Kambi, PENN Entertainment Reach Deal On Barstool Sportsbook Transition

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PENN Entertainment and its sportsbook platform provider Kambi reached an agreement last week on Barstool Sportsbook moving to its own platform.

PENN is moving the Barstool brand to a proprietary trading platform starting in 2023. The mobile portion should be finished by the third quarter, with retail sportsbooks moving over in 2024.

The agreement announced Oct. 5 provides Kambi with multiple areas of compensation for the change.

What does Kambi get from Barstool switch?

Kambi will get a one-time payment of $12.5 million for the early termination of the sports betting agreement from 2019. The two launched sports betting in 15 states, with 13 mobile sportsbooks and 25 retail books.

PENN will also pay Kambi $15 million for transition services paid in installments. Kambi will continue to help with launches throughout the transition period.

“This agreement sets out the continued collaboration between the two parties over the coming years, one which secures certain ongoing revenue for Kambi over the transition period,” Kambi CEO Kristian Nylén said. “Furthermore, the terms also provide Kambi with additional protections with regard [to] our data and intellectual property.”

Nylén critical of move when first announced

Barstool announced it would move on from Kambi at the same time it announced it was buying Score Media for $2 billion. theScore Bet, which is now only operational in Ontario, was migrated onto the platform this year.

PENN CEO Jay Snowden touted Score’s “state-of-the-art technology,” though the platform was not even built yet.

“While I respectfully disagree with Penn National Gaming’s long-term view on vertical integration, the entity they have acquired has yet to develop a proprietary sportsbook, and certainly not one to a similar high standard as what we offer,” Nylén said at the time.

Migration means better margins for Barstool

Whether or not the new sportsbook platform does everything Kambi can do is not the most important thing to shareholders, of course.

“Post migration, we’ll begin to realize the full benefits of our in-house technology stack,” Snowden said on PENN’s second-quarter earnings call. “That includes meaningful cost synergies, and improved marketing and promotional capabilities.”

PENN expects its interactive division to be profitable by the end of this year.