Barstool Sports Nears Betting Deal with DraftKings
Barstool Sports in Talks with DraftKings for a Lucrative Betting Deal
In a surprising turn of events, Barstool Sports is currently in negotiations with DraftKings to forge a sports betting partnership potentially worth low eight figures annually. This development follows the news that Dave Portnoy has reclaimed control of the popular sports and pop culture blog.
Despite the excitement surrounding this potential collaboration, Barstool Sports must wait until after the Super Bowl to finalize any agreements due to a lock-up arrangement. This restriction comes at a time when Barstool's ambitions to re-enter the sports betting market are heating up.Penn Entertainment Sells Stake Back to Portnoy
The backstory to these negotiations involves Penn Entertainment (formerly known as Penn National Gaming) selling their stake in Barstool back to Portnoy for a nominal fee of $1. This transaction marks a significant loss for Penn, which had initially acquired a 36% stake in Barstool for $163 million before purchasing the remaining 64% for an additional $388 million.
Penn's initial strategy was to leverage Barstool's brand to bolster their own sportsbook operations. Unfortunately, the expected synergies did not materialize, leading to Penn taking an $850 million write-off from the acquisition. Following this divestment, Penn pivoted by partnering with ESPN to create ESPN Bet, signaling a new direction away from Barstool.
Despite the sale, if Portnoy decides to sell Barstool in the future, Penn will still receive half of the gross proceeds from the deal, ensuring they retain a financial interest in the company's success.Barstool's Restriction and Future Plans
Currently, Barstool is prohibited from engaging in the betting industry until the conclusion of the current NFL season. This restriction stems from the agreement with Penn, but it hasn't dampened the company's determination to make a comeback in the betting space.
Barstool's intention to expand its presence in the betting industry is evident through its plans to establish partnerships that will solidify its position. The company has maintained its relevance in the gambling world by continuing to offer gambling advice and picks, despite the temporary setback.DraftKings Scaling Back on Marketing Spend
On the other side of the negotiation table, DraftKings has been making its own strategic moves. The company invested a hefty $1.19 billion in sales and marketing during fiscal 2022. Interestingly, this marked the first decrease in marketing spend in over three years for DraftKings.
This reduction in marketing expenditure coincided with the end of DraftKings' marketing partnership with ESPN, which has since joined forces with Penn for ESPN Bet. This shift suggests a changing landscape in sports betting partnerships and marketing strategies within the industry.Looking Ahead
As Barstool Sports prepares to re-establish itself in the sports betting arena, the potential partnership with DraftKings could prove to be a pivotal moment. With Portnoy back at the helm, the brand appears poised to leverage its influence and dedicated following to make a significant impact.
In a quote reflecting on the company's direction, it's clear that Barstool Sports sees sports betting as integral to its identity and future growth. "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," underscores the commitment to not only return to but also expand its footprint in the sports betting market.
As the industry watches closely, the outcome of the negotiations between Barstool Sports and DraftKings could signal a new era for both entities. The potential deal might set a precedent for how media companies and betting platforms collaborate, shaping the future of sports betting engagements. With the end of the NFL season on the horizon, the sports world eagerly anticipates Barstool's next move in this high-stakes game.