Barstool Hits a Speed Bump in Massachusetts | LSR 174
Penn Entertainment’s Barstool Sportsbook is facing pushback on potential licensure in the state where Barstool was founded. The first numbers out of Maryland online sports betting are here, and they are pretty big. We also take a fresh look at integrity concerns around the UFC and betting.
Full transcript
Matt Brown (00:15):
Hello and welcome to episode number 174 of the LSR Podcast. My name is Matt Brown, joined each and every week by the brightest minds in all of the gaming industry. With me, I have two of the foremost, Dustin Gouker, Adam Candee. You can follow them on the Twitter machine, and you should. It’s absolutely free. Go smash the button, @AdamCandee, two E’s, no Y. @DustinGouker. If you hate yourself, you can follow me, @MattBrownM2. We’ll talk some Maryland stuff, we’ll talk a little bit of a UFC update as well. But, Dustin, let’s kick things off here, with some stuff going on in Massachusetts.
Barstool hits a speed bump in Massachusetts
Dustin Gouker (00:48):
Lots of news in the old Massachusetts, where we are not speeding toward a launch, we’re continuing to turtle walk toward a launch. But, lots of stuff going on. Barstool, for the first time really anywhere in the country, has gotten some pushback on possible licensing. Now, we know Penn Entertainment, or formerly Penn National Gaming, owns a minority stake in this, will own a majority actually, all of the Barstool brand eventually. But Penn owns a track there in Massachusetts. They are hoping to get into this with Barstool, as their sportsbook brand. And, really, again, this is the first time and it surprised me that this is the first time that we’ve seen this, that there were concerns about the Barstool brand brought up. And this is a broken record now, I think on this podcast. This comes out of The New York Times piece, the series of pieces that they did about the regulated sports betting market and specifically, a story done on Dave Portnoy, the founder of Barstool, who is still very involved with everything there.
(01:50):
So, they have questions about the suitability of Barstool as a licensee. They talked about a Barstool college football show — it has college kids at it with alcoholic beverages — that’s pitching the sportsbook product. Just a lot of questions, and this is why I’ve thought it’d be interesting that we never really saw this. Penn has positioned Barstool as the “marketing brand” of the sportsbook and not actually the sportsbook. Even though, I’d say, we’d all argue. That’s just parsings and semantics in large part. So, they’re getting pushback, they’re not yet gotten their licensure. Not many have, but there are some real questions about whether this actually happens or not in Massachusetts. Which, if Barstool does not get licensed in a state, I don’t know, Penn’s going to probably re-evaluate its relationship there and the brand.
(02:44):
Because, if the brand that they have paid a lot of money to promote sports betting for them and to be the brand, doesn’t get into a state and is then causing them issues in getting licensed, that’s bad, that’s a bad scene. Especially, at a place like Massachusetts, where it is one of the few places to seek growth in the sports betting segment in 2023.
Matt Brown (03:04):
So, Adam, listen, we’ve talked ad nauseum about just, Barstool in general and how we thought it was a very curious, basically an acquisition for Penn in the first place. Because, let’s not even talk about just, from what they do personally and whether you agree with their messaging and the frontman and all the stuff like that, but more just the brand in general. Does it resonate with people over the age of what? Twenty-six, or whatever. Twenty-seven, 28, whatever. Something like that. I mean, is there real traction to be had outside of this, in the grand scheme of things, very small subset of people who are of age to legally bet? And a couple of months ago, you guys remember, I went back to Louisiana for the LSU-Alabama game, and I was there, and of course, Barstool is legal in Louisiana.
(03:58):
They built a real nice, new physical book in this casino that Penn owns down there called L’Auberge. And, look, it’s nice, it’s cool, things like that. Anecdotally, however, all of my friends and stuff had been, and just because it was a place to hang out and whatever, not one of them had the app on their phone. Not a single one had downloaded the app and had funded the app, or done anything like that. And so, there was no brand loyalty, there was no brand anything. It was like, “Oh, it’s a place to hang out physically.” But, as far as translating over to, “Oh, I’m going to go download the app, because I’m either loyal, or want to support Barstool, or whatever in the hell it might be. Bonuses, or this, that and the other.” Not a single one had Barstool.
