The times, they are a-changing.
PENN Entertainment, once heavily focused on online sports betting through partnerships such as ESPN Bet (which has now ended), has shifted its focus.
The company's CEO, Jay Snowden, and other executives have laid out a plan that emphasizes iGaming—online casino games such as slots and table games—over a broad pursuit of sports betting. This change comes as part of their response to a competitive sports betting market that has proved difficult to dominate.
“We saw significant adjusted EBITDA improvement of approximately $78 million year-over-year in Q1, driven by nearly 15% year-over-year growth in iCasino revenue and approximately 5% year-over-year growth in online sports betting revenue, and a significant reduction in marketing spend coupled with continued cost management,” Snowden said.
Maine is the latest state to add legalized online casino gaming, but states like Pennsylvania and New Jersey dominate the surging iGaming market. Even Washington, D.C., may soon allow online casino games.
“We are also seeing better-than-expected performance in stand-alone iCasino in the U.S. and in Canada, which is somewhat offsetting [other factors] and is consistent with our Interactive segment strategic priorities,” he added.
Why PENN Entertainment Is Shifting to Online Casinos
The move from sports betting to iGaming isn't just about following trends; it's a calculated decision based on profitability. While sports betting might grab headlines, it's often costly and faces intense competition, making it hard to turn a substantial profit. On the other hand, iGaming promises better profit margins and attracts long-term, high-value customers.
In PENN's first quarter of 2026, the results of this new approach were clear. iCasino revenue soared by 15% year-over-year, hitting record levels. Even though sports betting revenue also increased, the rate was much lower at 5%. The company's overall interactive segment reported improved financial health, with a significant reduction in losses due to disciplined marketing and spending.
“As you think about iGaming, maybe eventually passing from a legislative perspective in many of these states, your number one feeder into iGaming is the cross-sell from online sports betting. Sixty percent of our online gaming business in states that offer both came from, or was sourced from, online sports betting initiation. So that’s obviously compelling,” Snowden said.
The Dual-Licensed State Strategy
PENN Entertainment's shift also reflects a geographical strategy. They are focusing on U.S. states and Canadian provinces where both sports betting and iGaming are legally permitted—so-called "dual-license" or "iCasino states." By nurturing these markets, PENN can effectively use sports betting to introduce customers to its more lucrative iGaming offerings, leveraging its existing land-based casino customer base to cross-sell these digital products.
“The states that have both online sports betting (OSB) and iCasino, we’re going to see much stronger margins than the OSB-only states,” he added. “We’re of the opinion that it’s probably a matter of time before many of these OSB-only states turn to some form of iGaming. We want to stay in the business and be ready when that day comes.”
Canada, and particularly Ontario, plays a crucial role in PENN's strategy. The company has seen positive momentum there with their platform, theScore Bet. With the upcoming July 2026 launch of regulated iGaming and sports betting in Alberta, PENN is poised to capture this burgeoning market, though it's anticipated to incur some initial financial losses as it establishes its presence.
What Are Competitors Doing?
PENN Entertainment's forward-looking approach is betting on the claim that iGaming, rather than sports betting, will be a more profitable venture in the long run. By focusing on efficient growth and leveraging their casino roots, they aim to achieve profitability by 2027.
In contrast, competitors like DraftKings and FanDuel are still investing heavily in sports betting to gain market share, even as the market begins to show signs of maturation. Like PENN, BetMGM balances both worlds with an eye on profitability. But for PENN, it's all about the long game in iGaming and making the most of their cross-selling power with existing casinos.
The digital gaming landscape is ever-evolving, and PENN Entertainment is adapting with it. By embracing iGaming and leveraging their casino heritage, they're navigating these changes with an eye on sustainable success. As the market matures, their strategy might just be the beacon for others looking to balance tradition with innovation.
