Penn National Gaming is looking to capitalize on the spread of legal sports betting.
On Wednesday, the company issued a press release announcing four new market-access agreements with some of the biggest names in the US sports betting scene right now. Penn’s new partners include:
- DraftKings Sportsbook
- PointsBet
- theScore
- The Stars Group
The Pennsylvania based company also announced that Kambi will now power all of Penn’s in-house sportsbooks. Penn National Gaming currently operates 41 gambling facilities across 19 states, eight of these states have legal and regulated sports betting.
Jon Kaplowitz, Penn National’s Sr. Vice President of Interactive Gaming said: “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.
Breaking down the deals
Several multi-year partnerships were struck through “skin agreements.” According to Kaplowitz, these agreements will help the company fund the cost associated with launching and maintaining Penn’s primary sports betting and online gambling operations.
Skin agreements provide online sportsbook operators with market access in a certain jurisdiction under a land-based casinos existing license. According to the press release, Penn’s new partners will be able to own, operate and brand real-money online sports betting, poker, and casino operations.
The skin agreements are subject to state law, regulatory approval, and how many ‘skins’ can operate under a single license. The number of skins that can operate under a single land-base casino licenses varies from state to state. In New Jersey, three skins casinos can partner with up to three skins, while in Pennsylvania, each venue can only partner with one online skin.
Penn National’s press release contains a detailed breakdown of each agreement. Here’s what the deals look like, states with legal betting are in bold.
The DraftKings deal
States covered: Florida (1st skin), Indiana (3rd skin), Missouri (1st skin), Ohio (1st skin), Pennsylvania (1st skin), Texas (1st skin) and West Virginia (2nd skin).
Term of agreement: 10 years long, subject to a 10-year extension.
Cost: Revenue share based on net gaming revenue
Out of the four agreements, it looks as if DraftKings’ deal may have the most immediate impact. Not only has the operator secured access to seven states, but it has also secured entrance into the Pennsylvania sports betting market. DraftKings Sportsbook will now join the likes of FanDuel Sportsbook and SugarHouse in Pennsylvania.
Ezra Kucharz, DraftKings’ CBO said: “With dozens of states having already legalized sports betting or poised to do so in the near future, this expanded partnership ensures DraftKings is positioned to quickly enter new markets. 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 PointsBet deal
States covered: Indiana (2nd Skin), Louisiana (1st Skin), Missouri (1st Skin), Ohio (1st Skin) and West Virginia (3rd Skin).
Terms of agreement: 20 years.
Cost: Revenue share to Penn National based on net gaming revenue.
Equity position: PIV will take a strategic equity stake of 5.28% in PointsBet, with an additional $2.5 million access fee for Ohio, based on certain conditions, payable in cash or equity at Penn National’s option. In addition, PIV will receive 10,372,549 options, exercisable for two years, to acquire additional shares of PointsBet.
PointsBet may be one of the newcomers in the world of US sports betting, but it shouldn’t be underestimated. After launching in New Jersey through a market access deal with Meadowlands Racetrack in 2018, the Australian sportsbook has been working hard to establish a foothold in other US jurisdictions. PointsBet has partnered with venues in Iowa, Colorado and New York for sports betting.
Sam Swanell, PointsBet CEO said: “Partnering with Penn provides PointsBet access to five important states and the potential for further state deals. We are delighted to partner with such a forward-thinking and innovative organization.”
Penn National and theScore
States covered: Indiana (2nd skin), Iowa (2nd skin), Kansas (3rd skin), Louisiana (1st skin), Maine (3rd skin), Massachusetts (3rd skin), Michigan (3rd skin), Mississippi (1st skin), Missouri (2nd skin), Ohio (2nd skin) and Texas (2nd skin)
Terms of agreement: 20 years.
Cost: Revenue share to Penn National based on net gaming revenue.
Equity position: PIV will take a strategic equity stake of 4.7% in theScore, with the potential for this stake to increase as additional market access fees become payable.
Sports media company, theScore, announced it would be transforming into a fully-fledged sportsbook back in 2018. The company is expecting to launch its sports betting app in New Jersey in time for the start of football season. This deal grants the company access to 11 states, putting the organization in a strong position as more states legalize sports betting.
John Levy, CEO of theScore said: “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. 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.”
The Stars Group deal
States covered: Illinois (1st skin), Indiana (1st skin), Kansas (2nd skin), New Mexico (2nd Skin), Maine (2nd skin), Massachusetts (2nd Skin), Michigan (2nd Skin), Ohio (1st Skin) and Texas (1st Skin).
Terms of agreement: 20 years.
Cost: Upfront payment of $12.5 million payable cash, with an additional access fee of $5 million in cash for Texas-based on certain conditions; revenue share to Penn National based on net gaming revenue, with a one-time bonus based on net gaming revenue in 2023.
The Stars Group (TSG) is the largest public online gambling company in the world and has been working hard to establish its place in the US. In New Jersey, TSG offers online sports betting through the BetStars brand, as well as online poker and online casino.
In May, TSG announced a partnership with Fox Sports which will allow the broadcast company to move into the realm of online gambling. Both companies are working together to create FoxBet, a new online sports betting platform that will replace TSG’s BetStars brand in the US.
Will there be any more massive market access deals?
With Wednesday’s announcement, Penn National has taken a large number of market access opportunities off the table, making it trickier for other operators to secure entry into other US jurisdictions.
There are, however, several other avenues for operators to enter different states. After the merger between Caesars and Eldorado Resorts in finalized, operators without market access agreements could look towards the casino giants for a deal.
Boyd Gaming is another potential organization that could grant sportsbook operators access to other states. Boyd is currently partnered with FanDuel Sportsbook, suggesting there is room for other operators to strike a deal.
Elsewhere in the US, Iowa has confirmed that the first in-state sports bets can be made on 15 August at noon.