(04:42):
And they’re all of our age-ish, in that age bracket. And I do wonder, just in the grand scheme of things, as Dustin mentioned, not only just from this Massachusetts deal and all that, but just the overall branding, the overall reaching arc of this brand in general, what is the upside? Is the upside what Penn thought maybe, 18 months to two years ago?
Adam Candee (05:10):
Well Matt, it feels like the positive case, the bull case for them, is the idea that this is a demographic that is very willing to part with its money —
Matt Brown (05:21):
Mmm-hmm.
Adam Candee (05:22):
Right? OK. So, let’s say that this theoretically 21 years old, wink — we’re going to talk about that from Ohio in a minute. And up to what, 34? That’s really what we’re looking at here. Probably, a 21-to-34 demographic? That they’re very willing to part with their money. And I remember this from working in the casino industry in Las Vegas, years ago. The problem is, how much money? It’s just not there, right? Especially, in the economy that we’ve been in for the last few years where it has been harder and harder for young people to not only get a job, but to get a well-paying job. That it is difficult to see where the sustainable income is for the group that Barstool is marketing to regularly, right?
(06:05):
And so, what’s the idea? That you constantly churn through 25-year-olds? Right? They’re only going to have so much money in the long run. And if you want to reach beyond that, Matt, you talk about your friends, when it comes to having the Barstool app. Well, I’m someone who, when I go to a state that has legal sports betting, I’ll download any number of the apps, just to see what they look like. But, guess what, I’m so repulsed by that brand and by the frontman and by all the things we didn’t even talk about, that even if their tech was wonderful, I still wouldn’t fund an account there.
(06:39):
And there aren’t many other brands out there in the US sports betting market that are so divisive that they might actively send people away from the brand, based on the things that they do. I don’t agree with every move that every sportsbook in the United States has made. But, let me just say that I didn’t delete the PointsBet app off my phone after what happened in the last couple of weeks, even though I don’t agree with what happened at PointsBet.
Matt Brown (07:05):
This is very true. I mean, it is one of those things where I think it’s the very rare instance in which you would make a choice based solely off of something outside of, like you said, it could be the best offer on the planet, they could have the best tech on the planet, everything that we are sitting here pining for, right? I mean, we constantly talk about, “Man, they’ve got to update these apps. Man, they’ve got to be smoother. These bonuses, everything like that.” And even if it was a 10 out of 10 in every single one of those categories, it’s one of the few ones where you might go, “I’ll still pass, whatever.”
Dustin Gouker (07:39):
Yeah, yeah, let’s —
Matt Brown (07:40):
I’ll pay a few extra pennies at whatever, at MGM, or whatever the hell it might be.
Dustin Gouker (07:44):
Let’s play Adam’s game a little bit. Yeah, because if Barstool was that thing, if it had the best offer, or the best app, it is not any of those things either. So, you have that to overcome. Yeah, everybody else is neutral, or you at least know what the brand is. And then, yeah, Barstool, like it or not, and both Penn knew this. There are people who will probably never download the app and never use it, because of what Adam said. So, you have to overcome that. Yeah, maybe I don’t know, if it’s the greatest app in the world, or had the best live betting and all of that, maybe you can overcome that, but it doesn’t do that. And I’m going to tease ahead to Maryland, too, since we have the first numbers there. Again, Barstool, they’re supposed to, day one, convert all their customers into sports bettors, right?
(08:28):
OK, they got 3% of the handle share in Maryland in week one, after their launch of online sports betting. To be fair, that is the number four entrant in that, well behind DraftKings and FanDuel. But, the value proposition in Barstool was like, “OK, you don’t have to spend a lot on marketing and you’re going to get a lot of people betting on the app.” And there’s just nowhere where that’s happening. So again, they’ll say they’re getting profitability, but profitability on what scale? Whoop-de-doo, I think. I don’t know, the Maryland numbers underlined everything we’re talking about here, is the ceiling for Barstool at this point feels pretty low. And I don’t know how that ceiling improves.
Matt Brown (09:05):
And again, this isn’t us just piling on Barstool. But I did want to talk about one last thing on all this, or whatever is again, anecdotally and just talking to a couple of different people who do have access to whatever. Big time gamblers are always going to go where they’re going to get the best number and the best whatever. So, listen, come hell or high water, if Barstool ended up with a line that was off market on game X, Y or Z, people who are betting a lot of money are going to go there regardless; it doesn’t matter. If you’re a casual bettor and you’re casually betting and it doesn’t really matter the difference in a 110 or 112 or a 115, or a half point here and there and things like that. One of my friends was like, “I just would feel like a goober if I was betting at Barstool.”
