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Penn National Gaming may have found its national betting and gaming brand along with a media partner in one fell swoop.
The US casino company has acquired a 36% stake in controversial media outlet Barstool Sports for $163 million in cash and stock.
Under the agreement, Penn will be Barstool Sports’ exclusive gaming partner for up to 40 years and have sole rights to use the Barstool Sports brand for online and retail sports betting and online casino products.
The deal also sees Penn up its ownership stake to 50% in three years and then take full ownership if it desires.
The transaction valued Barstool at $450 million.
Penn has been vocal about its desire to find a recognizable brand for the sportsbook and online casino apps it is developing. Barstool Sportsbook will be the brand, and Penn is aiming to launch in Q3, the company said.
Barstool and its young, male audience are clearly a valuable commodity to US operators, as evidenced by multiple marketing deals with the likes of FanDuel and PointsBet.
Barstool made an estimated $90 million to $100 million in revenue last year, according to a Vox.com source, with the majority coming from podcasts, merchandise sales and gambling deals.
Barstool launched a free-to-play format, Barstool Bets, in September last year.
Penn National already has market access sorted, with 41 properties in 19 states and a presence in these states that have legalized betting:
Penn CEO Jay Snowden said the acquisition was part of Penn’s strategy to evolve from a large regional gaming operator to a “best-in-class” omni-channel betting and gaming provider.
“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,” Snowden said.
The exec said Barstool would help the operator reduce customer acquisition and promotional costs, “significantly enhancing profitability,”
The Chernin Group’s stake in Barstool will fall from 60% to 36%, with the remaining 28% held by Barstool employees, including founder David Portnoy and CEO Erika Nardini.
Portnoy said: “This opportunity is a dream of mine and why I started Barstool Sports in the first place. Barstool Sports has a deep sports and gaming history and from the moment we met Jay (Snowden) and the Penn National team we knew this could be an exciting and game changing partnership and we can’t wait to get started.”
From 2018. I called my shot – Pretty Sure These New Sports Gambling Laws Should Make Me Rich Beyond My Wildest Dreams But I Can’t Figure Out How Yet – Barstool Sports https://t.co/QKlaBx2a80
— Dave Portnoy (@stoolpresidente) January 29, 2020
The announcement will be welcomed by Kambi, which has an agreement to provide the sportsbook platform for Penn.
“Kambi will be a partner for a long time,” Penn said on an investor call today. The firm, however, is keen to take ownership of the front-end of its products and has a team of 50 engineers working in Philadelphia.
Penn said it envisaged using multiple brands for online casino, including a Barstool Casino brand that would focus on table games.
“Most successful companies in Europe have several different apps they work with across sports and casino, and I would envisage Penn doing the same,” said the head of Penn Interactive Jon Kaplowitz.
He said brands like HollywoodCasino.com, which is live in Pennsylvania, would be more focused on slots.