Barstool Sports Eyes DraftKings Betting Deal Amid Industry Shake-Up
Barstool Sports in Negotiations with DraftKings for Betting Deal
In a strategic move that has caught the attention of the sports betting industry, Barstool Sports is currently engaged in negotiations to forge a potentially lucrative partnership with DraftKings. The talks come after Dave Portnoy, the company's outspoken founder, regained control of the media entity known for its bold and unapologetic approach to sports coverage.The Financial Stakes
The potential partnership between Barstool and DraftKings could prove financially beneficial for both parties. Sources close to the matter suggest that the deal could be worth low eight figures annually for Barstool, signaling a significant opportunity for revenue generation. However, due to an existing lock-up arrangement, Barstool is unable to finalize any betting deals until the conclusion of the Super Bowl, thereby postponing any immediate developments until the end of the current NFL season.Penn Entertainment's Divestment
This negotiation phase follows a notable transaction where Penn Entertainment sold their entire stake in Barstool back to Portnoy for a symbolic $1. This divestment came after Penn had invested heavily in Barstool, initially acquiring 36% of the company for $163 million and subsequently purchasing the remaining 64% for $388 million. Despite these investments, Penn's strategy to utilize Barstool's brand to bolster their own sportsbook did not yield the anticipated results, leading to a reevaluation of their business strategy.
After the sale, Penn Entertainment shifted gears by partnering with ESPN to establish ESPN Bet, a new venture in the sports betting landscape. This shift was accompanied by Penn taking a substantial $850 million write-off from the Barstool acquisition, reflecting the financial impact of their miscalculated bet on leveraging Barstool's influence.
Under the terms of the sale, should Portnoy opt to sell Barstool in the future, Penn will be entitled to half of the gross proceeds from such a transaction, maintaining a stake in the company's potential success down the line.Barstool's Betting Industry Aspirations
Despite the setback with Penn Entertainment, Barstool remains intent on making a name for itself within the sports betting market. The company is well-known for offering gambling advice and picks, and it plans to capitalize on this reputation by expanding its presence through strategic partnerships once the restriction from the lock-up arrangement lifts at the end of the NFL season.DraftKings' Positioning
DraftKings, a major player in the sports betting arena, invested a staggering $1.19 billion in sales and marketing during fiscal 2022. Notably, this marked the first decrease in marketing investment in over three years for the company. Furthermore, DraftKings ended its marketing partnership with ESPN, which has since joined forces with Penn for ESPN Bet.Industry Implications
The potential collaboration between Barstool Sports and DraftKings is poised to have significant implications for the sports betting industry. With Barstool's strong brand identity and dedicated following, combined with DraftKings' established market presence, the partnership could disrupt the current dynamics of sports wagering.
Portnoy's vision for Barstool's future in sports betting remains ambitious. "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, highlighting his confidence in the brand's enduring relationship with sports betting culture.
As the industry awaits the outcome of the negotiations and the lifting of the current restrictions, all eyes are on Barstool Sports and DraftKings to see if they will indeed strike a deal that reshapes the landscape of sports betting. With the end of the NFL season on the horizon, the sports world is bracing for the potential impact of this emerging alliance.