(09:53):
Literally, it was one of those things where he is like, “If I have the choice of, do I play at DraftKings or play at Barstool, I’d rather just play at Draft…” So, there’s also that too, right? Where there’s just, “I’m 40+ years old, and I don’t want to open up a Barstool app and tell people I’m betting at Barstool.” He’s like, “I would just feel like I was trying to relive my early 20s, or something, or whatever.” So, there’s even that to overcome, Adam.
Adam Candee (10:19):
Well, let’s hope it’s your early 20s, Matt, because I teased what was going on in Ohio, and we have a story by Matthew Waters that just went up at Legal Sports Report right now, where maybe it’s the younger crowd that we have to worry about too, because quote from a letter from the Ohio Casino Control Commission, “On November 15th, Barstool hosted the College Football Show on, or targeting the University of Toledo campus. In that show, Barstool advertised Barstool’s sportsbook by promoting preregistration for the Barstool Sportsbook, including the offering of bonus cash, related to sportsbook preregistration, advertising failed to comply with Ohio law.” So, to what Dustin was saying, this whole idea that we are just going to walk in and convert everybody who’s part of the Barstool ecosystem, clearly isn’t true.
(11:07):
Because, here they’re out there pushing this to a group of people that could be 18, could be 19, could be 21, but either way clearly, is not engaged enough with the Barstool product all on their own, that they still feel the need to walk onto a college campus and do something that put them at great risk and potentially according to the OCCC, a $250,000 fine.
Matt Brown (11:29):
So, Dustin, before we get off of Massachusetts here and move on to the full story here on Maryland, who do we know that is approved there in Massachusetts? Even though, we don’t know of a launch date quite yet, but who do we know is going to be available there?
Dustin Gouker (11:43):
Yeah. First online operator to be approved, WynnBET. Not shocking there, with a casino there in Massachusetts. Well, so they’re the first one, they got unanimously granted on Tuesday. So, we know at least one app that will be there. Certainly, we believe a lot of the other major apps that we all know and love, or have at least heard of, or have not heard of, some of those will also be in Massachusetts. Two, we are still waiting on launch dates for Massachusetts. Again, the most recent intel we have, March 2023 is still sitting here as a target date, but we’re starting to wonder if we don’t have a launch date, we’re, in theory, three months away from that. We don’t have a formal launch date that has been promised. And the way things are going again, it’s how slow things are going. This meeting for WynnBET, just WynnBET, was six hours. And God bless the people on Adam’s team are sitting here watching these Massachusetts Gaming Commission meetings, because they’re hours and hours every freaking time.
(12:43):
So, how slow this is going, starts to make you wonder, are we really going to see this in March? Or is it going to get pushed back?
Maryland online sports betting numbers are out
Matt Brown (12:51):
All right, Adam, we talked a tiny little bit there about Maryland. But what do we see from Maryland, as a whole here, on the early numbers?
Adam Candee (13:01):
Big early numbers from the state of Maryland, which launched online sports betting right before Thanksgiving. We get the first nine days in Maryland, with more than $183 million in handle. Now, that’s obviously an enormous number when you play that out to a full month. But, keep in mind, when we talk about that, we are talking about more than a third of that handle coming from free bets, from promos being offered by sportsbooks. So, in some states we hear, “We’re pulling back on promos. We’re not going to be going as heavy as we were.” And then, we see nine days in Maryland with $63 million in free bets handed out by the sportsbooks. The share looks exactly like you would expect it to, with FanDuel and DraftKings out front in Maryland.
(13:46):
It’s obviously a state that, while it doesn’t have the same population as some larger states, it is high per capita income in Maryland. And as we’ve talked about, there is pent up interest from the DC area from Marylanders who might be going into DC for work, who have not had access to a good product, because of how bad things have been with Gambet in Washington, D.C.
