With the announcement of Kambi as the exclusive retail and online sportsbook operator for Penn National Gaming, a major piece of the US sports betting puzzle is in place. The ramifications of the deal will be felt across the industry.
In a press release announcing the deal, Jon Kaplowitz, Penn National’s SVP of Interactive, said, “Sports betting represents an exciting growth opportunity for Penn National. By controlling our front-end product and leveraging our vast casino footprint, our company is well-positioned to execute on a sports betting strategy that maximizes value to shareholders. Utilizing Kambi’s best-in-class managed-trading services and omnichannel software allows us to effectively capitalize on this strategy.”
“It’s an honor for Kambi to be working with an organization 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,” said Kristian Nylén, Kambi CEO.
Speaking exclusively to Play USA, Max Meltzer, Kambi chief commercial officer, said, “This is a landmark agreement as the market takes shape. Penn National (has) recognized the long-term benefits of owning their own sportsbook and IP, and the value in investing in a robust, scalable B2B supplier rather than taking the route of outsourcing to a consumer betting brand. Powered by Kambi, they have the opportunity to leverage the strength of their brands and establish a firm grip on the marketplace.”
Penn National’s market access is a huge advantage
As noted, the blockbuster deal fundamentally changes the legal sports betting landscape in the US.
And per a press release from Kambi, the partnership will be consummated in short order.
“The first launches are due to take place in Q3 2019, initially focusing on Penn National’s brick-and-mortar casinos in Iowa and Indiana, with online to follow in 2020,” the release states.
That’s just the tip of the iceberg.
When it comes to market access (availability in the US gaming industry), nobody can compete with Penn National. The company’s casino and gaming footprint provides access to 19 states and nearly half, more than 150 million, of all US residents.
Penn National’s market presence includes many highly sought after online gambling and sports betting prizes in the country. A deal that could eventually bring Florida online sportsbooks into existence also includes Illinois, Massachusetts, Michigan, Ohio, Indiana, Louisiana and Pennsylvania.
Several of these states already have sports betting industries, and several more are in somewhere in the process of transforming into legal sports betting state.
The Kambi-Penn National partnership comes first
At the same time the arrangements with Kambi were unveiling, Penn National also announced four other sports betting and online gambling partnerships.
The subsidiary partnerships are with DraftKings, PointsBet, theScore and the Stars Group/Fox Bet. These arrangements provide market access (as a second or third skin) for online sports betting and online casino games where applicable.
It’s important to note that those deals are all secondary to the Kambi deal. It simply elucidates the online gambling skin hierarchy Penn National will use in different markets.
As Meltzer explained, “Kambi will be the exclusive sportsbook provider for Penn National.” Prior deals that Penn National has agreed to will also be impacted.
According to Meltzer, the changeover may not be immediate in all locales, but it the Kambi deal supersedes all other deals Penn National has in place.
Control is a key factor in Penn National choosing Kambi
Kambi is a B2B sports betting provider. As such, its partners aren’t limited to a one-size-fits-all product. Rather, a partnership with Kambi is rooted in flexibility and empowerment.
As the Kambi press release notes, “The deal gives Penn National access to Kambi’s highly flexible and empowering technology, enabling the operator to develop a proprietary front-end and differentiated sports wagering experiences. Penn National also selected Kambi for its multi-channel capability, expertise in trading and risk management, (a) record of delivery and commitment to integrity and corporate probity.”
And as Meltzer explained to Legal Sports Report:
“I cannot emphasize this enough. When you select Kambi, you’re not getting a Kambi app. Kambi provides our partners the freedom to be who they want to be. They can use our technology and APIs to develop a Penn National app that is unique for the end-user while developing and building their own intellectual property, which adds intrinsic value to the organization.”
That’s precisely what DraftKings (an existing Kambi partner) has done, and what Penn National is planning on doing, adding their tech layer on top of Kambi.
Penn National values control
That control, coupled with its decision to earmark the first skin in each market for the Penn National brand, is seen as critical to success in the US.
Penn National’s incoming CEO, Jay Snowden, said as much during the company’s earnings call:
“We have honestly analyzed this to death and have come to the conclusion that it’s all about control. As have been proven in Pennsylvania, Illinois and Colorado, that first skin is extremely valuable. We believe by retaining control of that primary license, we control our future. Today for sports betting, tomorrow for iCasino.
“In most, if not all states, they will be inextricably linked to one another. If you are of the opinion as we are that the winners in the casino space, long term will be the ones that can offer compelling and unique products and experiences in an omnichannel fashion, one that includes best-in-class diverse brick-and-mortar destinations, coupled with social and real money, digital sports and iCasino offerings, then relinquishing control of that closed-loop strategy and the economics that come with it is a short term deal. This control doesn’t mean we won’t partner with third parties, such as media and technology companies with that primary skin in order to aggressively maximize the value of the opportunity. It simply means we want to maintain control of our future as it pertains to sports betting and interactive digital, mobile gaming opportunities that are rapidly coming our way.”
Or, as Meltzer put it, Kambi’s partners “own their own destiny.”