PENN Entertainment's Q4 2025 earnings detail the assumptions behind its 20% Interactive revenue growth target for 2026, highlighting shifting MAU and NGR dynamics and the strategic rebranding to Score Bet.
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What MAU and NGR assumptions underpin the 20% Interactive revenue target (starting base and monthly ramp)?
Analysis of MAU and NGR Assumptions Underpinning the 20% Interactive Revenue Growth Target for PENN Entertainment in 2026
PENN Entertainment’s 2026 guidance targets approximately 20% year-over-year revenue growth in the Interactive segment, excluding tax gross-ups, which translates to expected Interactive revenues of about $1.6 billion1. This growth is primarily driven by the iGaming vertical, alongside continued growth in online sports betting (OSB) despite some expected declines in handle from U.S. OSB-only states as a consequence of transitioning from ESPN BET to the Score Bet brand and a strategic shift in marketing spend.
U.S. OSB MAUs are expected to decline in 2026 due to the transition from ESPN BET to Score Bet and decreased handle in OSB-only states1.
Conversely, U.S. iCasino MAUs and Canadian OSB and iCasino MAUs are projected to increase year-over-year, reflecting PENN’s realigned digital focus emphasizing iCasino and cross-selling opportunities in hybrid states and Canadian markets1.
Retention across the top 4 of 8 customer cohorts (based on player worth) remains stable pre- and post-rebrand, particularly at the mid- and high-worth segments. The lowest-value cohorts see planned attrition, as PENN pulls back reinvestment to reduce unprofitable customers23.
Focus on VIP and mid-worth customers drives efficient growth and better flow-through.
Despite some declines in handle, NGR is expected to grow because of:
Better retention of higher-value customers and reduction of promotional expenses aimed at unprofitable low-worth segments 23.
Expected stable hold rates: approximately 9% for OSB and 3.7% for iCasino in 20261.
iCasino revenue growth currently exceeds 20% on a trailing basis and is expected to be the primary driver of the Interactive revenue surge234.
Sports betting revenue growth is moderated due to handle decline but NGR growth is expected because of better hold rates and improved product offerings within the rebranded Score Bet platform2.
The Interactive segment generated revenues of $398.7 million in Q4 2025, including tax gross-up, with adjusted EBITDA loss narrowing substantially from prior periods14.
Early 2026 trends are encouraging, with positive adjusted EBITDA achieved in December 2025, and solid performance sustained through January and February—even accounting for some expected variability due to seasonality and the Super Bowl results that were favorable overall567.
The growth path is supported by a "playbook" initiated in December 2025 coincident with the Score Bet launch, focusing marketing dollars in high-return jurisdictions and customer segments1.
Monthly and quarterly gains are expected to be modest adjusted EBITDA losses in Q1 to Q3, with Q4 2026 turning profitable for the Interactive segment1.
Marketing spend is expected to decline by approximately $150 million year-over-year due to termination of the ESPN marketing agreement and a more rationalized, regionally focused spend strategy emphasizing iCasino and Canadian markets14.
| Metric / Assumption | 2026 Guidance / Commentary | Citation(s) |
|---|---|---|
| Interactive Revenue (ex tax gross-up) | ~$1.6 billion, ~20% YoY growth | 1 |
| OSB MAUs (U.S.) | Expected to decline year-over-year due to transition and refocused marketing spend | 1 |
| iCasino MAUs (U.S. & Canada) | Expected to increase year-over-year, driving growth | 14 |
| Retention Rates | Stable Top 4 cohorts; deliberate attrition of low-value segments | 23 |
| Hold Rates | 9% on OSB, 3.7% on iCasino (expected stable) | 1 |
| Marketing Spend | Decline by ~$150 million vs. 2025, focused on high-return markets | 14 |
| Adjusted EBITDA | Breakeven expected in 2026; Q1-Q3 small losses, profitable Q4 | 15 |
| iCasino Growth Rate | Currently growing faster than 20% | 23 |
| New Market Launch | Alberta launch expected mid-2026 with marketing investment of ~$15-20 million | 58 |
PENN’s 20% Interactive revenue growth target for 2026 is underpinned by a shifting MAU base and NGR profile that focuses on profitable growth:
The starting base is strengthened by the Q4 2025 revenue run-rate (~$400 million including tax gross-up) and positive adjusted EBITDA achieved at the end of 2025.
The ramp to 20% growth assumes a managed decline in lower-value OSB MAUs, sustained stable retention among higher-value cohorts, and growth in iCasino MAUs in both U.S. hybrid states and Canada.
NGR growth is expected despite declining handle through increased retention, improved hold rates, and more efficient promotional spend weighted toward profitable cohorts213.
The rebranding to Score Bet and strategic marketing reallocation are core to the ramp, with early results validating the assumptions56.
This disciplined approach—prioritizing retention and customer quality over sheer MAU scale—supports the company’s projected breakeven adjusted EBITDA target in Interactive for 2026 and sets a foundation for longer-term scalable growth.
This analysis is based directly on PENN Entertainment's 2025 Q4 earnings transcript and includes specific management commentary and data points critical to understanding the Interactive segment's growth assumptions and operational focus.
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