Barstool Sports Eyes DraftKings Betting Deal Amid Ownership Changes
Barstool Sports in Talks with DraftKings for a Lucrative Betting Deal
In a significant shift in the sports media landscape, Barstool Sports is currently in negotiations with DraftKings over a sports betting partnership. This development comes on the heels of Dave Portnoy reclaiming control of the company he founded. The potential deal between Barstool and DraftKings could be highly profitable, with estimates suggesting it might bring in low eight figures annually for Barstool.
However, any formal agreement will have to wait, as Barstool is under a lock-up arrangement that prohibits finalizing betting deals until after the Super Bowl. This pause allows both parties to strategize and potentially align their partnership to capitalize on the post-Super Bowl betting enthusiasm.The Change in Ownership and Strategy
The landscape of sports betting and media partnerships is always evolving, and the recent changes at Barstool are no exception. Penn Entertainment has divested its interests in Barstool, selling their stake back to Portnoy for a nominal fee of $1. This transaction marks a stark contrast from Penn's initial investment, which saw them acquire 36% of Barstool for $163 million, followed by the remaining 64% for an additional $388 million.
Penn's strategy to leverage Barstool's brand to support their sportsbook did not yield the expected results. Consequently, Penn has taken a substantial $850 million write-off following the acquisition. In a strategic pivot, Penn has now partnered with ESPN to create 'ESPN Bet,' a move that follows the termination of DraftKings' marketing partnership with ESPN.
According to 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 the sale. Despite these shifts, Barstool remains committed to the sports betting industry, although they are currently barred from entering the market until the conclusion of the current NFL season.Barstool's Continued Influence in Sports Betting
Even with these restrictions, Barstool continues to maintain a strong presence within the gambling community by offering advice and picks. Their intention to re-enter the sports betting market is clear, and they plan to do so through strategic partnerships that will expand their influence within the industry.
Portnoy himself has expressed confidence in Barstool's continued relevance in the sports betting arena, 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."DraftKings Scaling Back on Marketing Investment
DraftKings, a key player in the sports betting market, has made notable changes to its investment strategy. In fiscal 2022, DraftKings invested $1.19 billion in sales and marketing, marking the first decrease in such spending in over three years. This reduction coincides with the end of their marketing partnership with ESPN, which has since teamed up with Penn for ESPN Bet.
The negotiation between Barstool and DraftKings suggests a new direction for both entities in the competitive sports betting industry. As companies reassess their marketing strategies and partnerships, the alignment of Barstool's influential brand with DraftKings' platform could signal a new era of sports betting collaborations.Looking Ahead
The sports betting landscape is in a constant state of flux, with media companies and betting platforms seeking to forge alliances that will benefit their growth and market share. As Barstool prepares to make its return to this lucrative market, all eyes will be on how the relationship with DraftKings unfolds and whether it will set a precedent for future deals within the industry.
With the Super Bowl serving as a pivotal moment for the sports betting sector, the outcome of the negotiations between Barstool and DraftKings could influence the strategies of other players in the field. As the industry awaits the finalization of this deal, the anticipation builds for what could be a transformative partnership in sports betting history.