Matt Brown (14:07):
Yes, this was an interesting one for me, as I was reading over this. I mean, I expected big numbers. I guess I didn’t expect as big as we saw here, Dustin. I mean, Maryland is one of those states where we were looking at and certainly thinking that it would be one of the markets we’d be paying a lot of attention to. But, I understand it’s new and I understand we’re in the heart of football season and all that. But I think even if you gave the truth serum to the operators themselves, they’d say, “Oh, those are pretty good numbers.”
Dustin Gouker (14:39):
Yeah, definitely. I think we’re, maybe not surprised, but it’s a bit on the top end of what everybody would expect, in terms of how much money we’ve seen from Maryland. Certainly, yeah, been primed, been getting ads from Virginia, DC, Maryland has been aware of this coming. And maybe, this long, long run-up from Maryland, there’s some pent-up demand, right? They knew this was coming, finally get it, finally get the sportsbook apps that they want and there you have it. You see that. Obviously, a lot of this is in promos and people continue to spend a lot on upfront acquisition of these players to get there. So, with all these promo credits, so …
(15:20):
Yeah, interesting. Certainly, it seems like it’s over-index versus other launches, maybe outside of Arizona. Even though, it was heading into Thanksgiving; maybe we’ve never actually had a launch going right into Thanksgiving. There’s a lot. You have some downtime, you have some NFL games to bet on. Maybe it wasn’t the worst time to do this, even though it is heading into a holiday. So yeah, super interesting stuff in the Maryland, and it’ll be interesting to see how these other launches come up, how some unique timing on that too, we’ll see how those do.
Matt Brown (15:49):
Adam, maybe we need to do some content on the site about four novice Maryland bettors that had been going over into DC and explain what -110 actually means. I am —
Adam Candee (16:01):
Yes.
Matt Brown (16:04):
Sure that they … We might need to put that out there.
Adam Candee (16:05):
We might want to do that. We might want to make clear that you don’t have to wager $15 to win $10 on your standard bet every single time. Also, didn’t hurt Maryland to launch into the foosball with the World Cup, so that was big too.
UFC betting update
Matt Brown (16:20):
All right, Dustin, let’s head over to the UFC and this is a story that has been brewing here for a few different weeks. Of course, up in Canada we started to get the word that maybe, there was going to be something coming down against MMA betting, just in general. I don’t know how much you guys hit on this last week when I was out, but a quick refresher on what’s going on there.
Dustin Gouker (16:42):
Yeah. And I think I’m going to quickly pitch it back to you. Because I think Adam and I, and certainly our listeners, would like to hear, you have the background in MMA, you see and know all this. I’m really curious what you think and what you make of all of this. But, in the latest news, ESPN reported, after talking to UFC President Dana White, that he’s backed off the pos… He was saying, “There was zero proof of any match fixing here.” But now, he’s at least softened that stance. He says that, “Integrity of this match is a huge concern. Now, there’s an investigation, it could be possible that it happened.” From White. So yeah, this comes out of an MMA coach, James Krause, who was actually famed for betting on UFC matches and had a Discord about it, I believe.
(17:31):
The fight in question involves Darrick Minner, who came out beforehand, I believe that he was injured and that information getting passed around was originally what was thought to be why there’s all this suspicious betting activity now. Nobody in the US has actually banned betting on the UFC, but we did have Ontario and Alberta do so. Alberta backed off of that, has reinstated. Ontario, still off the board in Ontario. But it all adds up to not a great look. And I’ve been pointing out, UFC has been behind on this, maybe it’s because it’s a Vegas-based promotion and that Vegas is so ingrained in it, didn’t maybe take this as seriously.
(18:12):
Just in October, they said athletes can’t bet on matches, which I think we all agree in the regulated landscape, that was late for all this and it fostered this, where we find ourselves today, where people are calling into question whether UFC fights are all legitimate. Certainly, most are, all really are. And we have this one example. But, it lends itself to this air of illegitimacy. And I’m curious, you’ve digested all of this and talked to a lot of people about it. Where do you see it all standing right now?
Matt Brown (18:41):
Yeah, it’s very interesting, because there are really only two sports in which this can really take place, right guys? It’s tennis and MMA, where there are literally two people that are head-to-head, where there is one winner and one loser, and then you move on. I’ve heard people jump up and down and say, “Well, golf is an individual sport.” And it’s like, “Yeah, well if you find out that a golfer’s got a back injury, there’s 100 other guys that are teeing it up and 100 other guys that can win the golf tournament. So, it doesn’t really matter all that much in the grand scheme of things when it comes down to it, right?” And so, it really is tennis and UFC, where it’s mano a mano, one guy wins, one guy loses. You bet on one guy, the other guy, whatever and things like that.
