Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or the “Company”) announced today that it 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 (“PIV”), 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.

• DraftKings:
  • States Covered: Florida (1^st skin), Indiana (3^rd skin), Missouri (1^st skin), Ohio (1^st skin), Pennsylvania (1^st skin), Texas (1^st skin) and West Virginia (2^nd skin)
  • Term of agreement: 10 years, subject to a ten year extension
  • Key economic terms: Revenue share to Penn National based on net gaming revenue
• PointsBet:
  • States Covered: Indiana (2^nd Skin), Louisiana (1^st Skin), Missouri (1^st Skin), Ohio (1^st Skin) and West Virginia (3^rdSkin)
  • Term of agreement: 20 years
  • Key economic terms: 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
• theScore:
  • States Covered: Indiana (2^nd skin), Iowa (2^nd skin), Kansas (3^rd skin), Louisiana (1^st skin), Maine (3^rd skin), Massachusetts (3^rd skin), Michigan (3^rd skin), Mississippi (1^st skin), Missouri (2^nd skin), Ohio (2^nd skin) and Texas (2^nd skin)
  • Term of agreement: 20 years
  • Key economic terms: 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.
• The Stars Group:
  • States Covered: Illinois (1^st skin), Indiana (1^st skin), Kansas (2^nd skin), New Mexico (2^nd Skin), Maine (2^nd skin), Massachusetts (2^nd Skin), Michigan (2^nd Skin), Ohio (1^st Skin) and Texas (1^st Skin)
  • Term of agreement: 20 years
  • Key economic terms: 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

“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 capitalize 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,” concluded Mr. Kaplowitz.