Barstool Met with DraftKings, Other Gaming Companies Prior to Penn Deal

By | September 21, 2021

Barstool Sports held talks with DraftKings (NASDAQ:DKNG) and other gaming companies prior to sealing a deal last year with Penn National Gaming (NASDAQ:PENN). Barstool finally concluded a deal with Penn that sets the stage for the casino operator to eventually own the sports media blog outright.

Barstool Penn
Barstool Sports founder David Portnoy, seen above, said his company held merger talks with DraftKings, but no offer was made. Penn National Gaming now has a stake in the media firm. (Image: Star-Tribune)

Barstool founder David Portnoy made the DraftKings revelation in a Twitter Spaces event conducted by Roundhill Investments last week. New York-based Roundhill is the issuer behind the Roundhill Sports Betting & iGaming ETF (NYSE:BETZ).

That’s the first exchange-traded fund (ETF) focusing on equities in the online casinos and sports wagering ecosystems. The $406 million BETZ has an allocation of almost four percent to Penn National.

Portnoy said he met with DraftKings and other gaming companies, which he didn’t identify. He didn’t get into details regarding how advanced talks were with DraftKings, but he made that clear that Penn National CEO Jay Snowden was the only executive to present Barstool with a firm offer.

With the emergence of Barstool Sportsbook, Penn and thereby Barstool Sports are now in direct competition with DraftKings.

For Barstool, Things Worked Out with Penn

After weeks of speculation, Penn announced in January 2020 that it was paying $163 million in cash and equity for a 36 percent stake in Portnoy’s media company.

In three years, the operator of casinos under the Argosy and Hollywood brands, among others, will increase its Barstool stake to 50 percent for another $62 million payment. The regional casino giant can eventually own the media property outright for $450 million.

The two companies are in a relationship for the long haul. Barstool landed a 40-year exclusivity pact with Penn, and the former will promote the latter’s online and brick-and-mortar casinos on its web pages.

The Barstool investment is paying for Penn in other ways. Shares of the gaming company more than doubled since the deal was announced. That paves the way for entry into the S&P 500, and what was once a sleepy regional casino operator now has the avenues with which to capture share among younger gamblers. That’s thanks to Barstool’s personality-driven approach, led by Portnoy.

Barstool, Penn Touched Off Betting/Media Wave

Prior to the Barstool/Penn tie-up, there had been some modest agreements between gaming companies and media entities. But none in the nine-figure ballpark.

In fact, it can be argued the Barstool/Penn marriage touched off a wave of more extensive accords between media firms and gaming operators, including some acquisitions. In March, DraftKings revealed its purchase of Vegas Sports Information Network (VSiN), and the following month, it reached a content distribution agreement with Meadowlark Media. Meadowlark Media is the owner of Dan Le Batard’s network of shows.

Those transactions were followed by Better Collective buying The Action Network for $240 million in cash and equity Penn in August said it’s acquiring Canada’s Score Media and Gaming (NASDAQ:SCR) for $2 billion in cash and stock.

The post Barstool Met with DraftKings, Other Gaming Companies Prior to Penn Deal appeared first on Casino.org.

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