Penn National Gaming’s (NASDAQ:PENN) Penn Interactive unit is gaining access to the crucial New York mobile sports betting and internet casino market via a “second skin” agreement with Rivers Casino & Resort.
The deal hinges on the state approving mobile sports wagering, which could happen over the near-term, as Gov. Andrew Cuomo (D) is warming to the idea of a multi-operator system. New York state Sen. Joseph Addabbo, Jr. (D-Queens) told Casino.org last week that the online sports betting issue should be included in the April 1 budget bill, and if that happens, mobile betting could be operational there for the start of the 2021 NFL season.
Financial terms of the 20-year Penn Interactive/Rivers Casino accord weren’t revealed.
We are hopeful that the New York State Assembly will follow those leading revenue producing states that allow for multiple skins for mobile sports betting,” said said Jon Kaplowitz, Penn National senior vice president of interactive gaming, in a statement. “A state the size of New York certainly warrants open competition and a free market approach.”
Barstool Sportsbook — Penn’s mobile sports betting app — is currently live in Pennsylvania and Michigan, and the company rolled out an internet casino offering in Michigan on Feb. 1. The operator is aiming to be live in 10 states by the end of 2021.
Part of Broader Penn, RSI Accord
As the fourth-largest state in the country, New York is a coveted market for gaming companies. New York City, which is contributing in a big way to the growth of New Jersey’s sports betting industry, is the biggest US city by population. Additionally, it’s clear that the state will have online betting well before the trio of California, Texas, and Florida, allowing operators to access at least one of the four most heavily populated states.
While New York is the headline grabber of the Penn/Rivers accord, the deal has wider ranging implications. Rush Street Interactive (NYSE:RSI) — the online gaming arm of River parent Rush Street — is gaining access to Maryland, Missouri, and Ohio through potential second skins in each of those states in a series of 20-year pacts with Penn.
RSI is currently live in Colorado, Illinois, Indiana, Iowa, Michigan, New Jersey, Pennsylvania, and Virginia.
“Taken together with our ability to access markets under applicable regulations or potentially access them through our existing market access deals for online gaming in New York, Ohio, Maryland, Missouri, and West Virginia, RSI now has the potential, with first or second skins, to access online gaming markets reaching more than 35% of the US population,” according to the company.
Investors reaction to the new is surprisingly muted, as Penn National shares are higher by 1.82 percent in midday trading. The stock resides five percent below its 52-week high. RSI, which hasn’t been public for two months, is lower by almost two percent.
Still, plenty of market participants, including Barstool Sports founder David Portnoy, remain bullish on gaming stocks.
“People love to gamble and the retail trading shows it,” he said in an interview last week with FOX Business.
Portnoy owns a sizable chunk of Penn stock by way of the operator’s 36 percent stake in Barstool. He also told FOX he holds shares of theScore Media & Gaming (OTC:TSCRF), a company where Penn owns 4.7 percent.
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