Barstool Sports in Negotiation with DraftKings for Betting Partnership
Barstool Sports Eyes Lucrative Deal with DraftKings Amidst Ownership Shake-Up
In a surprising turn of events, Barstool Sports is back under the control of its founder, Dave Portnoy, and is currently in talks with DraftKings to secure a sports betting partnership potentially worth low eight figures annually. This development comes as Barstool prepares to reassert itself in the sports betting market, despite being restricted from finalizing any deals until after the Super Bowl due to a lock-up arrangement.Penn Entertainment Divests from Barstool
The path leading to these negotiations has been unconventional. Penn Entertainment, previously known as Penn National Gaming, sold their stake in Barstool back to Portnoy for a nominal $1. This transaction marked a significant change in strategy for Penn, which had originally acquired 36% of Barstool for $163 million before purchasing the remaining 64% for an additional $388 million.
Penn's initial plan was to leverage Barstool's brand to bolster their own sportsbook. However, this strategy did not yield the expected results, prompting Penn to pivot away from Barstool and instead partner with ESPN to launch ESPN Bet. The failed venture led to an $850 million write-off for Penn, reflecting the stark discrepancy between their investment and the realized value of Barstool.
Despite relinquishing ownership, Penn will still benefit from any future sale of Barstool, entitled to receive half of the gross proceeds.Barstool's Betting Industry Ban and Future Plans
Currently, Barstool is prohibited from engaging in the betting industry until the conclusion of the current NFL season. However, this has not dampened the company's ambition to dive back into the sports betting arena. Barstool's reputation for providing gambling advice and picks remains intact, and there are plans to expand its influence through strategic partnerships once the ban is lifted.DraftKings Slows Marketing Spend as It Ends ESPN Partnership
DraftKings, a potential key player in Barstool's comeback, has invested heavily in sales and marketing, with expenditures reaching $1.19 billion in fiscal 2022. Notably, this marks the first time in over three years that DraftKings has reduced its marketing budget. The company also recently ended its marketing partnership with ESPN, which coincidentally partnered with Penn for ESPN Bet following the latter's divestment from Barstool.Looking Ahead: Barstool and Sports Betting
The sports media landscape continues to evolve rapidly, with Barstool Sports at the forefront of these changes. As the company positions itself to re-enter the sports betting market, it faces both opportunities and challenges. The potential partnership with DraftKings could be a significant boost, offering a new revenue stream and reinforcing Barstool's presence in the industry.
In light of these developments, Portnoy has expressed confidence in Barstool's role within the sports betting sector. "I would still argue that [sports betting] is a huge part of what we do today. Our crew bets obsessively on games, we always have... But I think you'll see, into next year, that we start to establish ourselves back in that space," he stated, signaling a clear intent to regain a foothold in the competitive market.
As the end of the NFL season approaches, all eyes will be on Barstool Sports to see how the company navigates its return to sports betting and whether the anticipated deal with DraftKings will come to fruition. With its founder back at the helm and a renewed focus on strategic partnerships, Barstool is poised to make a significant impact in the ever-growing world of sports betting.