Penn National Sports Betting App
– 20-year agreement provides theScore with market access for online and mobile sports betting and i-gaming in 11 states via Penn National casinos and racetracks
Penn National will host a conference call and simultaneous webcast today, Wednesday, January 29, 2020 at 8:00 a.m. ET to review the Barstool Sports transaction, share the Company’s vision for sports betting. Bet on sports with the Barstool Sportsbook from Penn National Gaming (NASDAQ: PENN) and Barstool Sports while enjoying the same online sports betting experience used by Dave “El Presidente” Portnoy and Dan “Big Cat” Katz. This app is packed with exclusive daily odds boosts, custom offers and promot. Competing against Draftkings Inc (NASDAQ: DKNG) and Penn National Gaming, Inc (NASDAQ: PENN), Score Media wants its sports betting app accessible to more customers and for it to continue growing.
In February 2020, Penn National entered into a strategic partnership with Barstool Sports, whereby Barstool is exclusively promoting the Company's land-based and online casinos and sports betting. In February 2020, Penn National entered into a strategic partnership with Barstool Sports, whereby Barstool will exclusively promote the Company's land-based and online casinos and sports betting.
– Penn National to take equity stake in theScore as part of US$10m private placement
TORONTO, July 31, 2019 – theScore, Inc. (TSX Venture: SCR) (“theScore” or the “Company”) today announced a major expansion of its U.S. mobile sports betting platform, through a multi-state market access framework agreement with Penn National Gaming Inc. (Nasdaq: PENN) (“Penn National”), North America’s largest regional gaming operator. In connection with the framework agreement, Penn National has also agreed to take a strategic equity stake in theScore.
The 20-year framework agreement provides theScore with the right to obtain market access to offer online and mobile sports betting and i-gaming applications in 11 states where Penn National operates casinos and racetracks. These rights include “first skin” access rights in Louisiana and Mississippi, “second skin” access rights in Indiana, Iowa, Missouri, Ohio, and Texas, and “third skin” access rights in Michigan, Massachusetts, Maine, and Kansas. A “skin” refers to the number of online brands an individual casino or racetrack may offer pursuant to applicable state gaming laws and regulations.
theScore’s ability to launch and operate online and mobile sports betting and i-gaming applications in these states will depend on the adoption of laws and regulations permitting online and mobile sports betting and i-gaming, as well as receipt of all relevant licenses and approvals. To date, Indiana and Iowa have already enacted laws that will permit theScore to exercise its market access rights under the framework agreement, while several other states are actively considering legislation to legalize online and mobile sports wagering.
Concurrently, theScore also announced a US$10 million private placement of Class A subordinate voting shares (“Class A Shares”), at a price of US$0.45 (C$0.59) per Class A Share (the “Private Placement”). Penn National has subscribed for US$7.5 million of Class A Shares as part of the Private Placement, alongside other investors including John Levy Family Holdings Ltd., the family holding company of theScore Founder and CEO John Levy. Proceeds from the Private Placement will be used to facilitate the expansion of the Company’s sports betting platform in the United States including the funding of an upfront market access fee of US$7.5 million due to Penn National under the framework agreement. Closing of the Private Placement, expected to occur on or about August 9, 2019, is subject to approval of the TSX Venture Exchange.
“Securing this highly-coveted partnership with Penn National is a major step towards our goal of becoming a leader in mobile sports betting in the United States,” said John Levy, Founder and CEO of theScore. “We are thrilled that Penn National believes in, and has invested in, our vision of an integrated approach to media and sports betting and we can’t wait to unveil the best-in-class mobile betting experience that we’ve been building for sports fans.”
“theScore has been a trailblazer in the sports media landscape for years, and we are excited to be forming a strategic partnership with John and his team as they embark on the first truly integrated sportsbook and sports media platform,” said Jon Kaplowitz, SVP Interactive Gaming for Penn National Gaming.
theScore’s sports media app for iOS and Android is already one of the most popular sports apps in North America, with an audience of approximately four million monthly active users that span every U.S. state. In late 2018, theScore announced plans to be the first media company in North America to launch a mobile sports betting platform, initially in New Jersey through an agreement with Darby Development LLC, the operator of Monmouth Park racetrack.
theScore remains on schedule for the launch of its mobile sports betting application in New Jersey, subject to receiving all relevant licenses and approvals from the New Jersey Department of Gaming Enforcement (DGE) and the New Jersey Racing Commission (NJRC). theScore’s mobile sports betting applications will leverage proprietary sports betting platform technology by U.S. based i-gaming and sportsbook provider Bet.Works.
