PENN Entertainment has placed online casino gaming at the center of its digital strategy after first-quarter results showed stronger growth from iCasino than from online sports betting. Executives said the company is reallocating resources toward markets where both products are legal, while reducing emphasis on sportsbook-only states.

During its Q1 2026 earnings call, management said the first quarter marked the first full reporting period under a revised digital plan. The company now prioritizes U.S. iCasino jurisdictions and Canada, while operating with tighter cost controls.

The owner of theScore Bet and Hollywood Casino digital brands reported Interactive segment revenue of $358.3 million for the quarter. Segment adjusted EBITDA reached $172.5 million. iCasino revenue increased 15% year-over-year, while online sports betting revenue rose 5%.

Chief Executive Officer Jay Snowden told investors, “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.”

Online Casino Delivers Stronger Returns

The company’s latest numbers suggest PENN sees greater consistency and profitability in online casino than in sportsbook operations. While sports wagering can fluctuate with seasonal calendars and betting results, casino products tend to generate steadier revenue.

Executives pointed to the standalone Hollywood Casino app as one of the quarter’s strongest performers. Chief Financial Officer Felicia Hendrix said the brand produced record quarterly revenue, including a record March result.

Chief Technology Officer Aaron LaBerge said PENN had previously spent more in sportsbook-only jurisdictions that delivered weaker returns.

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

That approach reflects a wider shift across the industry, where operators continue to search for stronger margins beyond pure sports betting competition.

Although online casino has become the priority, PENN said sports betting still plays an important role in customer acquisition and long-term market positioning.

Snowden explained that sportsbook users often become casino customers in jurisdictions where both verticals are legal. According to company data, 60% of PENN’s online gaming business in those markets came from sports betting cross-sell.

“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,” Snowden said.

LaBerge described the combination of sportsbook and casino in the same state as “a nice one-two punch” for attracting and retaining users.

The company added that it intends to stay active in many sportsbook markets so it can benefit if additional states legalize iGaming in the future.

“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,” LaBerge said.

Reduced Spend and Selective Market Decisions

PENN also used the quarter to sharpen its customer targeting. Snowden said the company intentionally moved away from lower-value sportsbook users.

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

Management said retention among higher-value customers has remained strong since the December 2025 rebrand from ESPN Bet to theScore Bet in the United States.

The company also cited a steep reduction in marketing costs, with one report noting spending fell roughly 65% year-over-year. PENN said those savings were not temporary, but part of a more disciplined operating model.

In one example of that discipline, theScore Bet exited Washington, D.C. in late February. Executives said the market lacked sufficient volume to justify continued operations.

“In D.C., we didn’t have much volume, so it didn’t make sense for us there,” Snowden said, as reported by SBC Americas.

He added that no other immediate market exits are planned.

Canada remains a key part of PENN’s digital outlook through theScore brand, particularly in Ontario. Executives also highlighted upcoming opportunities in Alberta’s commercial gaming market launch.

The company expects smaller digital losses through the next two quarters, partly due to launch-related promotional spending in Alberta, before aiming for profitability in Q4.

PENN’s strategy now differs from earlier expansion models built around aggressive sportsbook growth. Instead, the company is emphasizing iCasino revenue, measured customer acquisition and lower operating costs.