Barstool Sports Eyes DraftKings Betting Partnership
Barstool Sports in Talks with DraftKings for a Lucrative Betting Deal
In an unexpected turn of events, Barstool Sports has entered into negotiations with DraftKings to secure a sports betting partnership potentially worth low eight figures annually. This development follows the reinstatement of Dave Portnoy at the helm of Barstool Sports, signifying a new chapter for the company's involvement in the gambling industry.Penn Entertainment Divests from Barstool
The backdrop to this latest move is Penn Entertainment's decision to sell its stake in Barstool back to Portnoy for a nominal fee of $1. This transaction comes after Penn initially acquired 36% of the media entity for $163 million, followed by the remaining 64% for $388 million. However, the strategy to leverage Barstool's brand to bolster Penn's sportsbook did not yield the anticipated results, leading to Penn taking an $850 million write-off on the acquisition.
Subsequently, Penn has shifted its focus and formed a collaboration with ESPN, launching ESPN Bet, which marks their exit from Barstool and a new strategic direction in the sports betting landscape.Lock-Up Arrangement Delays Barstool's Betting Ventures
Despite these developments, Barstool is currently bound by a lock-up arrangement that prohibits the company from finalizing any betting deals until after the Super Bowl. Additionally, Barstool is restricted from participating in the betting industry until the conclusion of the current NFL season. Nevertheless, the company remains committed to making a strong return to the sports betting market once these restrictions lapse.Barstool's Future in Sports Betting
Barstool's intention to re-enter the sports betting fray is clear, with plans to expand its presence through strategic partnerships. The potential deal with DraftKings is particularly noteworthy given DraftKings' substantial investment of $1.19 billion in sales and marketing during fiscal 2022. Notably, this figure represents the first decrease in marketing spend for the company in over three years, coinciding with the end of DraftKings' marketing partnership with ESPN, which has since partnered with Penn for ESPN Bet.Continued Influence on Gambling Culture
Despite the setbacks and transitions, Barstool continues to be a significant player in the realm of gambling culture, offering advice and picks to its audience. As Portnoy remarked, "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."Implications for Penn if Barstool Sells
It's important to note that if Portnoy decides to sell Barstool in the future, Penn will receive half of the gross proceeds from the sale. This clause ensures that Penn retains a stake in the future success of Barstool, despite divesting from the company.Conclusion
As the sports betting industry continues to evolve, the movements of key players like Barstool Sports and DraftKings are closely watched. With Barstool poised to reassert its position in the betting market and DraftKings looking to solidify its standing post-marketing shift, the dynamics within the sector are set for significant changes. Stakeholders and fans alike are eager to see how Barstool's potential partnership with DraftKings unfolds and whether it will usher in a new era of prosperity for the iconic sports media brand.