Pennsylvania-based Penn National Gaming, looking for a recognizable brand for its online casino app and its forthcoming online sportsbook, has made a deal to acquire a 36% stake of the oft-controversial Barstool Sports.
According to a Wednesday company press release, Barstool gets $163 million in cash and stock in the agreement.
The deal calls for Barstool Sports, which has a reputation for a kind of “bro culture” – toxically male, misogynistic, bullying, abusive and sexist – according to accounts in the Washington Post, The Daily Beast, and Business Insider, to serve as Penn’s exclusive gaming partner for up to 40 years.
Penn has national growth and Barstool branding in mind
The deal allows Penn, a relatively staid player in the gambling market, to up its ownership stake in Barstool to 50% in three years and eventually take full ownership, if they so choose. The transaction puts the value of Barstool at $450 million.
Penn National will have two seats on Barstool’s seven-person board of directors. The deal should close in the first quarter of 2020.
Penn, headquartered in Wyomissing, PA, will use the Barstool brand for its online casino – specifically table games – and its planned online sportsbook. Penn’s established Hollywood Casino app will remain, with a focus on online slots. The brand that began as a racetrack in South Central, PA, aims to launch the products with Barstool in Q3.
Jay Snowden, Penn National president and CEO, explained in a statement how they hope to leverage the Barstool Sports audience for their own growth.
“With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database. In addition, with 66 million monthly unique visitors, we believe the significant reach of Barstool Sports and loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs for our sports betting and online products, significantly enhancing profitability and driving value for our shareholders.”
Demographic overlap, but potential clash of cultures
Barstool has a predominately young and male audience, which Penn hopes to capitalize on. The company has multiple marketing deals with sites such as FanDuel Sportsbook and PointsBet.
Barstool operates blogs, podcasts, a Sirius radio show, streaming shows, a free-play gambling section called Barstool Bets, and an online store. And it has a section for women labeled CHICKS.
According to Legal Sports Report, Barstool made an estimated $90 million to $100 million in revenue last year, mostly coming from podcasts, merchandise sales, and gambling deals. Despite the financial success, the company doesn’t have the most upstanding reputation.
Barstool’s founder Dave Portnoy is known for his disparaging comments towards women, even ones working for him. He has refused to apologize for such remarks, justifying them as comedy, made “in jest.”
And just earlier this month Portnoy took flak for anti-union tweets. He eventually agreed to remove anti-labor material in a settlement with the National Labor Relations Board, according to Bloomberg Law.
Still, Barstool’s audience grows with sports and comedy content successfully catering to a particular demographic.
Obvious growth potential with Penn/Barstool combo
In addition to its home state of PA, Penn National is in 18 other US states.
Those with legalized sports betting include:
According to Snowden, the acquisition will help take Penn to a new level in gaming.
“This exciting new partnership with Barstool Sports reflects our strategy to continue evolving from the nation’s largest regional gaming operator, with 41 properties in 19 states, to a best-in-class omni-channel provider of retail and online gaming and sports betting entertainment.”
Jon Kaplowitz, head of Penn Interactive, said the following of the partnership:
“Our team is excited to begin collaborating with Barstool Sports on ways to utilize its key talent and leading content to drive audiences to Penn National’s online gaming products and retail locations, as well as to special events and fan experiences.”
A ‘no-brainer’ for Barstool
Barstool CEO Erika Nardini said in a statement:
“Over the last five years, Barstool Sports has brought its audience, creativity and expertise to the biggest sports betting and DFS operators in the country with great results. The chance to combine our content and fans with Penn National’s massive footprint, and to develop a unique and compelling omni-channel approach together, was for us a no-brainer.”
Portnoy posted a seven-minute video announcing the deal to his 1.2 million Twitter followers Wednesday morning.
Emergency Press Conference – All Aboard the Barstool Rocket Ship pic.twitter.com/NWK2n9PoIP
— Dave Portnoy (@stoolpresidente) January 29, 2020
The acquisition is also good news for the gaming company, Kambi, which also has an agreement with Penn. Headquartered in Philly, Kambi will power the sportsbook that carries the Barstool name.