Interactive
US – Penn confirms deals with four more sportsbook operators for online
By Phil - 2 August 2019
As well as its deal with sports betting group Kambi, Penn National Gaming has entered into multi-year agreements with leading sports betting operators DraftKings, PointsBet, theScore and The Stars Group for online sports betting and iGaming market access across the Company’s portfolio. Penn Interactive Ventures, LLC, a wholly owned subsidiary of the Company, will manage the relationships, in addition to operating the Company’s primary sports betting and iGaming initiatives through a new partnership with leading service provider Kambi.
According to Jon Kaplowitz, Penn National’s Sr. Vice President of Interactive Gaming: “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.”
Under the terms of the agreements, each “skin” partner will have the option to own, operate, and brand real-money online sports betting, poker, and casino offerings in each of the states outlined below, pursuant to a first, second or third skin, as applicable, and subject to license availability, state law, and regulatory approvals.
“Sports betting represents an exciting new growth opportunity for Penn National,” said Mr. Kaplowitz. “Our skin agreements announced today 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.
“By controlling our front-end product and relying upon our new partnership with Kambi for managed-trading services, we can create a lasting and differentiated online and retail product experience for our customers,” continued Mr. Kaplowitz. “When coupled with our industry leading regional casino footprint and database of over five million active customers, the Company is uniquely positioned to capitalise on the rapidly expanding sports betting and iGaming markets in a way that maximizes value to our shareholders. This strategy is exemplified in our recent iGaming launch in Pennsylvania, where we were the first iGaming operator to take wagers in the state. Additionally, we will be launching our first in-house retail sportsbooks at our Iowa and Indiana properties in the coming weeks,” added Mr. Kaplowitz.
The states covered by the DraftKings are Florida (1st skin), Indiana (3rd skin), Missouri (1st skin), Ohio (1st skin), Pennsylvania (1st skin), Texas (1st skin) and West Virginia (2nd skin).
“With dozens of states having already legalised sports betting or poised t
o do so in the near future, this expanded partnership ensures DraftKings is positioned to quickly enter new markets,” said Ezra Kucharz, DraftKings chief business officer. “Penn National Gaming brings tremendous resources, people and experience to the partnership and, as we finalized the terms of the deal, it was abundantly clear there is a real synergy between our two companies that bodes very well for the future.”
The expansion builds upon the two companies’ earlier West Virginia market access deal, which was announced in December 2018. DraftKings’ additional market access is exclusive to Penn National Gaming across certain states in which Penn National Gaming operates casino properties.
“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,” said Jon Kaplowitz, SVP Interactive for Penn National Gaming. “We believe that DraftKings is well positioned to continue its success in the years to come.”
Since launch, DraftKings has accepted more than 21 million bets and paid out over $650m in winnings to customers. As the sports betting landscape continues to spread across the country, sports fans who enjoy having ‘skin in the game’ will be able to see first-hand what makes DraftKings a top choice for online and mobile betting.
PointsBet will take Penn online in Indiana (2nd Skin), Louisiana (1st Skin), Missouri (1st Skin), Ohio (1st Skin) and West Virginia (3rd Skin). The 20 year deal will see Penn take a strategic equity stake of 5.28 per cent in PointsBet, with an additional $2.5m access fee for Ohio, based on certain conditions, payable in cash or equity at Penn National’s option.
The 20-year framework agreement provides theScore with the right to obtain market access to offer online and mobile sports betting and iGaming applications in 11 states where Penn National operates casinos and racetracks. These rights include “first skin” access rights in Louisiana and Mississippi, “second skin” access rights in Indiana, Iowa, Missouri, Ohio, and Texas, and “third skin” access rights in Michigan, Massachusetts, Maine, and Kansas. A “skin” refers to the number of online brands an individual casino or racetrack may offer pursuant to applicable state gaming laws and regulations.
theScore’s ability to launch and operate online and mobile sports betting and i-gaming applications in these states will depend on the adoption of laws and regulations permitting online and mobile sports betting and i-gaming, as well as receipt of all relevant licenses and approvals. To date, Indiana and Iowa have already enacted laws that will permit theScore to exercise its market access rights under the framework agreement, while several other states are actively considering legislation to legalize online and mobile sports wagering.
Concurrently, theScore also announced a US$10m private placement of Class A subordinate voting shares at a price of US$0.45 per Class A Share. Penn National has subscribed for US$7.5m of Class A Shares as part of the Private Placement, alongside other investors including John Levy Family Holdings., the family holding company of theScore Founder and CEO John Levy. Proceeds from the Private Placement will be used to facilitate the expansion of the Company’s sports betting platform in the United States including the funding of an upfront market access fee of US$7.5m due to Penn National under the framework agreement. Closing of the Private Placement, expected to occur on or about August 9, 2019, is subject to approval of the TSX Venture Exchange.
“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,” said John Levy, Founder and CEO of theScore. “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.”
“theScore has been a trailblazer in the sports media landscape for years, and we are excited to be forming a strategic partnership with John and his team as they embark on the first truly integrated sportsbook and sports media platform,” said Mr. Kaplowitz.
theScore’s sports media app for iOS and Android is already one of the most popular sports apps in North America, with an audience of approximately four million monthly active users that span every U.S. state. In late 2018, theScore announced plans to be the first media company in North America to launch a mobile sports betting platform, initially in New Jersey through an agreement with Darby Development LLC, the operator of Monmouth Park racetrack.
theScore remains on schedule for the launch of its mobile sports betting application in New Jersey, subject to receiving all relevant licenses and approvals from the New Jersey Department of Gaming Enforcement (DGE) and the New Jersey Racing Commission (NJRC). theScore’s mobile sports betting applications will leverage proprietary sports betting platform technology by US based i-gaming and sportsbook provider Bet.Works.
The agreement covers nine states, which, when combined with The Stars Group’s existing market access deals, gives The Stars Group access in up to 20 states. Unless otherwise noted, all dollar amounts are in U.S. dollars.
The agreement grants The Stars Group the option to own, operate and brand real-money online sports betting, poker and casino offerings in each of the applicable states subject to license availability, state law and regulatory approvals. As it relates to sports betting, The Stars Group’s options currently provide first skin access in Illinois, Indiana, Ohio and Texas, and second skin access in Kansas, New Mexico, Maine, Massachusetts and Michigan.
“We are excited to announce this agreement with Penn, a respected leader in the gaming and racing industry in the United States,” said Rafi Ashkenazi, Chief Executive Officer of The Stars Group. “This agreement further extends our market access platform, as we work to establish our FOX Bet business as one of the leaders in the emerging U.S. online betting and gaming market.”
Timothy JWilmott, Chief Executive Officer of Penn,said: “The Stars Group is one of the world’s largest publicly listed online gaming companies. Its agreement with FOX Sports positions it to become a leader in the US industry, and we are excited to work with The Stars Group to capitalize on its proven ability to leverage its products to gain share in the growing market for online gaming.”
Under the terms of the agreement, Penn will receive a revenue share from the operation of the applicable offerings by The Stars Group, an up-front cash payment of $12.5m, and potential additional cash payments upon and following The Stars Group’s exercise of each option.
