Barstool Sports in Talks with DraftKings for a Lucrative Betting Deal
In a surprising turn of events, Barstool Sports is currently engaged in negotiations with DraftKings to strike a sports betting partnership potentially valued in the low eight figures annually. This development comes after a significant shift in ownership, with Dave Portnoy reclaiming control of the media company.
The deal, however, is on hold due to an existing lock-up arrangement that prevents Barstool from finalizing any betting agreements until after the Super Bowl. This stipulation is part of a broader narrative involving Penn Entertainment's divestment from Barstool and its subsequent collaboration with ESPN to launch ESPN Bet.
Penn Entertainment Sells Back Barstool Stake
Penn Entertainment's involvement with Barstool Sports took a dramatic turn when they sold their stake back to founder Dave Portnoy for a nominal fee of $1. This move came after Penn had initially acquired 36% of the company for $163 million and subsequently the remaining 64% for $388 million. The decision to sell reflects Penn's acknowledgment that leveraging Barstool to bolster their sportsbook fell short of expectations.
As a result of this change in strategy, Penn has taken an $850 million write-off from the Barstool acquisition. Despite this financial setback, Penn has negotiated a clause ensuring that if Portnoy decides to sell Barstool, they will receive half of the gross proceeds.
Restrictions and Future Betting Endeavors
Currently, Barstool is prohibited from entering the betting industry until the conclusion of the current NFL season. Nevertheless, the company has made it clear that it intends to re-enter the sports betting market. This ambition aligns with their ongoing provision of gambling advice and picks, which remains a core aspect of their content offering.
Portnoy himself emphasized the significance of sports betting to Barstool's identity, 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 Marketing Efforts
On the potential partner's side, DraftKings invested a hefty sum of $1.19 billion in sales and marketing during the fiscal year 2022. Notably, this marked the first time in over three years that the company reduced its spending on marketing initiatives. This reduction coincides with the end of DraftKings' marketing partnership with ESPN, which has since joined forces with Penn for the creation of ESPN Bet.
The decision by DraftKings to decrease its marketing spend may be indicative of a broader trend within the industry, where companies are seeking more strategic partnerships and collaborations to achieve growth and expansion.
Barstool's Ambitions in the Betting Landscape
Despite the temporary restrictions, Barstool Sports is gearing up to expand its presence in the betting industry through strategic partnerships. With the anticipated deal with DraftKings, Barstool could once again become a formidable player in the sports betting arena.
The potential collaboration between Barstool and DraftKings promises to bring together two influential brands within the sports and betting industries. For DraftKings, partnering with Barstool could offer a unique opportunity to tap into Barstool's dedicated audience and content creation capabilities. Conversely, for Barstool, the deal represents a chance to leverage DraftKings' established platform and technological expertise to enhance their offerings in the sports betting domain.
As the landscape of sports betting continues to evolve, with media companies and betting platforms seeking new ways to engage with fans and bettors alike, the outcomes of these negotiations will be closely watched. The implications for both Barstool Sports and DraftKings, as well as for the broader sports betting industry, could be significant.
With the Super Bowl serving as the deadline for the current lock-up period, the sports world is eagerly awaiting the finalization of the deal. If successful, it could signal a new chapter for Barstool Sports, one where they not only provide commentary on the world of sports but also play an active role in shaping the betting experiences of their audience.