Details of the Framework Agreement
The market access framework agreement between Penn National, theScore and Score Digital Sports Ventures Inc. (“SDSV”), a wholly-owned subsidiary of theScore, which has a term of 20 years, provides that SDSV will have the right to obtain market access to operate branded online and mobile sports betting and i-gaming applications pursuant to licenses conferred upon Penn National by the relevant gaming regulators in the states listed above, subject to the adoption of laws and regulations permitting online and mobile sports betting and i-gaming, as well as receipt of all relevant additional licenses and approvals in such states.
In addition, pursuant to the framework agreement:
Penn Sports Betting
- SDSV will pay to Penn National an upfront market access fee of US$7.5 million, which is creditable against future state-specific market access fees which will become due and payable upon the execution of state-specific market access agreements between SDSV, PNG and/or certain of their affiliates following the enactment of state gaming laws and regulations permitting online sports betting or i-gaming;
- When additional market access fees are due, SDSV will have the option to require PNG to increase its equity investment in theScore by the amount of such additional market access fees, based on a price per share for theScore equal to the 30-day volume weighted average trading price for such shares immediately preceding the date of issuance;
- SDSV will pay to Penn National a certain percentage of the net gaming revenue derived from SDSV’s operation of online and mobile sports betting and i-gaming applications; and
- theScore will provide Penn National with certain media marketing value across theScore’s digital media properties to promote Penn National’s land-based gaming properties.
Details of the Private Placement
As noted above, Penn National, John Levy Family Holdings Ltd. and other investors have subscribed for an aggregate of US$10 million of Class A Shares at a price of US$0.45 (C$0.59) per Class A Share. Proceeds from the Private Placement will be used to facilitate the expansion of the Company’s sports betting platform in the United States, including the funding of an upfront market access fee of US$7.5 million due to Penn National under the framework agreement. Closing of the Private Placement, expected to occur on or about August 9, 2019, is subject to approval of the TSX Venture Exchange.
John Levy Family Holdings Ltd., an entity controlled by John Levy, the Company’s Founder and CEO, has subscribed for an aggregate of 2,222,222 Class A Shares in the Private Placement. A material change report will not be filed more than 21 days prior to closing of the Private Placement as contemplated by the related party transaction requirements under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions as the insider participation was only recently confirmed.
The Class A Shares to be issued under the Private Placement to Canadian purchasers will be subject to a statutory hold period expiring four months and one day from the closing date of the Private Placement. Additional resale restrictions and legends may apply in the United States and other jurisdictions.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States nor shall there be any sales of our securities in any state or jurisdiction of the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“), or any state securities laws and may not be offered or sold within the United States or to U.S. persons (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration requirements is available.
For further information:
James Bigg
Sr. Manager, Communications
theScore, Inc.
Tel: 647-638-9281
Email: [email protected]
Neither the TSX Venture Exchange nor its Regulation Service Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy of this news release.
About theScore Inc.
theScore creates highly-engaging digital products and content that empower sports fans. Its flagship mobile app ‘theScore’ is one of the most popular multi-sport news and data apps in North America, serving millions of fans a month. The Company also creates innovative digital sports experiences through its web, social, and esports platforms, and has announced plans to launch a mobile sports betting application in the United States, subject to receipt of all relevant licenses and approvals.
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment. The Company operates 41 facilities in 19 jurisdictions. In total, Penn National Gaming’s facilities feature approximately 50,500 gaming machines, 1,300 table games and 8,800 hotel rooms. The Company also offers social online gaming through its Penn Interactive Ventures division and has leading customer loyalty programs with over five million active customers.
Forward-looking (safe harbour) statement
Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as “may”, “would”, “could”, “will”, “believes”, “plans”, “anticipates”, “estimates”, “expects” or “intends” and other similar statements which are not historical facts contained in this release are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Such statements reflect theScore’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking statements, including among other things, the adoption or non-adoption of laws and regulations permitting online and mobile sports betting and i-gaming in certain states and the impact such adoption or non-adoption will have on theScore’s ability to exercise its market access rights under the framework agreement, the receipt of all relevant licenses and approvals, and those which are discussed under the heading “Risk Factors” in the Company’s Annual Information Form as filed with the TSX Venture Exchange and available on SEDAR at www.sedar.com and elsewhere in documents that theScore files from time to time with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results could differ materially from the expectations expressed in these forward-looking statements. The Company does not intend, and does not assume any obligation, to update these forward-looking statements except as required by applicable law or regulatory requirements.
After nearly crapping out, Penn National Gaming appears to be back on a streak.
