Barstool Sports Eyes DraftKings Betting Partnership
Barstool Sports in Talks with DraftKings for a Lucrative Betting Deal
In a significant turn of events, Barstool Sports is currently in negotiations with DraftKings over a sports betting deal that could prove to be highly lucrative. The potential partnership is expected to be valued in the low eight figures annually for Barstool. This development comes after a notable change in leadership, with Dave Portnoy back at the helm of Barstool Sports.
The timing of this deal is crucial as Barstool is under a lock-up arrangement that prevents it from finalizing any betting deals until after the Super Bowl. This restriction stems from the company's previous engagement in the betting industry, which they intend to re-enter.Penn Entertainment Sells Stake Back to Portnoy
In an unexpected move, Penn Entertainment has sold their stake in Barstool back to Portnoy for a nominal fee of $1. This transaction marks a stark contrast from Penn's initial investment, where they acquired 36% of Barstool for $163 million and subsequently the remaining 64% for $388 million. However, the strategy to leverage Barstool's brand to support Penn's sportsbook did not yield the anticipated results.
As a result, Penn Entertainment has taken a substantial write-off amounting to $850 million from the Barstool acquisition. Despite this setback, Penn has swiftly shifted gears by partnering with ESPN to launch ESPN Bet, a new venture following the end of its relationship with Barstool.The Conditions of the Sale
The sale of Barstool back to Portnoy comes with a caveat: if Portnoy decides to sell Barstool, Penn will receive half of the gross proceeds from the sale. Additionally, Barstool faces a temporary barrier from entering the betting industry until the conclusion of the current NFL season, a condition that underscores the company's eagerness to make a strong comeback in the sports betting market.Barstool's Betting Market Ambitions
Despite these constraints, Barstool's ambitions remain undeterred. The company continues to provide gambling advice and picks, signaling its commitment to maintaining a foothold in the betting landscape. Furthermore, Barstool is eyeing expansion through strategic partnerships, a plan that aligns with its core competencies and brand identity.
A representative from Barstool highlighted the company's intrinsic connection to sports betting, stating, "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."DraftKings Scaling Back on Marketing Spend
DraftKings, on the other hand, has been recalibrating its marketing strategy. The company invested $1.19 billion in sales and marketing during fiscal 2022, marking the first decrease in such spending in over three years. This shift coincides with DraftKings ending its marketing partnership with ESPN, who has since joined forces with Penn for ESPN Bet.Conclusion
The sports betting landscape is witnessing a dynamic shift as major players like Barstool Sports and DraftKings reassess their strategies and partnerships. With Dave Portnoy reclaiming control of Barstool and steering it towards potentially profitable ventures, the industry is poised for intriguing developments. As Barstool prepares to reassert itself in the sports betting domain post-Super Bowl, all eyes will be on how these negotiations with DraftKings unfold and what impact they will have on the broader market.