Barstool’s entry increases the sports betting competition By Howard Stutz, Executive Editor, CDC Gaming Reports September 22, 2020 at 7:30 pm Pennsylvania has become a microcosm in the growing nationwide competition for the sports gambling consumer. Penn National Gaming launched its highly anticipated sports betting app in partnership with sports media giant Barstool Sports in the state on Friday. By Sunday, according to SensorTower – a mobile-app intelligence service – the Barstool app had roughly 63,000 downloads. Morgan Stanley gaming analyst Thomas Allen suggested in a late Monday research note that Barstool is growing the volume of the state’s sports bettors. “Other downloads didn’t appear to slow meaningfully, and GeoComply (a geolocation technology provider) data suggests Pennsylvania volume jumped roughly 10% week over week versus other states (that were) flat,” Allen said. He expected the Barstool app to reach roughly 5% of Pennsylvania’s market share by the end of September. “While Barstool’s app downloads are extremely strong, it does not appear to be meaningfully cannibalizing others,” Allen said. Penn National spent $163 million in January to acquire 36% of Barstool, which has roughly 66 million viewers of its website and social media content. The plan was to rebrand Penn’s retail sportsbooks under the Barstool brand and launch the app, with the hopes of changing and increasing the demographic make-up of Penn’s customer base, which skews to age 45 and older. Allen noted the weekend downloads, which followed a three-day state regulator-mandated trial run, surpassed launches of several other apps. For example, DraftKings’ sportsbook app had 4,000 downloads during its opening weekend in New Jersey in August 2018 and set a single-day record of 15,000 on September 10, the day of the NFL’s season-opening game between Kansas City and Houston. Allen also said Barstool’s weekend and single-day performance also topped FanDuel’s inaugural weekend launch downloads of 9,000 during the 2018 NFL opening weekend and the brand’s single-day download record of 19,000 on Sept. 13. Screen grab from the Barstool Sports app If one weekend is telling, the bet paid off for Penn National. Shares of the company hit a 52-week high of $76.62 on the NASDAQ Friday. Remember when Penn fell to $3.75 a share on March 18 after the company closed its 41 casinos in 19 states due to the COVID-19 pandemic? Shares closed Tuesday at $74.36. But Allen expressed caution. He believes Barstool will become one of the top-three players in the sports betting realm but warned investors about getting too optimistic. “Barstool marketed its sportsbook broadly across the U.S., while the daily fantasy sports operators have focused more locally on where people can bet,” Allen said. “Pennsylvania has a larger 13 million adult population than New Jersey’s 9 million, where DraftKings and Fan Duel were focused when they first launched.” There are now 18 states and Washington, D.C., with legal sports betting, more than double the total in 2018. Tennessee is expected to launch sports betting by November and North Carolina is also hoping to launch by the end of the year. Virginia and Washington, which have also legalized the activity, are looking at 2021. Meanwhile, voters in three other states – Maryland, Louisiana, and South Dakota – will weigh in on sports betting referendums on November 3. For Penn National and Barstool, Pennsylvania is just the beginning. Penn National CEO Jay Snowden has said the app would debut in Michigan by November. Penn also plans to roll out the app in New Jersey, Indiana, Iowa, West Virginia, and Colorado in early 2021, he said. The sports betting landscape is now crowded, as FoxBet, BetMGM, and William Hill US continue to grow their presence in new states. In Washington, D.C., William Hill’s temporary retail-only operation – a few betting windows and kiosks – at the Capital One Arena took in $9.1 million in wagers during August, almost triple what the online-only GambetDC sportsbook collected. The September numbers could be in the stratosphere. Some of the newer sports betting ventures are learning about handling the risk. ESPN’s David Purdum reported Monday that DraftKings was several million dollars in the hole after the betting public had a winning Sunday. But the Las Vegas Raiders’ 34-24 upset win over the New Orleans Saints Monday night helped the bookmaker recover its losses. Truist Securities gaming analyst Barry Jonas pointed out the wide revenue shifts sportsbooks face as an investment risk when he launched coverage of DraftKings last month. “Bookmaking is inherently more volatile. Win percentage is more volatile vs. traditional gaming,” Jonas wrote. “While the technology and science of bookmaking have helped mitigate volatility tremendously over the years, hold rate can still see large swings, depending on the outcome of certain high-profile events.” Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.