Its partnership with Dave Portnoy‘s Barstool Sports at least in part fueled Penn stock’s rise, fall and resurrection from January to June.
Penn National wanted to go big
The roller coaster ride came about because Penn, a top regional gaming company headquartered in the heartland of Pennsylvania just north of Harrisburg — think small-town suburbia set among farm fields and forested small mountains — had bigger aspirations at the start of the year.
What had begun as a family horse racing business wanted to go really big.
Having made itself a presence in nearly every legal US gambling market, with 41 properties and 26,000 employees, Penn was bumping up against economic concentration regulations.
Penn wanted Barstool as an online sports brand
That meant the only way for it to really grow was to tap a new market, a market free of the geographic constraints that came with buying or building yet another property.
The booming online sports betting market — which Penn had only tapped through brick-and-mortar under a past executive team — was its ticket to the gaming stratosphere.
On Jan. 29, Penn National rolled the dice and bought a 36% share of the sports-centric, risque and sometimes raunchy blog and podcast business Barstool Sports.
The purchase was for approximately $135 million in cash and $28 million in shares of non-voting convertible preferred stock. Penn swiftly closed the deal after the announcement.
Additionally, Penn National agreed to increase its ownership of Barstool to approximately 50% through an incremental investment of approximately $62 million at the end of three years.
Barstool brings a new demographic to Penn
Jay Snowden, president and CEO of Penn National, spelled out the rationale of buying a company without an internet gambling platform on the company’s website:
“This exciting new partnership with Barstool Sports reflects our strategy to continue evolving from the nation’s largest regional gaming operator, with 41 properties in 19 states, to a best-in-class omnichannel provider of retail and online gaming and sports betting entertainment.
“With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database.
“In addition, with 66 million monthly unique visitors, we believe the significant reach of Barstool Sports and loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs for our sports betting and online products, significantly enhancing profitability and driving value for our shareholders.”
Coronavirus disrupts the plan — and Penn’s stock value
And on paper, the plan worked at first.
The stock, which had hovered in the $25 to $26 range at the start of the year, hit $38.28 a share on Feb. 13.
Then came COVID-19 and an existential crisis for Penn stock, which bottomed at $4.52 on March 18.
Casinos shut down. Horse tracks shut down. Penn furloughed most employees. Two PA expansion projects, mini-casinos, stopped construction. Assets were sold. A huge stock offering followed to raise cash.
Penn casino reopenings coincide with rising stock price
But now properties are reopening. Employees are returning. But at least at least 1,900 Penn jobs at casinos are gone for good as the company pivots toward online wagering. Resuming work on the mini-casinos in Yorkand Morgantown still awaits, though.
Meanwhile, Penn is rebranding its retail books to carry the Barstool name. Its mothership casino in PA, Hollywood Casino at Penn National Race Course, is back up and running, and the company is working to create an online presence based on the Barstool brand.
In fact, despite recently announced permanent layoffs, the company is on a hiring tear.
On Monday, CNBC’s Jim Cramer remotely hosted Snowden of Penn, along with Portnoy and Barstool CEO Erika Nardini, on his program The Street.
And while Cramer briefly discussed Penn stock’s up, down and up record so far this year, he only spoke of Barstool and the coronavirus shutdown when laying out the context.
Penn plans August launch of Barstool online betting app
Snowden told Cramer that Penn had 70% of its propertiesoperating at 50% capacity and had called back 11,000 employees. No mention was made of the permanent job losses.
Betting Apps Sports
Snowden also told Cramer that the Barstool online book should launch in August. The target would put Penn ahead of the anticipated NFL start.
Nardini spoke of Barstool’s growth across platforms and the devoted audience it delivers.
Davey Day Trader moves the market again
Portnoy, uncharacteristically wearing a suit (brokers referred to as “suits” are frequent targets of his diatribes), predicted that Barstool will be the “dominant player” once sports return.
Penn National Sports Betting Apps
He boasted later that night on Twitter to his 1.5 million followers:
“I just sold the shit out of myself in Penn National.”
By the next day, Penn’s stock was up more than 17% at midday. Penn closed up about $5 a share, or just under 13%, at $36.82. Several market stories took note.
Two days later, the price has mostly played in the $33 range.
Since his highly publicized shift to “Davey Day Trader Global,” Portnoy has demonstrated an ability to influence stock prices, presumably through his “stoolies” who have followed him into the market. His latest national appearance is yet another example of the “Barstool effect” at work, some say.
Penn National’s imminent expansion into online sports wagering and the long-term stability of the stock price should provide a more accurate picture of the company’s position in the months to come.