Penn CEO Says This State Is Next Up For Barstool Sportsbook Launch

Posted on February 4, 2021
Barstool Sportsbook
Posted By on February 4, 2021

Penn National says its investment appears to be paying off with low customer acquisition costs for Barstool Sportsbook and younger customers.

Penn’s stock dipped briefly in pre-market trading Thursday as earnings per share estimates missed analyst expectations. That quickly turned around as investors digested its earnings presentation and full results.

Only two business segments saw adjusted EBITDAR growth in the fourth quarter of 2020. Those were the southern segment, which was least impacted by restrictions from COVID, and the segment including Barstool Sports.

Penn CEO Jay Snowden expects a much quicker rollout pace of its Barstool Sportsbook app this year. That’ll start with Illinois, with Penn hoping to launch before March Madness. The app will then launch in new states every three to five weeks with at least 10 states live this year, he said.

Snowden sang Barstool’s praises and reiterated the brand’s strength in the US sports betting market:

“What I think you should assume is that we are going to be top three, we said that before we ever launched and we’re delivering on that. We’re going to be profitable faster than anyone else, and we’re delivering on that and continue to deliver on that pledge, again, faster than anybody else.

“And as we scale, we just end up with a lot more dry powder to be more aggressive in the areas of widening that funnel and customer acquisition that we believe is driving the best return.”

Barstool Sportsbook acquiring customers at industry lows?

Ever since Penn invested $163 million for 36% of Barstool Sports early last year, the company talked about how customer acquisition could look different and cost less given Barstool’s user base. It’s reported to be 66 million monthly visitors.

So far, that’s proving to be more than true. It can cost sportsbooks anywhere from $300 to $800 to acquire a sports betting customer, Snowden said. But that’s not what Penn’s paying.

“For Penn, so far from the first four months in PA, despite all of the Barstool Fund matching that we’ve done as well as in Michigan in our first month, we are well below the bottom end of that range,” Snowden said. “We have so much room, we have so much cushion to be opportunistic and figure out what we want to do and how we want to do it.”

Even with the more than $3 million donated to the Barstool Fund from Michigan’s first weekend, customer acquisition costs are still less than $200 each, he added.

Penn also “dabbled” with some TV ads in Michigan and Pennsylvania during the AFC and NFC championship games. The company was happy with those returns, Snowden said.

Barstool Sportsbook has different Super Bowl plans

Snowden praised Barstool’s plans to drive Super Bowl bets this weekend that its competitors can’t really replicate.

Five personalities from Barstool will bet throughout Sunday to see who can win the most money. Bettors will be randomly assigned to one of the five teams by betting $100 on any Super Bowl wager.

Whichever personality comes in first will win everyone on the team $1,000 dropped into their account.

“Those are ideas that no one else really maybe has thought of, but more importantly they don’t have the people and the following within their media partnership that it would even make a difference,” Snowden said.

Penn Interactive could be profitable – with this twist

Penn lumps its interactive business into its “other” segment, which includes a mess of line items like corporate costs. The segment saw a significant improvement of a loss of $1.3 million in the fourth quarter. That was up from a $21.7 million loss in the prior year.

“What you see in that other line is that you’re seeing really early on profitability,” Snowden said. “I’m not telling you that you should expect that every quarter because we may decide that as we launch we want to be more aggressive.”

In other words, where most sports betting companies are burning cash to acquire market share, Penn’s segment could be profitable this year. It’ll more likely break even for the year considering marketing pushes in new markets, Snowden said, but should be profitable in 2022.

Next states for Barstool Sportsbook

Illinois was an easy choice for the next launch, Snowden said. Chicago has the second-highest Barstool Sports following behind only Boston and there aren’t any other states launching anytime soon.

Snowden said 10 states simply because that’s what launching in the currently available markets like New Jersey, Tennessee and West Virginia would equal by the end of the year.

Those launch plans could change if other new states move quickly, he added. If a state like Massachusetts or Texas legalizes this year and fast-tracks its market launch, Snowden said Penn would shuffle plans to make sure it was on the starting line in a new market.

Retail sportsbooks see boost from Barstool brand

The Barstool Sports fans known as Stoolies aren’t just flocking to the brand’s online sportsbooks. Snowden said all of the sportsbooks rebranded under the Barstool name saw “very strong results” after the change.

Indiana‘s retail sportsbooks reported record handle, revenue and EBITDAR in the fourth quarter, especially after the rebrands, he added.

Ameristar East Chicago, for instance, saw handle jump 35% in the four weeks after its rebrand compared to the previous six weeks. The table games and slots in the adjacent Barstool-themed gaming areas also saw handle jumps of 27% and 26%, respectively.

Those retail rebrands will continue throughout 2021, starting with Pennsylvania in the first half of the year.

Younger customers coming for Barstool brand

Remember that sports betting is rarely going to be a significant financial boost by itself for any operator. Its use as an acquisition channel is far more critical with those customers hopefully playing at higher-margin table games and spending more at non-gaming amenities.

Snowden called January’s trends encouraging with retail sportsbooks positively impacting gaming and non-gaming revenue, especially with a key demographic.

“We are continuing to see encouraging growth in the younger demographic tiers of our database, and we believe the rollout of vaccinations will encourage more guests in all age segments of our database to return to our land-based facilities soon,” Snowden said.

Matthew Waters Avatar
Written by
Matthew Waters

Matthew Waters is a reporter covering legal sports betting and the gambling industry. Previous stops include Fantini Research and various freelance jobs covering professional and amateur sports in Delaware and the Philadelphia area.

View all posts by Matthew Waters
Privacy Policy