US casino and racetrack operator Penn National Gaming has entered into market access agreements with DraftKings, PointsBet, theScore and The Stars Group, as well as a sports betting technology deal with Kambi.
Penn Interactive Ventures (PIV) a wholly owned subsidiary of the operator, will manage the relationships, as well as operate its primary sports betting operations through the new agreement with Kambi.
Kambi has been selected as the technology provider to power sports betting for PIV in states with active sports betting legislation, and will integrate its platform ahead of a roll-out in these jurisdictions.
“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,” Kambi chief executive Kristian Nylén commented. “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.
“It’s an honour for Kambi to be working with an organisation of the size and stature of Penn National, and we look forward to helping them become a national leader in the US sports betting market in the coming years.”
Meanwhile each operator agreement covers a skin partnership with Penn National, with DraftKings, PointsBet, theScore and The Stars Group having the option to own, operate, and brand real-money online sports betting, poker, and casino offerings in certain states.
Penn National said operators will be granted options to launch a first, second or third skin, subject to license availability, state law and regulatory approvals.
“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.” Penn National’s senior vice president of interactive gaming, Jon Kaplowitz, said.
“Our skin agreements will help fund the cost of launching and maintaining our primary sports betting and iGaming operations, both by way of the upfront consideration and the long term revenue sharing arrangements, which are consistent with industry standards and subject to minimum guarantees.”
DraftKings will have a first skin option in Florida, Missouri, Ohio, Pennsylvania and Texas, as well as second skin on West Virginia and third skin in Indiana. The agreement will run for 10 years, with the option of a 10-year renewal, and run under a revenue share agreement, based on net gaming revenue. The agreement builds on the companies’ West Virginia market access deal, agreed in December 2018.
“DraftKings is a clear leader in the burgeoning sports betting industry, and Penn National is excited to be extending our partnership with Jason Robins and his team,” Kaplowitz said. “We believe that DraftKings is well positioned to continue its success in the years to come.”
PointsBet will run a first skin in Louisiana and Ohio, a second skin in Indiana and a third skin in West Virginia, with the 20-year deal being based around a revenue share arrangement.
As part of this deal, PIV will take a strategic equity stake of 5.28% in PointsBet, while the agreement includes an additional $2.5m (£2.1m/€2.3m) access fee for Ohio, based on certain conditions. In addition, PIV will receive 10,372,549 options, exercisable for two years, to acquire additional shares of PointsBet
Penn National’s revenue share agreement with theScore will run for 20 years, with PIV taking a 4.7% strategic equity stake in the provider, worth $7.5m, and the option to increase this as additional market access fees become payable. This equity stake covers the $7.5m fee due to PIV from theScore.
theScore will have first skins in Louisiana and Mississippi, second skins in Iowa, Indiana, Missouri, Ohio and Texas, as well as third skins in Kansas, Michigan, Maine and Massachusetts.
“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,” theScore founder and CEO John Levy said. “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.”
Finally, The Stars Group has signed a 20-year deal to run first skins in Illinois, Indiana, Ohio and Texas, as well as second skins in Kansas, New Mexico, Maine, Massachusetts and Michigan.
The deal includes an upfront payment of $12.5m in cash and an additional access fee of $5m for Texas based on certain conditions. Revenue sharing with Penn National will be based on net gaming revenue, with a one-time bonus based on net gaming revenue due in 2023.
“When coupled with our industry leading regional casino footprint and database of over five million active customers, the company is uniquely positioned to capitalize on the rapidly expanding sports betting and iGaming markets in a way that maximizes value to our shareholders,” Kaplowitz said.