Penn Entertainment to Buy 100% of Barstool

In what has been a much-anticipated move, Penn Entertainment has decided to exercise its option to purchase Barstool Sports. The deal has been signed with Barstool owner David Portnoy, who is expected to give up management and ownership of the sports betting company in the early part of 2023.

In 2020, Penn Entertainment plopped down $163 million to secure 36% ownership in Barstool. When they later paid another $62 million to move their stake to 50%, the handwriting was on the wall. By the time the deal has been finalized, Penn Entertainment will have paid a total of $550 million for the right to call Barstool Sports a subsidiary.

Barstool Makes Penn Entertainment a Big Player in the U.S. Sports Betting Market

To be clear, there is still a bit of controversy surrounding Portnoy due to prior sexual misconduct allegations. The allegation came forth in November of 2021. It's not clear if a legal case could interfere with this transaction, but it is a situation worth watching.

For now, Penn Entertainment is looking to leverage Barstool ownership as a marketing tool. The one thing Portnoy's group never did was invest heavily in marketing. The company's preference was always to take a low-key approach and let the sports betting brand speak for itself with full support from key players like Dave Williams (White Sox Dave) and Michael Sterk (Barstool Carl).

Earlier this year, here is what Penn Entertainment CEO Jay Snowden said in an earnings call:

“Disciplined organic marketing, omnichannel cross-sell, great products, and owning our media strategy with our friends at Barstool Sports and theScore have led to growth in our net gaming revenue market share results in the first quarter. We believe our differentiated approach will benefit us going forward.”

Barstool's Standing the U.S. Sports Betting Market

Currently, Barstool Sports hold a place among the top 5 online sports betting operators in the U.S. in at least two states. In Pennsylvania, the operator recently clear the $1 billion in all-time gross sports betting revenue. In Illinois, the operator has made over $500 since its introduction to Illinois sports bettors in March of 2021.

In the coming months and years, industry experts expect Penn Entertainment to be more aggressive about pushing the Barstool sports betting brand. Along with its sports betting platform, Barstool also maintains an online casino platform, which is currently available in four states.

Currently, Barstool Sports is providing online betting services in 12 states, including Pennsylvania (sports betting & online casinos), Michigan (sports betting & online casinos), Illinois, Colorado, Virginia, New Jersey (sports betting & online casinos), Tennessee, Arizona, West Virginia (sports betting & online casinos), Iowa, Indiana, and Louisiana.

It's noteworthy that Snowden recently commented that Penn Entertainment should be nearing net profitability by the end of the year. This is a significant comment given that so many other sports betting operators and gambling companies appear to be operating in the red.