Out The Gate Inc., Prime Sportsbook’s parent company, has filed for Chapter 11 bankruptcy as a pending deal with sports betting technology platform Plannatech USA. Plannatech provides the tech stack for the Prime Sportsbook app that is live in New Jersey, Ohio, and Kentucky.
The bankruptcy filing is intended to help Out The Gate reorganize its balance sheet and conduct a sale process after failing to achieve profitability. According to the bankruptcy filing, the company entered Chapter 11 with roughly $51 million in secured debt split between two lenders. Plannatech USA is holding about $4 million in first-lien debt. Neapeg Investment LP is holding approximately $47 million in second-lien obligations.
Neapeg, according to the filing, has agreed to subordinate its position to Plannatech to facilitate the preparation of bridge financing. Plannatech has also agreed to provide up to $6.5 million to fund the Chapter 11 process, support ongoing operations, and facilitate restructuring or sale.
When news of a bankruptcy hits, customers may immediately look to withdraw funds and switch to another sportsbook operator. There are likely concerns regarding whether Prime Sportsbook, even with a pending sale, will survive once the restructuring is complete.
Prime emailed customers earlier this week reassuring them it will continue to operate as usual. Deadspin obtained a copy of the email. It reads:
“We’re going to be very transparent. Our company has entered bankruptcy – not because we’re giving up, but because we’re taking charge. This move lets us cut unnecessary costs, rebuild the structure, and bring in new investors who believe in what we do and where we’re headed.”
It goes on to state that balances, wagers, and future winnings “are all 100% secure and guaranteed.
As far as Prime Sportsbook’s future goes, the company is working directly with regulators, vendors, and partners to make sure “we come out the other side of this even stronger.”
“Our goal is simple: stay true to the players who’ve backed us, and come back with the same edge and energy that made us who we are.”
By the time parent company Out The Gate entered the NJ sports betting landscape in 2024, the majority of the New Jersey sports betting apps had established customer bases. It’s the most mature of the U.S. markets. Prime is one of 13 sports betting apps Garden State users can choose between.
Prime Sportsbook went live in Kentucky earlier this year and has been live in Ohio since October 2023. Being available in only three states pales in comparison to FanDuel, DraftKings, BetMGM, Caesars, and bet365, all of which are live in at least 15 jurisdictions. The count does not include the Missouri sports betting market that is launching Dec. 1.
Looking at September’s revenue results from the New Jersey Division of Gaming Enforcement, it’s easy to see that Prime Sportsbook is struggling to compete against the likes of DraftKings, FanDuel, BetMGM, and others.
Not including October, Prime’s year-to-date sports betting gross revenue from Garden State gamblers is only $1.49 million. FanDuel Sportsbook is the market leader at $318.5 million followed by DraftKings at $222.4 million. BetMGM is currently ranked third with $56.9 million.
Bally Bet and betParx are two other brands that have produced under $2 million in year-to-date sports betting revenue. Both brands, however, can cross-sell customers as a result of having online casinos built into their platforms. Prime is strictly an online sports betting product without a land-based presence to help build brand recognition.
