When people hear that we at Plannatech Group acquired Out the Gate/Prime Sports out of bankruptcy, the first question is usually some version of: “Why would you do that?”
It’s a fair question. The book failed. The previous owners ran out of money. Investors stopped writing checks. By any conventional measure, this was a cautionary tale, not an opportunity.
My answer is that they’re looking at the wrong variable.
The model wasn’t broken. The overhead was.
When I started doing due diligence on Out the Gate, I wasn’t looking at the brand, the technology, or the customer count in isolation. I was looking at the cost structure. And what I found was a story I’d seen before — not just at Out the Gate, but across the U.S. sports betting industry at every level.
I should be upfront about something: Plannatech wasn’t an outside bidder looking at a data room. We were Out the Gate’s B2B trading and player account platform from its inception. So when I say I’d seen this story before, I mean it literally. We had a front-row seat to where the journey wasn’t being optimized, and yes, that view informed the decision to buy. It also means some of what went wrong happened on our watch as a vendor, which I’ll get to.
Expensive market access. Big salaries. A generic/whitewashed marketing spend. The expensive lunches and the startup atmosphere that comes when you’re building a company on someone else’s money and growth is the only metric anyone’s watching. None of that is unique to Out the Gate. It’s practically a template.
I’ve written elsewhere about the big brands — the Fubos and TwinSpires of the world — that spent themselves toward market positions that never turned profitable and ultimately walked away. Out the Gate was the same disease at a smaller scale. The capital structure assumed a growth trajectory that the market didn’t deliver fast enough, and when the checks stopped coming, there was no underlying unit economics to fall back on.
But here’s what I also found: green shoots.
The book lost roughly a million dollars on the sports betting side in its last full year of operation. That number sounds damning until you start pulling it apart. My estimate is that at least half of that loss came from trading errors — bad lines, inadequate oversight on the risk management side, the kind of mistakes that happen when the trading operation isn’t properly resourced or supervised. That’s not a market problem. That’s a fixable operational problem. Some of that, I’ll be honest, was on Plannatech’s side too — we had involvement, and we didn’t catch it early enough. I’m not absolving us.
But “fixable” is the key word. A business that loses money because its lines are wrong is a fundamentally different problem from one that loses money because nobody wants the product.
What I actually saw
The foundation was there. The licenses were real and hard-won. The technology bones were in place. The states were right — New Jersey as the crown jewel, Ohio with its professional and college sports culture sitting just across the Pennsylvania border, and Kentucky squarely in the horse racing world that I know well and want to spend more time in.
What was missing was customers. Full stop. And while that sounds like a devastating diagnosis, it was actually clarifying. Because the question then becomes: Can you acquire customers more efficiently than the previous operators, with a leaner cost structure, at a market access price that makes the unit economics work?
I believed the answer was yes. If we could reduce overhead by 40-50% and renegotiate market access costs to less than half of what the previous structure carried, the numbers would change materially. Not to DraftKings’ scale. But to a sustainable, profitable, growing scale — which is a different and in some ways more interesting target.
The honest answer about competition
I’m not going to pretend this is easy.
We are competing against companies with marketing budgets that dwarf our entire operation. We’re competing against brick-and-mortar casinos with established customer relationships and physical footprints. We’re competing in states where the regulatory cost of doing business is significant and the customer acquisition economics are brutal.
Many operators with more capital and more brand recognition have tried and failed. The graveyard of U.S. sports betting is full of serious money and serious talent.
So what makes us different? I’ve thought about this a lot, and the honest answer is probably not what you’d expect from a CEO. We’re bookmakers. Some of us are bettors. We understand the product from the inside, we understand risk, and we have decades of experience in trading and operations across multiple jurisdictions. We’re not a tech company that decided sports betting was an interesting vertical. We’re not a media company looking for engagement. At our core, we are people who understand how a book actually makes money.
I’m not going to name the trading team, and that’s deliberate. In this business, the trading floor is the secret sauce, and I’m not handing anyone a roster. What I will say is that I’ve spent 30 years setting odds and managing risk across more jurisdictions than most operators will ever file paperwork in, and the people around me have similar mileage.
That’s not a marketing pitch. It’s just the truth of what we are.
The verdict is still being written
For context on the clock we’re working against: Out the Gate went live in Ohio, its first state, in September 2023. The bankruptcy court approved our purchase on May 20 of this year. So the previous operation had less than three years of runway before it ran out, and we’ve had the keys for a matter of weeks.
We’ve already seen the thesis start to play out. The first quarter of this year showed real movement on the expense side and early signs of the trading operation running cleaner. The World Cup window was tighter than we wanted — that’s the subject of another column — but we’re heading into a full football season with the infrastructure in place.
By the end of this football season, we’ll know whether this worked. And let me define that, because “worked” shouldn’t be a word an operator gets to leave vague. It means we can see where the growth came from and how much of it there is. Whether one state is carrying the numbers or all three are moving together. Whether the transition landed at the level we hoped, or whether it needs adjusting.
That last word matters. There is no exit plan. If the numbers come in short, the answer is adjustment, not exit. We didn’t structure this deal for a quick way out. But I’m clear-eyed that the market will tell us, and I’m not going to pretend otherwise.
The reason I bought a book that failed isn’t that I thought failure was fine. It’s that I thought the failure was misdiagnosed. The model was never the problem. And if the model was never the problem, then the question was always whether the right operators, with the right cost structure, at the right moment, could make it work.
We’re in the process of finding out.
Adam Bjorn is CEO of Plannatech Group, the parent company of Prime Sports (New Jersey, Ohio, Kentucky) and Betcris Arizona.
