US racetrack and casino operator Penn National Gaming (PNG) has acquired social gaming operator Rocket Games.
On Wednesday, PNG announced that it had agreed to pay $60m upfront plus a maximum of $110m in potential earn-out payments to certain Rocket Games execs to acquire the social casino business. PNG says the acquisition will be immediately accretive to its operating results.
The San Francisco-based Rocket Games was founded in 2013 by CEO Bill Gelpi and CTO Steven Jian and has since amassed a library of over 50 social casino titles, including Vegas Jackpot Casino, Downtown Deluxe Slots and its flagship title Viva Slots Vegas, which boasts over 200k average daily active players.
The earn-out payments will be based on a multiple of 6.25x Rocket’s future earnings. In the six months ending June 30, 2016, Rocket’s earnings totaled around $5.6m. Eilers & Krejcik Gaming tipped Rocket as 2015’s fastest-growing social casino operator, posting year-on-year gains of over 500%.
PNG CEO Tim Wilmott said the acquisition would build on PNG’s existing social casino products – Hollywoodcasino.com and Hollywoodslots.com – which made their debut last year and are reportedly already turning a profit for PNG.
Wilmott believes there are “meaningful operating and revenue synergies” between its land-based and social businesses “that will drive near- and long-term growth for our shareholders.”
Rocket’s Gelpi logrolled back, saying that “tying our innovative gaming expertise to a traditional casino operator with a qualified database of customers will create unmatched opportunities” for both companies.
Rocket will continue to operate from San Francisco, where it has amassed a 30-strong staff, many of whom were formerly senior execs at social gamers Zynga that were let go following that company’s multiple payroll purges.
Gelpi used to be Zynga’s director of product, while Jian was its principal software engineer. Rocket COO Niko Vuori was Zynga’s Studio GM, while Chief Content Officer Justin Cooper was Zynga’s user experience VP.
