PENN Entertainment and Kambi Group Part Ways After Three Years

PENN Shifts Inside

On Oct. 5, Kambi Group, a sports betting software provider, announced via press release that PENN Entertainment will be moving Barstool Sportsbook away from Kambi’s platform to their own in-house proprietary technology. The migration for its online sportsbook is planned in Q3 of 2023 while the transition for retail sportsbooks will come in 2024. Essentially, the group is planning to test out the new platform for the 2023 football season. 

Jay Snowden, PENN Entertainment CEO said: “Kambi has been a topflight supplier to PENN in our digital evolution. Kambi’s well-proven, high-quality technology and services have empowered PENN as we pursued our differentiated sports betting strategy, and I’m pleased to have secured our partnership to ensure a seamless transition for both companies.”

Details Of Contract Termination

Since the two groups partnered in 2019, Barstool Sportsbok has been legalized in 15 states that feature 13 online launches and 25 retail launches. The two groups will continue to cooperate on additional state launches for Barstool Sportsbook until the transition is fully complete. 

“This agreement sets out the continued collaboration between the two parties over the coming years, one which secures certain ongoing revenue for Kambi over the transition period,” said Kristian Nylen, Kambi CEO and co-founder. “Furthermore, the terms also provide Kambi with additional protections with regard [to] our data and intellectual property.”

The initial contract between Kambi and PENN was dubbed “long-term” in the initial press release from 2019, and while the specific length of the contract was not detailed, it was definitely cut short. Because of the termination of contract, PENN is subject to a $12.5 million payment for the early termination and a $15 million payment for “transition services.” 

A Long Time Coming

This migration was widely expected following PENN’s purchase of theScore and its proprietary technology for $2 billion last year. It announced the merging of theScore’s software earlier this year. 

In the July 25 press release about theScore’s migration, Snowden said, “we’re thrilled to have this technology deployed in Ontario and are diligently working toward migrating the Barstool Sportsbook in the U.S. to the platform in Q3 2023, after which we will begin to realize the full benefits of our in-house, custom designed technology.”

In-house tech migration for a growing company like Barstool allows them to create unique betting options otherwise not available to them, such as single-game parlays. In short, a competitive technology platform is crucial to maintain a competitive advantage in the industry, and this is why the process often takes several years.

It’s somewhat of a “risk” on behalf of PENN to acquire theScore’s technology (which is only live in Ontario) and use it to compete in the U.S. sports betting sector, however these are risks that every operator in the industry have taken (or plan to) as well.