Penn Entertainment has agreed to pay sports betting supplier Kambi an early termination fee as it switches to its own proprietary technology.
Penn will migrate its online sportsbook from Kambi to its in-house technology in the third quarter of 2023, with retail sports betting operations expected to begin the migration in 2024.
During this time, Kambi will continue to receive revenue share payments related to online and retail sports betting services, as well as a one-time early termination fee of $12.5m and $15.0m for transition services.
“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 Kambi chief executive Kristian Nylen. “Furthermore, the terms also provide Kambi with additional protections with regard our data and intellectual property.”
Kambi has served as Penn Entertainment’s (formerly Penn National Gaming) sportsbook supplier since 2019, launching together in 15 US states during that time.
“Kambi has been a topflight supplier to Penn in our digital evolution,” said 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.”
Penn Entertainment’s in-house sports betting technology is a result of the $2.0bn acquisition of sportsbook operator Score Media and Gaming, which was first announced in August 2021 and completed in October of that year.
Shares in Kambi Group plc. (STO:KAMBI) were trading 0.93 per cent higher at SEK168.55 per share in Stockholm Thursday morning, while shares in Penn Entertainment Inc. (NASDAQ:PENN) closed 2.78 per cent higher at $31.40 per share in New York Wednesday.