Penn National Gaming (NYSE: PENN) looks to clear the hurdle set out to enter the New York online gaming space thanks to a partnership with Rivers Casino and Resort. While the deal is signed, regulators will give the final green light on the partnership, which is said to last for a duration of 20-years.
New York has wavered on its stance for the path to regulated online sports betting, even going as fas as proposing a single operator monopoly-style approach. Sources close to the talks claim that it is now looking like the state will allow anywhere between 7 and 14 total operators.
Governor Andrew Cuomo made headlines late last year when he claimed that online sports betting would offer immediate financial relief for the crippled state.
Stock prices reacted quickly, with nearly every brand in the sports betting vertical experiencing quick lifts in share value thanks to the thought of things opening up in one of the country’s largest untapped markets.
Cuomo later became bullish on the concept of a single-operator option that would work with higher tax rates, a plan he thought would best benefit the state.
Cuomo states that online sports betting was “not a money-maker for private interests, it’s just the means so that we can collect more tax revenue.”
Pointing to what he considered a flawed system in neighboring New Jersey, Cuomo boasted that his plan would turn the estimated $50 million in tax revenue into $500 million.
This claim was supported by no evidence, and while it sure looked good in a headline, held little to no water.
Now eyeing a more open approach will allow for a competitive market to emerge in New York, only helping citizens get better products.
“A state the size of New York certainly warrants open competition and a free market approach,” stated Jon Kaplowitz, Penn National Senior Vice President.
Penn National and their relatively young Barstool Sportsbook already hold just over 13% of the US digital sports betting market share. Early returns in Michigan saw the Barstool Sportsbook outperform DraftKings and FanDuel in earnings and nearly top them in new player acquisition.
As the brand continues to gain recognition, Penn would likely enjoy similar success in a New York launch along side the other industry giants.
Penn National remains one of our strongest buy now stocks in this sector, as the longterm upside outweighs nearly all potential threats.