(19:13):
And so, we’ve heard about it in low-level tennis, of course. High-level tennis, not really. Again, too much at stake for any of the shenanigans to happen and things like that. And in the UFC, with it being merit-based and stuff, we hadn’t really heard of a ton of this. And I don’t believe in … I’ve asked around a ton, to not only managers and fighters and things and stuff like that. I don’t think there was match fixing by any stretch of the imagination, but I do believe that information was getting out, right? And the thing, is it’s not necessarily match fixing, but if you know that a dude is entering with whatever, an MCL injury, or you found out that whatever, broke this, that and a finger three weeks into camp. And anyway, there’s all these different little things that can get out.
(20:13):
Hell, it could even get out a couple of days before, that a person had a miserable weight cut even, right? And so, there is information that is very, very valuable to a bettor in a contest such as fighting specifically, that is a one-on-one sport and stuff like that. And so, look, I’ve talked to several managers since this, so it’s not only fighters that can’t bet. It’s all managers, all the whatever. So, it’s a blanket across the board now, any of that stuff. So, of course, that needed to be done in the first place. And I think now moving forward, there might even have to be a la NBA, NFL type stuff, or there might need to be injury reporting stuff go on within UFC.
(20:55):
And then, figuring out a way to weigh in advance, guys have to get medically cleared six weeks out of a fight, as well as leading into a fight and things like that. Because, these injuries, and … This also, stems to a much larger conversation, in which we can have and the fact that a lot of these guys, if you’re saying like, “Oh, well these guys are scumbags” and stuff like that. It’s like, “No, no, no, no, that’s not what we’re saying. What we’re saying is because these guys don’t make a salary, you have to go fight injured, because that’s the only way you make money,” right? And so, you pull out of a fight, you make no money. So, it’s not these guys are necessarily being scumbags, fight, whatever and all that. It’s more that, “Hey, I can’t help it that I tore my MCL. I have to go make that minimum money, because that’s what I need to live and pay bills,” right?
(21:46):
And so, it’s even a larger conversation with the sport and in general and stuff. And so, look, if you think that there’s anything going on and if you’re nervous about all that, I mean, you can just stick to the main card fights where these guys are making more money and are more prone to pull out of a fight and stuff, if they do get injured and things like that, because they’re not as hard strapped for cash and stuff, as some of these guys on the undercards and whatnot. But it is certainly something … And Adam, I mean I know you tangentially, just working in sports in Vegas and with some of the content stuff that you do as well, know how this all works and stuff. And it’s very interesting to me the changes that I think will be necessary moving forward from this.
Adam Candee (22:31):
When you talk about the injury reporting, Matt, I could go off on that for… I mean, it could be its own podcast, right? If we’re going to talk about the legal sports betting era in the US, the one thing where I would be an advocate for some blanket reform, would be for standardized injury reporting across all sports, college as well. Because, when we talk about the partnerships that are involved and the integrity concerns that are involved, it’s like we talk about here with UFC, then that would definitely go a long way toward feeling like there’s some level of transparency, that doesn’t exist right now. I think, I would add in, even though it’s not a popular sport like it used to be, boxing along the same lines, Matt, is what you were talking about with tennis, with UFC. And with boxing and I think, I bring it up to say, this is not a new concern, right?
(23:20):
The idea of a fighter taking a dive is not a new concern. We’ve been dealing with this, from boxing, for a long time. And when it comes to UFC, obviously you just did a fantastic job of detailing all of the reasons why a fighter has to fight, all of the information that could potentially get out. And when it comes to how it happens within the scope of people who are in that sphere being able to bet on it, then I think that the sportsbooks, you don’t want them to see where they have to feel like UFC is a sport that needs lower limits, where it’s a sport that they don’t feel as confident booking. That’s the thing you just don’t want to happen. I want to bring up one other point, when it comes to this though, and this is not meant to specifically rebut David Purdum from ESPN, but it’s a concept that people were discussing on social media and the idea that this was the big integrity concern, that all of the major sports leagues were worried about.
