Penn National Gaming Enters Into Agreements With Leading Sports Betting Companies
Penn National Gaming, Inc. has entered into multi-year contracts with a handful of the biggest sports betting operators in the country, signaling a huge power play that could alter the sports betting landscape.
With the agreements, Penn National has agreed to deals with heavy hitters like DraftKings, PointsBet, theScore and The Stars Group.
“(Penn National) is pleased to be providing the top names in sports betting, iGaming and poker access to our Company’s non-primary licenses,” says Jon Kaplowitz, the company’s Senior V.P of Interactive Gaming.
“(These companies will) conduct these operations in exchange for a combination of upfront cash and equity, one-time market access fees and ongoing revenue sharing.”
What are the “Skin Agreements” That Each Company Agreed Upon?
The partnership contracts that each company entered with Penn Gaming are called “skin agreements.” These agreements allow Penn Gaming and the operator an advantage in a market.
Penn Gaming will finance the introductory costs with launch and maintenance of the company’s primary initiatives, while the betting operators will gain access to the market and specific jurisdiction in return.
Skin partners with Penn Gaming will have the ability to own and operate an online sports betting, poker, and casino gaming site via the agreement.
The skin agreements do come with a few caveats. For starters, the jurisdiction, usually a specific state, has to have first legalized sports betting.
Some of the states in the agreements, such as Texas, has not legalized sports wagering at this time.
For DraftKings, the company will have the option to enter seven additional states under the partnership with Penn Gaming.
The daily fantasy sports powerhouse will have market access now to Florida, Indiana, Missouri, Ohio, Pennsylvania and Texas.
The deal with DraftKings will be for ten years with an option to extend the agreement for another decade if both parties are satisfied.
“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,” DraftKings CBO Ezra Kucharz said in a press release.
“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.”
Who’s the Biggest Winner in the Agreements?
The biggest winner of the operators that entered into agreements is the Kambi Group. The company will handle all of Penn National’s sports betting and iGaming operations.
The deal with Kambi came as a shocker because the company was in a lucrative partnership with betting operator William Hill U.S. That agreement appears to be dead with the announcement of the new deal.
“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 CEO Kristian Nylen said in a press release.
“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.”
Penn National will start the partnerships immediately in areas where they have legalized operating licenses. For the remainder of the states, they’ll have to wait for the governor’s signature before they cash in on these potentially lucrative agreements.