Penn National used its acquisition of Barstool Sports to dive into the US sports betting market, and so far, so good. The company is a serious player in its operational markets, but Penn’s goal has never been to be a Top 5 or Top 10 sportsbook. It wants to be the top sportsbook.

Enter theScore, which Penn National just acquired for the ho-hum (by recent sports betting standards) price of $2 billion. The acquisition is interesting for both companies from an operations and media standpoint. It also signals the end of the Penn National-Kambi relationship, as Penn pursues the current industry trend of consolidation.

The End of the Line for Penn National-Kambi

Penn is the second high-profile client Kambi has recently lost. First was the news that , and now in a similar way to how the company lost DraftKings, Penn National has decided to chart its sports betting future.

However, Kambi will still be getting paid by both Mohegan Sun and Penn National.

In a Kambi stated:

In 2019, Kambi signed a long-term partnership agreement with Penn National Gaming, which remains unaffected by today’s news. Therefore, there should be no financial impact on Kambi for the guaranteed term of the contract.

Interestingly, a similar situation exists between Kambi and Mohegan Sun:

The amendment respects the financial terms set out in the initial agreement between Kambi and MGE, signed in 2019, with Kambi to receive its full revenue forecasted for the duration of the full initial agreement term.

This willingness to pay Kambi for a product and service it has no plans to use points to Penn’s apparent belief in controlling their destiny and that such control will be paramount in the future.

Ding

— Dave Portnoy (@stoolpresidente)

Penn CEO Jay Snowden praised its third-party partners White Hat Gaming and Kambi but noted, “at the end of the day, given how important this is to us, we just have to be in control of our tech stack.”

Kambi has a different opinion, as stated in a regarding the Penn National news.

Kristian Nylén, Kambi Chief Executive Officer and Co-founder, comments: “I congratulate Penn National Gaming on today’s acquisition of theScore. While I respectfully disagree with Penn National Gaming’s long-term view on vertical integration, the entity they have acquired has yet to develop a proprietary sportsbook, and certainly not one to a similar high standard as what we offer. The transaction announced today creates some exciting opportunities for Penn National Gaming and I look forward to working with them over the coming years in support of their sportsbook growth.”

Bring Everything In-House: This Is the Way

Controlling every aspect of your sports betting operation is a strategy that may or may not work out for the better. Complete control seems like a terrific end-goal, but sports betting is a complicated product with several moving parts from risk-management and trading to UX to player account management.

The overarching question is, does this improve the product? Would a company be better off outsourcing some of these services to companies that specialize in such matters?

As Nylen put it in his statement above, “the entity they have acquired has yet to develop a proprietary sportsbook, and certainly not one to a similar high standard as what we offer.”

Reliance, or lack thereof, on third-party software and service providers could very well be the critical difference going forward, separating national and international gambling companies from smaller, local operators.

What will be interesting to watch is how successful each model is. Will major corporations with everything in-house be the preferred gambling outlet? Or will that become too bureaucratic, with customers, perhaps slowly, migrating towards more independent products where many services are outsourced to specialist companies?  

Covering All the Media Bases

TheScore began its life as a media company and still has a strong presence as a news content creator and aggregator. The site also provides a one-stop-shop for sports schedules and scores.

What’s interesting about the acquisition from a media perspective is how theScore fits into Penn’s existing media portfolio, most notably Barstool Sports.

TheScore has minimal overlap with Barstool Sports. That’s not to say the two outlets don’t share readers, but the content is quite different.

Barstool’s sports content is edgier, focusing on the writer’s opinions and passion for the teams or players. theScore’s content is straight news. But Barstool personalities will now be able to recommend theScore for straight news, thereby giving an immediate boost to theScore’s visibility as a news and information site.

But will that translate into the rarely achieved media-betting mashup (Sky Betting) that everyone seems so keen on replicating?

Another question is, will the addition of theScore, coupled with the reach of Barstool, keep Penn National from using affiliates as a customer acquisition tool? So far, the company has avoided affiliates, which helps explain some of the flack it receives for its performance compared to sites that have embraced the affiliate model.

Similar to bringing the entire tech stack in-house, with Barstool and theScore, Penn National has brought an affiliate business in-house, perhaps further, or even permanently, delaying the use of outside affiliates.