(24:20):
I disagree entirely with that idea. This is not that. This is not even Tim Donaghy, the NBA referee who was betting on his own games. This is completely different, and Matt just brought up the point and I’ll throw it back to you on this Matt. It’s one-on-one situations, versus team sports, versus team sports that have had prohibitions on their own athletes being able to bet on their sport and people in the sphere, for a long time.
Matt Brown (24:44):
Yeah, no, absolutely and I think this will also … And while a lot of this is going to fall on the UFC to figure out how to deal with this moving forward, I think the sportsbooks probably, behind the scenes, are going to be wondering how to deal with this as well. Maybe, even from a KYC perspective, or whatever. I don’t know how exactly you can get people to give you accurate information, what their profession is, or whatever, things like that. I mean, if you find out a guy is an MMA coach, or in a gym with UFC fighters and stuff, I don’t know. I think, it’s probably one of those things where, more times than not, these books probably just would rather pass on their business, right?
(25:23):
I mean, it’s not worth it in the long run. I know one guy, or a handful of guys that are in an industry, are going to make or break any of these sportsbooks and stuff. And so, I think that there’s some of that stuff maybe even happen, that will come down the line, right? Where, just as we enhance our KYC stuff and things like that, that these guys that may or may not have information, may or may not share information. Hey, it’s better that we just go ahead and say, “You can’t do it, no matter what.”
Dustin Gouker (25:50):
And I’ll just add this, too, because this gets lost in the wash. This got caught because of the regulated market, right?
Matt Brown (25:56):
Right.
Dustin Gouker (25:57):
Because, sportsbooks saw this, I mean, we’re probably going to forget this now. But this would not have come to light, this was going on in the background, if it’s in offshore books —
Matt Brown (26:05):
Yup.
Dustin Gouker (26:06):
And maybe not. Maybe Nevada just catches it, but sportsbooks pointed out that, “Hey, there’s irregular betting patterns.” This is part of the value of the regulated market, so far from being the boogeyman. This did what it’s supposed to do. We found out that passing information in a way that wasn’t right. And I’ll just piggy-back, too, I totally agree with you guys. This injury reporting, these guys, especially … If you go into these fights, you need the paycheck. I know that for a fact, but they’re not doing this, because … You’re right. Because, they’re bad guys. They’re just trying to get the paycheck. But, there should be some onus on the league itself to make that like, “OK, this guy’s going to fight, but you know what? He’s not fully healthy.”
Matt Brown (26:50):
Mm.
Dustin Gouker (26:52):
Or the UFC starts putting up actual money, the guy has to pull out, so that we avoid this. Because, yeah, right now the optics are worse than the result.
Matt Brown (27:00):
Yep, I agree. And that’s the thing with injury reporting, I mean we do it, whenever we watch, with any other sport. And I think Dustin made a perfect point right there, where it’s like, it doesn’t necessarily mean if a guy is going to go in with some nagging injury, or some injury, that he’s mandated to pull out. It’s just, that information just needs to be known. No, I mean, just the same way that a quarterback is questionable and whatever, or you know that wide receiver X, Y, Z is going to try to play through an ankle sprain, or whatever. But, at least that heading in, and you then at that point, the books can choose to either pull the fight off or move the odds so incredibly that no one’s going to want to bet, whatever it might be. But, as long as the information is public, I think that’s where we all stand on this. We’re not trying to take food off these guys’ table and say like, “No, you definitely can’t fight and you definitely whatever.” But, just the information, just needs to be known.
Dustin Gouker (27:52):
No argument.
Matt Brown (27:54):
Guys, everything we do, here on this podcast, you can find over at legalsportsreport.com. Please go in, take in all of the great words and the time that Adam and company are putting in over there. If you have not seen the fresh new design, please go ahead, let us know what you think about it. Slip on in to Adam’s DMs, if you don’t mind. And we would appreciate any feedback that you have on that, as well. If you haven’t already, subscribe, rate, review over on the audio side of things. And if you’re watching us over on the YouTube, hello, this is what we look like, and down below you can hit that subscribe button. We do appreciate that as we try to grow the video side of everything as well. You want to follow Dustin on the Twitter machine, @DustinGouker. You want to follow Adam, @AdamCandee, two E’s, no Y. For Adam, for Dustin, I’m Matt, talk to you guys next week.