Barstool Sports in Talks for a Betting Deal with DraftKings
Negotiations with DraftKings
Barstool Sports, the digital media company known for its sports and pop culture content, is currently in negotiations to strike a sports betting partnership with industry giant DraftKings. This potential collaboration could prove lucrative for Barstool, with annual figures speculated to be in the low eight digits.Leadership Changes
In a surprising turn of events, Dave Portnoy has resumed control of Barstool Sports. This leadership shift comes after Penn Entertainment divested its interests in the company, selling their stake back to Portnoy for a nominal fee of $1.Penn's Departure and New Ventures
Penn had previously invested heavily in Barstool, initially purchasing 36% for $163 million and later acquiring the remaining 64% for an additional $388 million. However, the strategy to leverage Barstool's brand to boost their sportsbook fell short of expectations. Consequently, Penn has since forged a new alliance with ESPN, launching ESPN Bet, and has taken an $850 million write-off on the Barstool acquisition.
According to the terms agreed upon during the sale, if Portnoy decides to sell Barstool in the future, Penn will be entitled to half of the gross proceeds from the transaction.Barstool's Betting Industry Constraints
Despite these changes, Barstool faces a temporary restriction from finalizing any betting deals until after the Super Bowl, owing to a lock-up arrangement. Moreover, the company is prohibited from entering the betting industry until the conclusion of the current NFL season. Nonetheless, Barstool is determined to re-establish itself in the sports betting market once these limitations expire.DraftKings' Financial Moves
DraftKings, meanwhile, has been making significant financial commitments in the sector, investing $1.19 billion in sales and marketing during the fiscal year 2022. Notably, this marks the first time in over three years that DraftKings has reduced its marketing investment. The company has also terminated its marketing partnership with ESPN, which now collaborates with Penn for ESPN Bet.Barstool's Strategy and Future Plans
Despite the restrictions and ownership changes, Barstool has continued to provide gambling advice and picks to its audience. Looking ahead, the company plans to expand its foothold in the betting industry through strategic partnerships.
A representative from Barstool emphasized the importance of sports betting to the brand, 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."
The unfolding scenario presents a fascinating narrative in the competitive world of sports betting. With Barstool's imminent re-entry into the market and its potential partnership with DraftKings, the landscape of sports wagering could witness significant shifts. Fans and bettors alike will be watching closely as Barstool navigates its post-Penn era and seeks to reclaim its position within the sports betting realm.