How Penn National is providing a Rocket to social games

How Penn National is providing a Rocket to social games

Monday, August 8, 2016 Posted by Totally Gaming
Penn National’s online MD, Chris Sheffield, talks to Totally Gaming about social and new opportunities in the US

Even as one door shut on US land-based gaming interest in social casino with Caesars Entertainment’s sale of its Playtika operation for $4.4bn another was opening when it was announced that Penn National had bought up San Francisco-based social casino developer Rocket Games.

The $60m Rocket deal announced 3 August sees Penn, the operator of 27 regional and Nevada casinos including the off-strip M Resort property, bolster its existing social set-up and sets it on the path to being one of the more significant gaming plus social corporate players alongside IGT’s Double Down and Churchill Down’s Big Fish Games. took the opportunity to put some questions to Penn National’s director of online managing director Chris Sheffield (formerly in charge of Betfred’s online operations) about the company’s social casino plans and its wider hopes for online in the US.

Totally Gaming: Can you go a bit further into the thinking behind the Rocket Games buyout for Penn National?

Chris Sheffield: We have been successful to date with our product provided by Scientific Games which has mainly been marketed to our existing customer base but have also started to explore a direct-to-consumer model beyond our core business where we are seeing some success acquiring totally new customers. We believe in a portfolio approach as per a number of the other big social operators and wanted to offer different style of games for different consumers. As the leader in three-reel mechanical slots (3RM) Rocket Games was a good choice of platform given these types of games appeal to both land-based customers and casual social gamers.

TG: Social casino seems to be going through another new phase of development with some significant acquisitions in the space.

CS: We are beginning to see the land-based operators become more involved in this space with many if not most casino operations now offering some form of social gaming and also beginning to see interest from media type companies as well… I am certain we will see more land based gaming operators make further investments in this model as it is such a great way to engage with customers beyond the casino floor.

TG: Specifically, on the recent deal for Playtika: do you see any correlation with your deal or is that more to do with Caesars' corporate problems at present?

CS: Playtika is a fantastic business run by amazing people with a very strong product portfolio and they had a great early mover advantage and helped to grow the whole social casino category. With a price tag of $4.4bn and a quoted multiple of 16 times EBITDA it would be hard for any business to resist such an offer especially at this time for Caesars corporate.

TG: Is Penn preparing for any further state-by-state regulation or does the social casino strategy mean you can operate without worrying about which state next opens up to online gaming?

CS: We believe that further states beyond New Jersey, Delaware and Nevada will eventually regulate real-money and Pennsylvania came quite close prior to the summer recess. However, social casino games provide a great way to engage with customers anywhere now and help to build a database which could be used in the future for marketing real-money igaming products when they become available, legal and regulated.

TG: Can you see Penn buying in more games development talent or do you think with Rocket you have sufficient scale and creative elements?

CS: We are very focused on growing our business quickly and I am a big advocate of the portfolio based approach as showcased by operators such as Playtika with different studios developing different games and markets. We will definitely continue to invest in this area with our focus right now on Rocket Games and helping them to become as successful as possible.

TG: What other developments in online gaming is Penn viewing with interest? Does it have a view on DFS? Or eSports? Or on the potential for further expansion of sports-betting in the US?

CS: We are interested in DFS as it is an activity that we know a large number of our customers enjoy and there is affinity between our land-based casino’s and sports. We have two sportsbooks in Las Vegas and most of our casinos would have a sports bar which are usually packed for big games. We are watching this area very closely as the regulations in each state are ironed out and also eSports is an area to watch for the future and provides an opportunity for our industry to engage with a different type of customers. 

In terms of sports and given my background from the UK (Sheffield was previously in charge of Betfred’s online business) I still find it hard to reason why sports-betting would not be legalised and regulated in the US given the size of the black market and the opportunity to create tax dollars and jobs for a recreational pastime which is legal in some places such as Vegas but not overall. I am sure the time will come when sports betting will be legal in the US and would be extremely excited about the size of the opportunity for an operator such as Penn.

Totally Gaming says: Penn National already had a toe-hold in the social casino market but the Rocket Games acquisition gives the business a huge boost. As Sheffield points out, Caesars may be exiting the space (largely down to the debt pickle the company has landed in) but the future for social casino remains bright regardless of the name of the ultimate owners. Penn is now an established player but its ambitions for online clearly point to greater ambitions.


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