iCasino emerges as central to PENN's digital strategy

iCasino takes centre stage
Sportsbook becomes acquisition funnel
Alberta launch and profitability target

PENN Entertainment reported 15% iCasino revenue growth in Q1 2026, compared to 5% growth for online sports betting.
Interactive adjusted EBITDA improved by approximately $78 million year over year, narrowing losses to $10.8 million.
The company is scaling back in sportsbook-only states and preparing to launch theScore Bet in Alberta on 13 July.

PENN Entertainment has repositioned iCasino as the primary growth engine of its digital business after Q1 2026 results showed online casino revenue rising three times faster than sports betting.

The operator, which owns Hollywood Casino and theScore Bet, used its latest earnings call to outline a strategy focused on hybrid markets where both iCasino and sports betting are legal, supported by significantly lower marketing spend.

PENN reported interactive segment revenue of $358.3 million for the first quarter. Adjusted EBITDA losses narrowed sharply to $10.8 million, compared with a loss of $89 million in Q1 2025, representing an improvement of approximately $78 million.

iCasino takes centre stage

Standalone iCasino delivered record quarterly revenue, with March setting a new monthly high. Gross gaming revenue from iCasino increased approximately 15% year over year, compared with 5% growth for online sports betting.

The standalone Hollywood Casino app was identified as a major contributor to the performance.

CEO Jay Snowden said the company’s revised strategy was already delivering results.

“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.”

CTO Aaron LaBerge highlighted PENN’s withdrawal from less profitable sportsbook-only markets as a key margin driver.

“Clearly, we were spending a lot more in OSB-only states, which weren’t as profitable for us. 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.”

Interactive marketing spend fell by more than 65% year over year, a reduction management described as structural rather than temporary. The lower-cost approach followed PENN’s December 2025 rebrand from ESPN Bet to theScore Bet.

Sportsbook becomes acquisition funnel

Despite the strategic pivot, PENN continues to view sports betting as a crucial acquisition channel for its higher-margin casino business. Snowden said roughly 60% of PENN’s iGaming activity is generated through sportsbook cross-sell, making dual-product jurisdictions substantially more attractive than pure sportsbook markets.

“We’re of the opinion that it’s probably a matter of when, not if, before many of these OSB-only states turn to some form of iGaming.”

Online sports betting revenue rose from $62 million in Q1 2025 to $65.2 million in Q1 2026. That growth came despite lower handle and fewer monthly active users, as PENN intentionally reduced exposure to lower-value customers.

“We’ve lost some of the unprofitable and lower worth. That was by design.”

Retention among higher-value users has remained strong since the rebrand. Approximately 22% of new iCasino sign-ups in Q1 came from theScore Bet accounts, up from 14% in the previous quarter. As part of its market rationalisation, theScore Bet exited Washington, D.C. in late February. Management said no additional market withdrawals are currently planned.

Alberta launch and profitability target

Canada remains central to PENN’s digital ambitions. theScore Bet has received approval from the Alberta Gaming, Liquor and Cannabis Commission ahead of Alberta’s regulated market launch on 13 July 2026.

Management expects the Alberta rollout to generate an estimated $20 million loss during 2026, before the interactive division reaches profitability in the fourth quarter. Ontario continues to perform strongly, with executives describing Canada as PENN’s highest-margin market thanks to favourable tax rates and the benefits of an integrated iCasino and sportsbook model.

Total company revenue across retail and interactive operations reached $1.78 billion, comfortably ahead of Wall Street expectations of $1.745 billion. Adjusted earnings per share came in at $0.11, versus analyst forecasts of $0.06. PENN shares rose approximately 16% following the earnings release.

For investors and competitors alike, PENN’s latest quarter reinforces a broader industry lesson: disciplined iCasino-led growth, supported by sports betting as a customer acquisition funnel, may prove far more sustainable than the high-spend sportsbook-first model that previously dominated the US market.

The key tests now will be whether PENN can achieve its targeted fourth-quarter profitability and whether Alberta delivers the market share gains management expects.

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