Kambi has reached an agreement with PENN Entertainment for the planned migration of the latter’s sportsbooks from Kambi to PENN’s proprietary technology.
The transition of the online sportsbook is currently planned for Q3 2023, while the retail sportsbook move will take place in 2024.
During the migration period, the two parties will also cooperate to launch the Barstool Sportsbook in additional US states.
Kambi and PENN’s partnership began in July 2019, and since then, the two companies have launched together into 15 states with 13 online launches and 25 retail properties.
“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,” commented Kristian Nylen, CEO and Co-Founder of Kambi.
“Furthermore, the terms also provide Kambi with additional protections with regard our data and intellectual property.”
The agreement between Kambi and PENN provides for ongoing revenue share payments related to online and retail sports betting services for the duration of each service.
Kambi will also receive one-time fees of $12.5m for early termination and $15m for transition services, the latter payable in installments through the transition period.
“Kambi has been a top-flight supplier to PENN in our digital evolution,” added Jay Snowden, CEO of PENN Entertainment.
“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.”
Vertical integration trend
When asked why he believes there has been a trend toward vertical integration and if he thinks it will continue, Nylen replied: “There has been a trend among some of the larger operators to own their own technology, but that doesn’t mean to say they need or want to own all of it.
“In the main, these operators are seeking to complement in-house technology with high-quality, third-party sports betting products. As a prime example, bet365 recently said they were looking at outsourcing as a method to improve their sportsbook, which I feel is a good indicator for where the industry is headed.
“Over time, I believe the proportion of products being outsourced by these vertically integrated companies will only increase, leaning more on high-quality providers such as Kambi to not only improve the quality of their sportsbook but to increase their efficiency and profitability.
“That said, most operators will still demand a high-quality turnkey solution, so our focus is on continuing to push the boundaries of our full sportsbook offer, while simultaneously making available standalone elements for those looking to raise the standard of their own sportsbook.”
