $ | 637.5 |
South segment | 136.6 |  |  | 139.9 |  |  | 381.1 |  |  | 429.7 |
West segment | 54.7 |  |  | 60.5 |  |  | 153.4 |  |  | 171.4 |
Midwest segment | 123.8 |  |  | 129.4 |  |  | 376.5 |  |  | 386.2 |
Interactive segment | (50.2) |  |  | (49.3) |  |  | (68.7) |  |  | (80.1) |
Other (1) | (28.1) |  |  | (26.5) |  |  | (80.7) |  |  | (73.6) |
Total (3) | 445.1 |  |  | 471.9 |  |  | 1,400.1 |  |  | 1,471.1 |
Other operating benefits (costs) and other income (expenses): |  |  |  |  |  |  |
Rent expense associated with triple net operating leases (4) | (146.6) |  |  | (31.5) |  |  | (439.0) |  |  | (119.6) |
Stock-based compensation | (35.2) |  |  | (13.6) |  |  | (71.4) |  |  | (45.1) |
Cash-settled stock-based awards variance | 2.9 |  |  | 3.8 |  |  | 12.0 |  |  | 16.2 |
Gain (loss) on disposal of assets | — |  |  | 0.2 |  |  | — |  |  | (7.0) |
Contingent purchase price | (1.3) |  |  | (0.1) |  |  | (1.8) |  |  | 0.9 |
Pre-opening expenses | — |  |  | (0.5) |  |  | — |  |  | (4.1) |
Depreciation and amortization | (105.8) |  |  | (148.7) |  |  | (323.9) |  |  | (417.2) |
Impairment losses (5) | — |  |  | (104.6) |  |  | — |  |  | (104.6) |
Insurance recoveries, net of deductible charges | 0.3 |  |  | 1.9 |  |  | 13.9 |  |  | 10.7 |
Non-operating items of equity method investments (6) | (1.0) |  |  | (2.6) |  |  | (6.4) |  |  | (4.7) |
Interest expense, net | (117.5) |  |  | (198.5) |  |  | (346.1) |  |  | (554.7) |
Interest income | 10.2 |  |  | 5.2 |  |  | 30.5 |  |  | 7.0 |
Loss on disposal of Barstool (7) | (923.2) |  |  | — |  |  | (923.2) |  |  | — |
Gain on Barstool Acquisition, net (8) | — |  |  | — |  |  | 83.4 |  |  | — |
Gain on REIT transactions, net (9) | — |  |  | — |  |  | 500.8 |  |  | — |
Loss on early extinguishment of debt | — |  |  | — |  |  | — |  |  | (10.4) |
Other (10) | (14.7) |  |  | (41.7) |  |  | (20.6) |  |  | (115.7) |
Income (loss) before income taxes | (886.8) |  |  | (58.8) |  |  | (91.7) |  |  | 122.8 |
Income tax benefit (expense) | 161.7 |  |  | 182.0 |  |  | (40.9) |  |  | 78.1 |
Net income (loss) | $ | (725.1) |  |  | $ | 123.2 |  |  | $ | (132.6) |  |  | $ | 200.9 |
(1)The Other category consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Park, 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. Corporate overhead costs were $27.0 million and $26.5 million for the three months ended September 30, 2023 and 2022, respectively, and $78.1 million and $74.9 million for the nine months ended September 30, 2023 and 2022, respectively. (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; loss on disposal of a business; non-cash gains/losses associated with REIT transactions; non-cash gains/losses associated with partial and step acquisitions as measured in accordance with ASC 805 “Business Combinations”; and other. Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (see footnote (6) below) added back for Barstool and our Kansas Entertainment joint venture. (4)For the three and nine months ended September 30, 2023, pertains to the operating lease components contained within the: (i) AR PENN Master Lease; (ii) 2023 Master Lease; (iii) Margaritaville Lease; and (iv) Greektown Lease. For the three and nine months ended September 30, 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)Amount primarily relates to a $102.8 million impairment charge in the Northeast segment. (6)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, “Acquisitions and Dispositions”) and our Kansas Entertainment joint venture (7)Relates to the loss incurred on the sale of 100% of the outstanding shares of Barstool which was completed on August 8, 2023 (see Note 6, “Acquisitions and Dispositions”). (8)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, “Acquisitions and Dispositions”). (9)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”). (10)Primarily relates to unrealized holding losses on our equity securities of $11.6 million and $10.8 million for the three months ended September 30, 2023 and 2022, respectively. Primarily relates to unrealized holding losses of $8.5 million and $66.4 million for the nine months ended September 30, 2023 and 2022, respectively. In addition, during the three and nine months ended September 30, 2023, the unrealized holding losses were partially offset by dividend income received (see Note 15, “Fair Value Measurements”). Also consists of non-recurring acquisition and transaction costs of $31.9 million and $46.3 million for the three and nine months ended September 30, 2022, respectively. The table below presents capital expenditures by segment:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2023 |  | 2022 |  | 2023 |  | 2022
Capital expenditures: |  |  |  |  |  |  |
Northeast segment | $ | 27.1 |  |  | $ | 26.4 |  |  | $ | 74.6 |  |  | $ | 82.1 |
South segment | 20.3 |  |  | 14.8 |  |  | 49.4 |  |  | 51.1 |
West segment | 5.6 |  |  | 3.3 |  |  | 15.9 |  |  | 7.3 |
Midwest segment | 11.1 |  |  | 11.3 |  |  | 40.7 |  |  | 25.5 |
Interactive segment | 8.6 |  |  | 6.5 |  |  | 18.3 |  |  | 9.7 |
Other | 2.3 |  |  | 1.7 |  |  | 8.9 |  |  | 13.9 |
Total capital expenditures | $ | 75.0 |  |  | $ | 64.0 |  |  | $ | 207.8 |  |  | $ | 189.6 |
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 September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |
Investment in and advances to unconsolidated affiliates | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 77.8 |  |  | $ | — |  |  | $ | 4.7 |  |  | $ | 82.6 |
Total assets | $ | 1,993.6 |  |  | $ | 1,250.0 |  |  | $ | 382.1 |  |  | $ | 1,260.8 |  |  | $ | 2,366.6 |  |  | $ | 8,915.5 |  |  | $ | 16,168.6 |
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.
Schedule of Complimentaries | Revenues recorded to “Food, beverage, hotel, and other” and offset to “Gaming” revenues were as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2023 |  | 2022 |  | 2023 |  | 2022
Food and beverage | $ | 54.0 |  |  | $ | 54.0 |  |  | $ | 163.1 |  |  | $ | 156.8 |
Hotel | 39.1 |  |  | 37.6 |  |  | 104.8 |  |  | 106.4 |
Other | 3.5 |  |  | 4.0 |  |  | 9.8 |  |  | 9.3 |
Total complimentaries associated with gaming contracts | $ | 96.6 |  |  | $ | 95.6 |  |  | $ | 277.7 |  |  | $ | 272.5 |

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