Barstool Sports in Talks with DraftKings for Lucrative Betting Deal
In a significant shift within the sports betting landscape, Barstool Sports is currently in negotiations with industry titan DraftKings. This potential partnership could mark a new chapter for Barstool, with the deal speculated to be valued in the low eight figures annually. The move comes after Dave Portnoy, the company's founder, has once again taken the helm of Barstool Sports.
Awaiting the Super Bowl: The Lock-Up Arrangement
Despite the buzz around these discussions, Barstool is under a lock-up arrangement that prevents it from finalizing any betting deals until after the Super Bowl. This stipulation means that fans and industry observers alike will be waiting with bated breath to see how the situation unfolds once the restriction is lifted.
Penn Entertainment Sells Back Stake to Portnoy
The backdrop to these developments is Penn Entertainment's decision to sell their stake in Barstool back to Portnoy for a nominal fee of $1. This move came as a surprise to many, given that Penn had previously acquired 36% of Barstool for $163 million before purchasing the remaining 64% for an additional $388 million. However, Penn's strategy to leverage Barstool's brand to bolster their own sportsbook fell short of expectations, leading to a reevaluation of their investment.
Penn's New Direction with ESPN Bet
Following the sale, Penn has pivoted to a new venture, partnering with ESPN to create ESPN Bet. This collaboration appears to align more closely with Penn's strategic goals, especially in the wake of an $850 million write-off from the Barstool acquisition. As part of the terms of the sale, if Portnoy decides to sell Barstool in the future, Penn will be entitled to half of the gross proceeds from such a transaction.
Barstool's Strategic Betting Ban
Currently, Barstool is barred from entering the betting industry until the conclusion of the current NFL season. Despite this temporary limitation, the company's intentions are clear: Barstool is poised to re-enter the sports betting market with vigor. This ambition is underscored by the fact that Barstool continues to provide gambling advice and picks, maintaining its presence in the gambling conversation.
DraftKings Slows Marketing Spend
On the other side of the negotiating table, DraftKings has been making its own strategic adjustments. The company invested $1.19 billion in sales and marketing during fiscal 2022, marking the first decrease in such spending in over three years. Moreover, DraftKings ended its marketing partnership with ESPN, which has since joined forces with Penn for ESPN Bet.
Portnoy's Vision for Barstool's Future
Despite the ebb and flow of partnerships and market strategies, Portnoy remains confident about Barstool's role in the sports betting industry. "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," Portnoy said. He further emphasized the company's forward-looking stance, stating, "But I think you'll see, into next year, that we start to establish ourselves back in that space."
As the industry evolves, Barstool's planned expansion through partnerships suggests that the company is not content to sit on the sidelines. With a reputation for being at the forefront of sports media and entertainment, Barstool's potential re-entry into the betting market could shake up the competitive dynamics once again.
Conclusion
The sports betting world is watching closely as Barstool Sports navigates its post-lock-up period. With a potential DraftKings deal on the horizon and a renewed leadership under Portnoy, the company seems determined to reclaim and possibly redefine its position within the industry. As the Super Bowl approaches, the countdown begins for what could be one of the most impactful partnerships in sports betting history.