- US Online Poker
- US Online Casinos
- US Online Sports Betting
Penn National Gaming announced last week that it would release a new play money casino app, powered by Game Account Network (GAN). The app will use the branding of Penn’s loyalty program, mychoice, which covers more than 35 properties owned or operated by the company.
The company has hinted that the makeover is related to its plans to integrate Barstool Sports into its loyalty program.
GAN describes such apps as “Simulated Gaming” and has made supplying them a core part of its business. The deal with Penn is the second it announced this week, following a similar one with New Mexico’s Route 66 Casino. Including these new partners, GAN is now supplying Simulated Gaming services to over 100 individual casinos nationwide.
Jeff Berman, GAN’s chief commercial officer described the new products as “a uniquely diverse simulated gaming content portfolio, accessed via an enhanced custom front-end development and a full integration into Penn National’s market-leading reward program, leveraging our unique patented technical capability to deliver on-property to online convergence for their carded patrons.”
Penn currently uses other technology providers for its real-money operations. It has Kambi for its sportsbook and IGT for its online casino in Pennsylvania. Nonetheless, GAN is optimistic that the deal might pave the way for further collaboration.
“We hope this marks the beginning of a partnership that may grow beyond the opportunity of social gaming for GAN,” said Berman.
Play money casino products are popular in the mobile space, as well as in the form of Facebook apps. Virtually all major casino companies have one these days. Examples include:
Those that didn’t have one to begin with are busy launching them, such as Boyd Gaming’s new Stardust Casino, which it launched just last month. Mobile devices are the primary channel for such products, though Apple has begun imposing restrictions on them in its App Store. Most also have browser versions and some have apps on Facebook.
It’s probably worth differentiating these products from social casinos with no associated real money product. Although those look similar, the business model is different. Standalone social casinos encourage players to pursue in-game status and to spend real money towards that end. Although simulated gaming can also be monetized in this way, its primary function is to support the companies’ real-money gambling operations.
One way they do this is by allowing companies to begin acquiring players in a state before real money online products become legal there. Although states have had the ability to legalize online gambling all along, the repeal of the sports betting ban and resulting boom of legal online sports betting has heightened interest in other forms of gambling expansion. It’s therefore more important than ever for companies to stake out their territory ahead of time.
Until recently, legal real-money online casinos were only available in Delaware, New Jersey and Pennsylvania. Just last month, West Virginia joined the club, and Michigan is coming sometime between October and early next year. Penn owns properties in both these new states and should be fairly quick to enter those markets. Giving its play money casino a facelift is one way Penn is preparing for those launches.
Penn’s previous social casino used Hollywood Casino branding, the same as its real money online product in Pennsylvania. However, Hollywood is only one of several brick-and-mortar casino brands operated by Penn. Changing the name to mychoice may be, in part, an effort to ensure that there’s no branding conflict if online gambling becomes legal in states where a different Penn brand operates, like l’Auberge or Ameristar.
However, another important function of simulated gaming is to increase customer engagement with the company’s loyalty program. Penn’s decision to name the social casino after the loyalty program suggests that it plans on pushing hard on that front.
Penn’s CEO, Jay Snowden, said as much in the company’s Q2 earnings call:
“We believe [mychoice is] going to be the strongest loyalty program in the space because it’s going to be the only program that is wholly owned by the operator and we deploy on wholly owned channels of business. That’s going to be deployed in all of our brick-and-mortar casinos. Greektown, we’re going to go live in October, so then we’ll be 41 out of 41.”
He also sees the loyalty program dovetailing with the company’s partial acquisition of Barstool Sports. Mychoice will be integrated into the new Barstool Sportsbook app as soon as it launches. That should be next month in Pennsylvania, with other states to follow. There’s more to the relationship than that though, as the company plans on tailoring mychoice rewards to Barstool customers specifically.
“There’s going to be Barstool merchandise and opportunities to go to special events with Barstool personalities,” said Snowden. “And so this younger demographic that we’re seeing sign up for cards, and we’re seeing growth in their rated play right now, and that’s really without the Barstool connection in place as it relates to the mychoice program.”
GAN’s shareholders reacted favorably to the news. Its shares rose 2.9% to $25.17 on Thursday following the announcement, though they came back down in after-market trading. (Its stock would fall on the heels of it losing its sports betting business with FanDuel.)
The company has been on the market for less than four months, following its NASDAQ IPO in May. It traded below $15 for most of that month, but rose sharply as June began. It has bounced around the low to mid-20s since then, briefly hitting a high of $28.95 at the beginning of July.
Penn’s stock likewise rose on Thursday, gaining 3.4% to close at $56.58. It’s less clear in Penn’s case that this had much to do with the announcement, however. The company’s shares have been rising steadily since crashing in March as casinos shut down.
Indeed, Penn was one of the companies hardest hit by the casino closures, but also one of the fastest to recover. Its share values plunged from nearly $40 in mid-February to less than $5 just after the shutdowns began. It was back in the high 30s by June and is now trading at all-time highs, largely on the potential investors see in the Barstool deal. Whether it really warrants those prices, however, is a matter of debate.