Viewers on Barstool Sports’ various platforms were treated to images of company founder Dave Portnoy and his crew watching in stunned amazement last Sunday as the Arizona Cardinals defeated the Buffalo Bills on a last-second touchdown pass.
The game-changing play and outcome cost Barstool’s “El Presidente” $50,000.
But the reaction resulted in millions of subsequent views on Barstool’s social-media channels, bringing additional attention to the company’s mobile sports betting app that launched in September in partnership with Penn National Gaming.
That’s the type of attention the regional casino company was hoping to gain after making a $163 million bet on Barstool, taking a 36% ownership stake with designs on creating an omnichannel sports wagering product.
The expanding partnerships with media companies has been viewed as a way for sports betting operators to attract new customers in an ultra-competitive market, now that legal sports betting is available in 19 states and Washington, D.C. Another six states could go live in 2021.
Media companies have unlimited viewers, which aids in customer acquisition: ESPN and DraftKings, CBS Sports and William Hill US, NBC and PointsBet, Fox and The Stars Group, and – as of this week – Sinclair Broadcast Group and Bally’s Corp./Bet.Works.
None of the partnerships, however, has been more scrutinized and dissected than the deal between Penn National Gaming and Barstool, whose stage draws some 66 million viewers to watch its somewhat irreverent and frat-boy-style content.
A rendering of Penn’s Barstool-branded sportsbook planned for Ameristar East Chicago in Indiana/Via Penn National
Barstool’s long association with sports betting was well ahead of the May 2018 Supreme Court ruling that opened the U.S. to legalizing and regulating the activity. It was hard for Penn to ignore the audience reach.
We finally have a sense of how much Barstool could grow Penn National’s business.
In October, the first full month Barstool was operating in Pennsylvania, online and retail sportsbooks generated a record $525.8 million in wagers, up 118% from a year ago and eclipsing the previous single-month record of $462.8 million.
Eilers & Krejcik Gaming analyst Chris Grove said Barstool “appeared to grow the Pennsylvania market” and not cannibalize the business. Only one sports betting brand, Harrah’s, did not report a month-over-month growth in online wagering when comparing October with September.
Grove said Barstool accounted for 13% of Pennsylvania’s online wagers and 12% of the gaming revenue. The company’s promotional spending to attract new customers was “well above” the statewide average of 27% in October. Barstool’s was a 38% ratio when comparing the costs to gaming revenue.
“(It was) consistent with a new brand, and a relatively late-market entrant, in full-on acquisition mode,” Grove said.
Screen grab from the Barstool Sports app
Daily online wagers on Barstool grew slightly from $1.8 million for part of September to $1.9 million in October. Grove said the figure was in line with the rest of the market.
“It’s too early to read much into that, in our view, but certainly a trend worth watching,” Grove said.
Penn National operates 41 gaming properties in 19 states and the initial results in Pennsylvania – albeit early – indicate the company is on the right path. CEO Jay Snowden said the Barstool app recorded 310,000 downloads in October in states where customers are awaiting its launch.
The plan is to bring the app to Michigan in the next five weeks, but that could be derailed by the pandemic, which forced the closure of Detroit’s three casinos. Penn operates Greektown Detroit, where it was planning to open a Barstool-branded retail sportsbook. The Barstool app could land in New Jersey, Indiana, Iowa, West Virginia, and Colorado in early 2021.
Dave Portnoy is not a button-down corporate executive. In August, he posted a bed-ridden video on social media, saying he might have contracted coronavirus. The news sent Penn’s share price tumbling. In June, he got into a tiff with a gaming analyst when he didn’t like his stock valuation.
Penn’s stock closed Friday at $69.88, a far cry from its $3.75 price when the pandemic ravaged the markets in March.
Portnoy showed a different side of his personality in October when he convinced Penn to help save the historic Reading Terminal Market in downtown Philadelphia, which was hard hit by COVID-19 and facing bankruptcy. The company agreed to contribute $100 for every $100-plus new account opened on the Barstool Sportsbook app in a 24-hour period to a GoFundMe account. Penn and Barstool raised more than $150,000.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
