Analysis: Tests Ahead For Penn After TheScore Bet In-House Migration

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Barstool Sportsbook

Penn has successfully migrated theScore Bet brand in Ontario to its in-house risk and trading platform.

The company announced the transition last week.

This means theScore Bet now operates entirely on its own technology stack in the ON sports betting market.

Background for theScore Bet tech

TheScore Bet moved onto its own Player Account Management (PAM) system and Promotion Engine last year, but had been reliant on Bet.Works’ risk and trading engine until now.

The operator will take full control over its own lines in Ontario. As a result, it plans to significantly increase its product scope, including more in-play markets and props. TheScore Bet will also launch a same-game parlay product in the fall for all major sports called Parlay+.

Penn has been building out its trading team in Gibraltar for the last year, under former Ladbrokes exec Patrick Jay.

Major milestone for Penn National

TheScore Bet will also now offer “greater personalization and media integration capabilities,” Penn said.

“The completion of theScore Bet’s technology stack is a milestone accomplishment that significantly strengthens our online betting capabilities, mobile product offerings and overall integrated media and betting ecosystem,” said Penn CEO Jay Snowden.

“This vertically integrated platform will increase our ability to engage and retain customers, drive more flexible pricing, provide valuable savings on third party platform costs, and allow us to deliver the most personalized product experience in the market.”

Vertical integration

The in-house tech stack is one of the main reasons Penn acquired theScore for $2 billion in 2021. Penn is just the latest US sportsbook trying to own its technology.

In recent years, tech-focused deals include:

Next big challenge for Penn

Penn now aims to migrate the Barstool Sportsbook in the US to the same tech stack in Q3 2023.

However, that looks to be a much larger challenge. For one, Barstool is live in 12 US states.

Penn engineers must essentially rebuild the current Barstool Sportsbook product (built on Kambi and White Hat) on theScore Bet platform. They must then get the platform approved by regulators in every state.

“Migrating 12-plus sites in 12-15 months in a heavily regulated environment is no easy feat, especially if you haven’t done it before,” said Avi Howard, the CEO of gambling tech firm USAbility.

“Technology teams often seem too confident with delivery dates of such large transformations, without having gone through similar projects before. These are the projects most CTOs might do once in their career. Experience in migrations is crucial if you want to make it a success. This is even more important in the case of public company under the eyes of shareholders. Failure is not an option.”

Mountain to climb

To give an idea of the size of the task, it took Caesars Sportsbook 18 months to move onto the William Hill platform. Some states are still not migrated, hinting at the hassle involved. 

DraftKings’ move to SBTech took around 15 months and resulted in several hiccups for the consumer.

As DraftKings CEO Jason Robins put it recently:

“That was the largest technology project we’d ever undertaken, migrating to our in-house sports betting tech and product platform. That was a 15-month long project, consuming a very large percentage of our engineering force.”

As recently as June, Robins admitted engineering resources were still focused on the migration and further “cleanup.”

Roll the dice on Barstool Sportsbook

So why is Penn proceeding with such a significant move? For one, it spent $2 billion to acquire theScore.

But the switch might also give Barstool Sportsbook a much-needed shot in the arm. The brand has a ~5% share of net gaming revenue in markets that report that number, some distance short of its initial lofty goals.

In February 2021, Snowden told analysts:

“You should assume we are going to be top three. We said that before we ever launched and we’re delivering on that. We’re going to be profitable faster than anyone else, and we’re delivering on that.”


So what went wrong?

“I think they misunderstood the reach of the Barstool brand,” said one US sports betting executive who asked not to be named. “It is a small and vocal audience, but it has a hard ceiling.”

Penn itself admitted as such, albeit in different words. Snowden said in May this year theScore Bet launch in Ontario compared “very favorably” to Barstool launches in the US.

“In the US, we are relying organically on Barstool personalities for marketing,” Snowden said. “And when they announce we are live in a state, you see an influx. That is the bulk of what you get in the first two weeks. And then you see it fall off a bit quicker. But in Ontario, every day since launch, we are seeing significant activity.”

The only way is up?

All that means the stock market is giving Penn “effectively zero credit for their Interactive business,”according to Stifel analyst Steven Wieczynski.

That might be a fair appraisal given the division’s performance to date.

“The market is so smart,” said Adam Steffanus, global equity portfolio manager at Advisory Research. “If it’s valued at zero then it’s probably not worth anything.”

But the change in technology could be a catalyst to change that, especially if Penn also accepts the ‘Stoolie’ base has a ceiling and starts to market more widely.

The next 18 months, then, could make or break Penn Interactive, with some major risks but also a chance for upside.