Penn National Gaming removed any remaining doubt about its plans to capitalize on US sports betting expansion.
The company issued a press release late Wednesday announcing an impressive new quartet of market-access agreements. Penn’s new partners include some of the most ambitious names in the game — both in sports and in other forms of online gambling:
Additionally, UK-based Kambi announced that it will power Penn’s in-house sportsbooks across its entire portfolio. Penn currently owns and/or operates more than 40 properties in 19 states, including eight with legal sports betting.
Here’s Penn’s SVP of Interactive Gaming Jon Kaplowitz on the big US sports betting news:
“We’re pleased to be providing the top names in sports betting, iGaming and poker access to our Company’s non-primary licenses to conduct these operations in exchange for a combination of upfront cash and equity, one-time market access fees and ongoing revenue sharing.”
The LSR crew breaks down the massive deals in this week’s podcast
Penn’s new US sports betting roadmap
This announcement changes quite a bit for Penn.
It looks like the end of its William Hill partnership, for starters, which never broadened after its trial run in early-adopting states. Penn will instead employ Kambi to power its products going forward, including both retail and online betting.
Kambi CEO Kristian Nylén called it “an honour” to sign the agreement, the biggest yet for his company:
“Kambi’s strategy has always been to partner with tier one operators, particularly those that share our vision and passion for sports and sports wagering. In Penn National, we have found an ideal partner – one that is not only passionate about providing high quality sports wagering experiences to its customers, but a company that adheres to the highest level of ethical business standards.”
Penn holds the door for new partners
As game-changing as it is, the Kambi announcement is likely the smaller deal for the industry as a whole. Penn also entered into partnerships with four operators, each of which appears well-positioned in its own right.
The big shakeup apparently has been brewing for some time, as the press release includes a detailed breakdown of the game plan and the financials. Here’s who gets what and how much it cost them (skin priority in parenthesis, legalized states bold):
DraftKings Sportsbook comes up big
- States: Florida (1), Indiana (3), Missouri (1), Ohio (1), Pennsylvania (1), Texas (1), West Virginia (2)
- Terms: 10 years, optional 10-year extension
- Cost: Revenue share
There are certainly several winners out of all these deals, but the biggest impact in the short term might be for DraftKings Sportsbook.
The key news out of all of this is DraftKings is coming to Pennsylvania, a nut that the sportsbook had not cracked. While FanDuel Sportsbook PA is already live, DraftKings was, until today, still looking for a way into the state.
Here’s CBO Ezra Kucharz:
“With dozens of states having already legalized sports betting or poised to do so in the near future, this expanded partnership ensures DraftKings is positioned to quickly enter new markets. Penn National Gaming brings tremendous resources, people and experience to the partnership and, as we finalized the terms of the deal, it was abundantly clear there is a real synergy between our two companies that bodes very well for the future.”
DraftKings already had a market-access deal with PNG for West Virginia; its app could roll out there sometime in the near future. The company will also deploy a Penn skin when Indiana sports betting launches later this year.
PointsBet lands its largest deal to date
- States: Indiana (2), Louisiana (1), Missouri (1), Ohio (1), West Virginia (3)
- Terms: 20 years
- Cost: Revenue share + 5.28% equity + $2.5 million conditionally for Ohio
PointsBet is no doubt the youngest company in this piece, but it is clearly not one to underestimate. After importing its product from Australia, the new US operator is already making some noise.
It was one of the first to line up a spot in the NJ sports betting market, partnering with Meadowlands in mid-2018. That deal also includes access to New York via Tioga Downs, though NY lawmakers failed to authorize online betting this year. Lastly, PointsBet has also secured a spot in the Iowa market via a partnership with Catfish Bend.
PointsBet brings its popular and proprietary Points Betting system to the Penn network, a key differentiator in an increasingly competitive industry.
theScore also scores for its sportsbook
- States: Indiana (2), Iowa (2), Kansas (3), Louisiana (1), Maine (3), Massachusetts (3), Michigan (3), Mississippi (1), Missouri (2), Ohio (2), Texas (2)
- Terms: 20 years
- Cost: Revenue share + 4.7% equity
Media company theScore — best-known for its sports app — is coming to New Jersey with a sportsbook, probably as soon as next month.
It has a deal with sports betting provider Bet.Works for its sports betting platform. But its path to getting into other states had remained a mystery. Now it has a lot of market access — 11 states to be exact.
Here’s CEO John Levy:
“Securing this highly-coveted partnership with Penn National is a major step towards our goal of becoming a leader in mobile sports betting in the United States. We are thrilled that Penn National believes in, and has invested in, our vision of an integrated approach to media and sports betting and we can’t wait to unveil the best-in-class mobile betting experience that we’ve been building for sports fans.”
The Stars Group finds a master key
- States: Illinois (1), Indiana (1), Kansas (2), New Mexico (2), Maine (2), Massachusetts (2), Michigan (2), Ohio (1), Texas (1)
- Terms: 20 years
- Cost: Revenue share + $12.5 million + $5 million conditional for Texas
This one is perhaps the most intriguing of the bunch.
The Stars Group is the world’s largest public online gambling company, and it has begun to establish a prominent US footprint. It already offers all three online gambling verticals in New Jersey — casino, poker, and sports — under its own Stars-themed brands, but it’s been doing some of its own shopping.
In May, Stars announced a first-of-its-kind partnership with Fox Sports which will move the broadcaster into the gambling realm. The duo is working to create a new FoxBet platform to replace the existing BetStars client in the US.
With industry-leading technology and a top partner under its belt, it also secured broad market access via a partnership with Eldorado Resorts late last year. Tacking onto those deals, Penn’s blueprint puts TSG at the forefront in major sports markets like Illinois, Indiana, and (optimistically) Texas.
The last broad sports betting market access deal?
This effectively ends Penn National as an avenue for any company other than the ones that announced deals today.
And the other major casino companies have already done a lot of deals, as well, although not every possibility is exhausted:
- Both Caesars and Eldorado Resorts had deals in place for sports betting before their planned merger. The footprint of a lot of the deals still have to shake out post-merger, but counting on CZR or ERI as a partner if you don’t have a deal would be dicey.
- Boyd Gaming has a deal with FanDuel Sportsbook that seemingly leaves room for some operators to strike a deal for access.
- MGM Resorts seems to be counting on itself and not opening its licensing opportunities beyond its reciprocity deal with Boyd, at least not yet.
If you wanted to get into a lot of states with one deal, that’s the landscape. Penn National taking a bunch of market access off the board in one fell swoop makes the remaining spots that much more valuable.
Dustin Gouker contributed to this report.