Penn National Gaming continued its foray into online gaming and sports betting with the purchase of the leading Canadian company, the Score Media and Gaming. Based in Toronto, TheScore had the inside track when just a few weeks ago, Canada legalized full sports betting—only parlay betting had previously been permitted—since it had a big head start on the field. While the $2 billion deal clearly valued the country’s sports betting future, it really was technology that clinched the deal.
Jay Snowden said the company embarked on its journey into sports betting when it acquired 36 percent of Barstool Sport in January 2020 for $163 million, but Score Media is the “missing piece” because it gives Penn its own technology, enabling it to cut ties with B2B vendors and producing “industry leading margins.” Penn’s platform supplier, Kambi, saw its stock plummet by 30 percent on the announcement.
“Importantly, the transaction provides us with a path to full control of our own tech stack,” says Snowden. “TheScore has developed a state-of-the-art player account management system and is finalizing the development of an in-house managed risk and trading service platform.”
The deal gives Score shareholders $37 a share in a mix of cash and Penn equity. The agreement has been approved by both companies’ boards of directors, and should close in the first quarter of 2022.
Score Media was formed by its CEO John Levy in 2012 after he sold his cable television network to Rogers Communications for $131 million. Levy’s son Benjie serves as the COO. It’s expected that the Levys will continue to operate Score following the transaction.
In addition to its Canadian customers, TheScore is legal in four U.S. jurisdictions—Colorado, Indiana, Iowa and New Jersey. Two-thirds of its customers are outside of Canada.
Analysts were generally enthusiastic about the deal Macquarie Capital’s Chad Beynon believes it’s a good deal for Penn.
“I think what Penn is buying is a pretty solid front-row ticket to be a major player in Canada,” Beynon told Forbes. “You do that math—Penn essentially paid market rates for these customers, and on top of that, they got the technology synergies and a Canadian beachhead,” Beynon says.
Jefferies’ David Katz says the deal fulfills a goal that Snowden had set for Penn.
“Our broad view of the necessary elements for digital success is consistent,” Katz wrote in a note to investors. “As we have previously indicated, PENN has had the market access and audience but lacked the technology and content to progress at the rate of the largest players. The progression from its current B2B providers to an integrated platform with SCR, which is in the process of developing its own PAM and risk/trading capabilities, could take several quarters that offset any incremental revenues generated. The long term revenue and profit should become evident over time.”
Meanwhile, Score Media and Gaming has announced a one-year partnership with Canlan Sports, which owns numerous hockey arenas and sports complexes in North America.
The agreement will lead to sports betting in Ontario, Canada, specifically at Canlan’s six sports complexes in or near Toronto—though Ontario hasn’t yet adopted rules and regulations for sports betting.
Included in the deal is a title sponsorship and branding opportunities for the theScore Bet as well as title sponsorship of the Adult Safe Hockey League. At the same time Canlan will be able to use Score Media to promote its arenas and programs.
Liana Guiry, Canlan’s VP of sales, marketing and customer experience, commented, “We’ll do some test-and-learn things this year and hopefully it’ll lead to a long-term agreement.”
Meanwhile, Ontario’s Alcohol and Gaming Commission announced July 28 that it was ready to receive public comments on its draft standards for sports and events wagering.
The Ontario Lottery Corp. is also promoting its new Pro Line+ online betting product.
Score Media has been very proactive about sports betting. Less than a day after the Canadian Senate gave final approval to the amendment to the Criminal Code of Canada that lifted the ban on sports betting, the company had begun putting up billboards in Toronto’s Dundas Square.
Aubrey Levy, Score Media’s vice-president of marketing and content, told the Toronto Star: “As a Canadian company, we’re in a fantastic brand position but that doesn’t create any less impetus to be aggressively in the market. We don’t take anything for granted.”
