Barstool Sports in Talks with DraftKings for a Lucrative Betting Deal
In a significant move within the sports media and betting landscape, Barstool Sports is currently in negotiations with DraftKings over a potential sports betting partnership. This deal could prove to be financially rewarding for Barstool, with early figures suggesting it may be worth low eight figures annually.
The discussions come after Dave Portnoy, the company's founder, regained control of Barstool Sports. The change in ownership follows Penn Entertainment's decision to sell their stake back to Portnoy for a nominal fee of $1. This transaction marked a notable shift from Penn's initial investment strategy, where they purchased 36% of Barstool for $163 million before acquiring the remaining 64% for an additional $388 million.
Penn Entertainment Changes Course
Penn Entertainment's initial aim was to leverage Barstool's brand to bolster their own sportsbook operations. However, this approach fell short of expectations, leading Penn to partner with ESPN to create ESPN Bet, a new venture into the betting arena. As a result of these developments, Penn took an $850 million write-off from the Barstool acquisition.
Despite relinquishing ownership, Penn will still benefit if Portnoy decides to sell Barstool in the future, as they are entitled to half of the gross proceeds from any potential sale. In the meantime, Barstool has been temporarily sidelined from entering into any new betting deals until after the Super Bowl, due to a lock-up arrangement. This restriction aligns with the broader prohibition that bars the company from participating in the betting industry until the conclusion of the current NFL season.
Barstool's Ambitions in the Betting Market
Barstool Sports, known for its bold and influential presence in sports media, has not shied away from expressing its intentions to re-establish itself in the sports betting market. "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," said a representative from Barstool. The company continues to offer gambling advice and picks, signaling its ongoing commitment to the betting sector.
As part of its strategy to expand its footprint in the betting industry, Barstool is exploring partnerships, which would mark a return to form for the brand. The potential collaboration with DraftKings is particularly noteworthy given DraftKings' substantial investment in sales and marketing, totaling $1.19 billion in fiscal 2022. Interestingly, this figure represents the first decrease in marketing spend for DraftKings in over three years, coinciding with the end of its marketing partnership with ESPN, which has since joined forces with Penn for ESPN Bet.
Implications for the Betting Industry
The unfolding developments signal a dynamic shift in the sports betting ecosystem. Barstool's planned re-entry into the market, coupled with DraftKings' willingness to engage in talks despite scaling back its marketing budget, underscores the competitive nature of the industry. As companies vie for market share, strategic partnerships like the one being discussed between Barstool and DraftKings could shape the future of sports betting.
Moreover, the separation between Penn Entertainment and Barstool Sports opens up new opportunities for both entities to pursue their respective goals. While Penn looks to capitalize on its alliance with ESPN through ESPN Bet, Barstool seems poised to reclaim its stake in the sports betting domain through innovative partnerships and leveraging its robust media influence.
Looking Ahead
As the NFL season progresses towards the Super Bowl, the industry will be watching closely to see how the situation between Barstool Sports and DraftKings unfolds. Should the two powerhouses strike a deal, it could herald a new era for Barstool, enabling the company to once again become a major player in the sports betting scene. With the end of the NFL season on the horizon, the countdown begins for Barstool's anticipated comeback to the betting world, where it aims to make a resounding impact.
For fans and bettors alike, the potential partnership holds promise for fresh and engaging betting experiences, backed by the expertise and entertainment value that Barstool Sports has consistently delivered. As the sports betting landscape continues to evolve, all eyes remain fixed on these industry titans and the moves they make in the high-stakes game of sports betting.