Kambi Warns On Dangers Of Penn Building Own Tech

Posted on October 28, 2021
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Written By on October 28, 2021

Penn National Gaming (PNG) faces a “tough task” in building its own sportsbook platform, according to Kambi CEO Kristian Nylén.

Penn acquired TheScore for $2 billion back in August, in part because the Canadian company was building out a sportsbook platform.

PNG ultimately will move Barstool Sportsbook off Kambi onto that platform. But Nylén warned that “many have tried and failed” in that process.

Warning shot to Penn National

Speaking to analysts at Kambi’s Q3 results Wednesday, Nylén was asked how Penn could be confident in its plan, given the challenges faced by DraftKings as it went through a similar process.

“That is clearly a question for Penn,” Nylén replied. “What we do is highly complex and is not easy to replicate. Many have tried in Europe and failed before. Starting from scratch and getting something up and running in a couple of years is a tough task.”

Penn has said it wants to launch theScore Bet in Ontario in Q1 2022 on the new tech stack before launching it in the US in 2023.

Sour grapes?

Of course, Kambi has incentive to disparage the switch. It does not want to lose more customers – such as BetRivers, for example – to vertical integration. But Nylén is not a lone voice. 

“From someone who has been through the process, it is tough” said Andy Daniels, CEO of Sharp Gaming, which is building a sportsbook platform for UK operator Betfred. “Every operator is trying to do the same thing so there’s a global shortage of development talent.

“Building in-house is definitely the right thing to do but Penn’s timeline for this seems ambitious. Plus, while you are building, everyone else is moving their product forward.”

On that note, BetRivers parent company CEO Richard Schwartz said recently that owning sportsbook tech was pointless if the product was just average.

“There is a lot of pressure on sportsbooks to buy sportsbook tech,” Schwartz told GGB Magazine. “But I don’t think that’s the right approach. I would not be surprised to see that trend switch back in five years time.”

Is the DraftKings comparison a fair one?

The initial analyst question suggested DraftKings suffered from moving from Kambi onto its own technology. That is not necessarily the case – though DraftKings has seen more outages.

The SBTech-powered product recently topped Eilers & Krejcik’s app review, coming in 1st out of 35 US sportsbook apps.

State-by-state data also shows DraftKings gaining handle share in recent months across markets like Michigan, Pennsylvania and Indiana. Some of that may have been driven by a lower hold at DraftKings.

PA online sports betting market share chart
DraftKings is gaining share of sports betting handle in PA

Apples to oranges

Regardless, the SBTech platform was well-established even before DraftKings acquired it. Penn’s project, on the other hand, is at a very different stage. 

When Penn first acquired theScore back in August, Nylén was critical, saying:

“The entity they have agreed to acquire has yet to develop a proprietary sportsbook and certainly not one to a similar high standard as ours”.

TheScore timeline to Penn

TheScore said in July it would deploy a player account management (PAM) platform and promo engine this year. It will then build out the rest of the sportsbook engine with an eye on that 2022 target.

That’s a lot of development to be done.

“The purchase of a not-yet functional ‘platform’ is a gamble, no doubt,” said Jeevan Jeyaratnam, the COO of Abelson Odds. Nylén is right, it’s a tough ask to get to where Kambi is. From Penn’s point of view, owning their own tech stack is surely a positive. But whether they fulfill that potential is another question.”

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Brad Allen

Brad has been covering the online gambling industry in Europe and the US for more than four years, most recently as the news editor at EGR Global.

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