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Penn National Gaming might not be a household name, but it is well on its way to becoming a dominant force in the sports betting industry.
At a glance, its series of new partnerships announced last week appears likely to shift the long-term balance of power in the young US sports betting market. We’re putting the pieces together a week later, and it’ll likely be much longer before the full ramifications are apparent.
Some of the basics are immediately clear, though.
Supplier Kambi will take over sportsbook operations for Penn across its expansive portfolio. As it stands today, the company owns property in eight states with legal sports betting:
The Kambi alliance covers both brick-and-mortar sportsbooks and Penn’s in-house online sports betting platform.
It’s in the digital realm that the company appears to have struck gold. It signed additional agreements to provide broad access to four competing operators, each of which earns a distinct priority in each individual market. Each will share a portion of revenue with Penn, and two of them even surrendered equity in exchange for access.
We’ll set the Kambi deal aside for now. Parties to that agreement are either unwilling or unable to clarify what will happen with Penn’s existing retail operations in four states, all but one of which William Hill powers. The terms of those agreements are not public.
We’ll focus on the new online partners instead, a group which features four brands with major aspirations for sports betting in the US:
TheScore is the only one of the four without an existing operation, though it is currently working toward launch in New Jersey. Each of the other three serves only that one market today, but each has seen its access multiply courtesy of Penn.
Let’s run through the states where we’re likely to see the first signs of this big new deal.
Each Illinois casino is allowed just one online/mobile skin apiece, but Penn has three casinos in the state. It looks like two of its licenses are now distributed.
Penn will take one for itself, while Stars secured priority access via another. Given its new partnership with Fox Sports, it seems fair to expect a Fox Bet platform in Illinois. It must, however, display the brand of the primary licensee alongside its own by law.
The deal does not open Illinois up to any of the other parties, leaving one slot available under the Penn license. Whether or not it will spend the $10 million to activate that license for IL sports betting remains to be seen.
DraftKings appears to have access to Illinois under an existing partnership with Caesars.
In contrast to Illinois, every new Penn partner gets access to Indiana. The law there allows three skins per casino, and Penn’s two casinos give it a total of six permits.
Everyone under its umbrella will participate in the market, with Stars holding top priority. That positioning appears to give Fox Bet another path into another sports-heavy market in the Midwest. PointsBet and theScore share second priority, while DraftKings sits alone on the third line.
Unlike Illinois, there is no co-branding requirement for IN sports betting skins.
The Iowa law authorizes two skins for each licensee, and regulators declined their option to add a third. Penn has one Iowa casino in Council Bluffs, where it competes with two Harrah’s properties, and the announcement actually creates some confusion here.
TheScore is listed with priority number two, but nobody is listed above it. Penn, of course, gets top billing above its partners in every market, but it does not include itself in the breakdown. This means that either:
It’s presumably the latter, and theScore is likely “number one” for IA sports betting behind Penn itself. The three other partners previously locked up their access to Iowa under separate deals.
Penn’s footprint is heavily concentrated in the central and southern US, extending all the way down to the Gulf Coast. It operates five properties in Mississippi, two of which fall under the Hollywood banner.
As it stands today, MS sports betting is limited to brick-and-mortar casinos. Lawmakers briefly considered expanding the law to include online betting, but the status quo will persist through football season. Ignoring the Penn/William Hill union for now, Kambi appears to be the big winner in Mississippi.
Should online sports betting eventually become legal, however, theScore will have priority access. In the meantime, it also has the option to deploy an on-property mobile sports betting solution under the Penn license.
Again, DraftKings and The Stars Group already had access to Mississippi prior to this deal under separate partnerships.
It may carry Penn in its name, but the company at the center of this deal also holds corporate offices in Nevada. It owns two properties in Las Vegas, plus a third in a small northern town along the Idaho border.
As it stands today, William Hill runs the sportsbooks at Cactus Pete’s and The M while Tropicana’s sportsbook is a CG Technology operation. How Kambi factors into those plans now or in the future is anyone’s guess.
The same can be said for online sports betting. Each of the new partners would now appear to have a path into the NV sports betting market, but none has disclosed plans to that effect so far. None are listed in the breakdown of access priority either.
Penn and Greenwood Gaming & Entertainment jointly own a racetrack in the northern part of the state which is eligible to offer sports betting. Although both parties have their own sportsbooks elsewhere in the US, the two have not capitalized on their combined opportunity in New Jersey.
That may change soon.
While the co-owners play their cards close to the vest, an Associated Press report from December uncovered plans to add a sportsbook to the property. Such an addition would allow Freehold to better compete with the two other nearby tracks, including Monmouth Park in the same county.
A brick-and-mortar sportsbook would also allow Penn/Greenwood to allocate three more skins for NJ online sports betting. The owners would retain two of those, of course, but that would leave the third available to a third party. All four of its new partners had access to New Jersey prior to the Penn deal.
Freehold is already licensed by the state racing commission and requires just a sign-off from the Division of Gaming Enforcement to offer sports betting.
Pennsylvania is a single-skin state for sports betting, but Penn has the luxury of two licenses. It currently relies on William Hill to power its operations at Hollywood, and the duo is working together to launch an online sports betting platform.
Penn uses Hollywood as its flagship online brand, giving it little reason to invest in a separate sports betting license for Meadows — until now.
That sports betting permit might cost a flat $10 million, but its actual value is much higher to a third-party operator than it is to Penn. In tandem with the announcement, the company filed a second PA sports betting application on behalf of Meadows.
At long last, DraftKings has its path into the Keystone State. Its previous partnership with Caesars did not yield Pennsylvania access, and this specific alliance represents perhaps the largest single component of the entire deal.
The Stars Group already had its PA dance partner (Mount Airy) locked up before Penn came along.
The West Virginia hierarchy was pretty well-established prior to this deal.
Regulations allow three skins per casino, and Penn’s partnership with William Hill was actually its very first post-PASPA. DraftKings also secured its position a long time ago via a standalone partnership with Penn, and The Stars Group has a separate WV alliance with Eldorado Resorts.
This new deal does, however, add PointsBet into the third and final slot under the Penn license in West Virginia. The company’s US access has increased to four states with legalized sports betting, a list rounded out by Indiana, Iowa, and New Jersey.
Regulators have no timeline for relaunch.