Penn National Gaming Inks Sports Betting Deals with DraftKings, PointsBet, Some in States Where It’s Not Yet Legal

Posted on: August 1, 2019, 04:30h. 

Last updated on: August 1, 2019, 08:00h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Penn National Gaming said Wednesday it has landed agreements with some of the biggest names in online gaming and sports betting, including DraftKings. The deals cover 16 states, including some where neither online casinos nor sports wagering are currently legal.

In addition to DraftKings, Penn National is partnering with PointsBet, theScore and The Stars Group for sports wagering and internet gaming. Penn Interactive Ventures (PIV), a unit of the regional gaming company, will oversee those deals. That subsidiary’s primary sports wagering deal will be with Malta-based Kambi Group.

Penn National Vice President Jon Kaplowitz said in a statement the company is providing its partners with access to Penn’s non-primary licenses “in exchange for a combination of upfront cash and equity, one-time market access fees and ongoing revenue sharing.”

This strategy is exemplified in our recent iGaming launch in Pennsylvania, where we were the first iGaming operator to take wagers in the state,” said Kaplowitz. “Additionally, we will be launching our first in-house retail sportsbooks at our Iowa and Indiana properties in the coming weeks.”

Penn National operates 38 casinos across the US, including the M Resort and Tropicana in Las Vegas. Some of the company’s popular brands are Argosy, Ameristar and Hollywood. PIV runs Hollywoodcasino.com, Hollywood Races and Abradoodle Bingo.

Speaking Of States

Penn National’s accords with DraftKings, PointsBet, theScore and The Stars Group appear to be wagers on more states embracing sports wagering. Of the 16 states mentioned in the statement, nine, or more than half, currently do not permit betting on athletic competitions. Those are Florida, Kansas, Louisiana, Maine, Massachusetts, Michigan, Missouri, Ohio and Texas.

While gaming companies are champing at the bit to offer sports betting in Texas and Florida, the second- and third-largest states, respectively, there is no relevant legislation currently being considered in the Sunshine State. In the Lone Star State, sports betting is considered dead in this year’s legislative session.

PointsBet, the Australian company that is showing no trepidation about establishing a footprint in states prior to the legalization of sports wagering in those markets, signed a 20-year pact with Penn National. PIV gets a 5.28 percent equity stake in PointsBet, which listed shares in Sydney in June.

There is also “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,” according to the statement.

Other Partners

TheScore, Inc., shares of which trade in Toronto, signed a 20-year deal with Penn National, forking over a 4.7 percent stake to PIV in exchange for skins in 11 states. Of the states involved in that agreement, several already have sports betting up and running, while a few others, such as Maine and Massachusetts could approve relevant legislation this year.

The Stars Group’s 20-year contract with Penn National requires a $12.5 million upfront payment and another $5 million if Texas gives the nod to sports wagering as well as a “revenue share to Penn National based on net gaming revenue, with a one-time bonus based on net gaming revenue in 2023.”

Of the nine states involved in that pact, only Kansas and Texas appear unlikely to permit sports wagering in the near future. Oklahoma tribes and commercial gaming operators in Louisiana are major political donors in Texas and push politicians there to keep betting offerings scant.