On Thursday, Penn National Gaming announced plans to buy Canadian sports betting company Score Media and Gaming for nearly $ 2 billion in cash and stocks. The transaction, which will further position Penn as a major player in a growing sports betting industry, is expected to close in the first quarter of 2022. Penn National also purchased the Barstool Sports app for $ 450 million in 2020 On the heels of the new sports betting bill in Canada, Penn Gaming is playing an important role in expanding its sports betting reach across North America.
New sports betting law in Canada
On June 22, 2021, the Canadian Senate passed C-218, a bill that will regulate single-game sports betting in the country province by province, much like the United States currently operates. The bill received Royal Assent on June 30, and Prime Minister Justin Trudeau is expected to set an effective launch date for sports betting at the end of 2021. Previously, only parlay betting was allowed in Canada, but this project The law will allow a significantly expanded sports betting market, including betting on a single game.
theScore was founded by John S. Levy, current CEO and Chairman of the Board, in 2012 as a digital media company based in Toronto, Canada. Later in 2012, Rogers Communications bought The Score Television Network for $ 167 million, leaving theScore to go into their digital outlets. Levy has since built theScore into a media company with a massive user base, particularly in Canada, and leveraged that consumer base into a competitive sports betting business. TheScore Bet app launched in 2019 and on March 16, 2021 theScore joined the Nasdaq.
theScore provides Penn National Gaming with a unique platform for vertical integration and key synergies in the sports betting industry. Penn CEO Jay Snowden said the acquisition allows his business “significant savings on third-party platform costs and allows [them] to broaden [their] product offerings – providing the missing piece to operate at what we believe are the best margins in the business.
The partnership gives Penn Gaming significant reach in North America given theScore’s strong position in the Canadian market. It also gives Penn Gaming access to theScore’s “vast pool of product and engineering talent and data-driven user analytics” to help it manage “customer acquisition, ‘engagement, retention strategies and cash flow’. Penn National estimates that the acquisition will increase its EBITDA by $ 200 million over the next four years and up to $ 500 million in the long term.
Will this affect Barstool Sportsbook?
Barstool Sportsbook is expected to launch in Arizona, Colorado, New Jersey, Tennessee and Virginia by the start of the NFL season on September 9. Barstool uses Kambi as a betting platform, but theScore Bet has its own Player Account Management System (PAM). and a Bet.Works provider owned by Bally’s. Kambi CEO Kristian Nylen disagreed with the move, saying theScore “has yet to develop an exclusive bookmaker, and certainly not of a standard as high as that [Kambi] offers.”
With theScore’s integration with Penn National, the primary provider of Barstool Sportsbook is expected to change by the start of the 2023 NFL season. This should help Barstool Sportsbook with the cost of use per acquisition, as bettors using theScore Bet who also have theScore’s media app have 88% higher pay per user, place three times as many bets and generate an increase of 91% of retention after one month. It should also help Barstool Sportsbook and Penn National reduce future traditional advertising costs, as Barstool CEO Dave Portnoy noted on Twitter.
There is no one else doing what they are doing. The Score was the first company I tried to acquire when Chernin invested in us. I couldn’t afford it. It’s the perfect compliment for us. Tech, market, mental space. We will control the whole ecosystem with their help from technology to media https://t.co/StvbbVCwJm
– Dave Portnoy (@stoolpresidente) August 5, 2021
Stock market implications
As part of this purchase, Score Media shareholders will receive $ 17 in cash and 0.2398 shares of Penn National Gaming for each share of Score held. That’s a per share value of $ 34 or 87% more than the share’s close on Wednesday. As such, there was a big move Thursday – Score Media closed at $ 32.64, up 79.93%, on Thursday after the announcement of the Penn purchase. Penn National Gaming, Inc. closed at $ 72.26 on Thursday, up 9.09%.