Penn National inks partnership with Barstool Sports

Penn National has bought a 36% share in Barstool Sports.

Penn National Gaming (PNG) announced today that it has entered an agreement to acquire 36% interest in the sports media company, Barstool Sports, for approximately $163m in cash and stock.

What’s covered in the deal?

Under the deal, PNG will become Barstool Sports’ “exclusive gaming partner” for up to 40 years and have the sole right to use the digital sports media company for all of its online and land-based sports betting and online casino products.

According to the announcement, PNG will fund the purchase with approximately $135m in cash and $28m in shares of non-voting convertible preferred stock. After three years, Penn will increase its ownership to approximately 50% with an incremental investment of about $62m. The transaction has valued Barstool Sports at $450m.

Once the transaction has been closed, entities affiliated with The Chernin Group, which previously owned approximately 60% of Barstool Sports, will own 36% of the media company and the remaining 28% will be held by Barstool Sports’ employees including its founder Dave Portnoy and the company’s chief executive Erika Nardini.

Nardini said: “Barstool Sports is a dynamic content company that has grown into a media juggernaut thanks to some of the best talent and fans in the world. Over the last five years, Barstool Sports has brought its audience, creativity and expertise to the biggest sports betting and DFS operators in the country with great results. The chance to combine our content and fans with Penn National’s massive footprint, and to develop a unique and compelling omni-channel approach together, was for us a no brainer.”

Portnoy added: “Barstool Sports has a deep sports and gaming history and from the moment we met Jay and the Penn National team we knew this could be an exciting and game-changing partnership and we can’t wait to get started. I think with our shared vision and goals, we are uniquely positioned to be a leader in this business.”

Chernin Group partner Mike Kerns added: “We have long believed in the power of Barstool Sports’ unique brand, and with Erika’s leadership and Dave’s vision, the company has realized remarkable growth over the last four years.”

Penn will also have the option to bring in another partner to acquire a portion of its shares in the media company. The gambling giant will also have customary governance rights as well as an initial two seats on Barstool’s seven-member board of directors.

Jay Snowden, President and CEO of Penn National, said: “This exciting new partnership with Barstool Sports reflects our strategy to continue evolving from the nation’s largest regional gaming operator, with 41 properties in 19 states, to a best-in-class omni-channel provider of retail and online gaming and sports betting entertainment.”

“With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database. In addition, with 66 million monthly unique visitors, we believe the significant reach of Barstool Sports and loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs for our sports betting and online products, significantly enhancing profitability and driving value for our shareholders.”

Another big move by Penn

This deal with Barstool Sports is the latest move made by Penn following the repeal of the Professional and Amateur Sports Protection Act (PASPA) in 2018.

In July, Penn National inked market access deals with DraftKings, PointsBet, The Stars Group and theScore. At the same time, Penn announced that it had selected Kambi as its sportsbook technology partner. The operator has already begun to take over operations at its land-based sportsbooks and is in the process of developing a mobile sports betting platform with Kambi.

Penn National has also launched land-based sports betting operations at the Ameristar Casino in Iowa and the Ameristar Casino East Chicago in Indiana.

In December, Penn also announced a partnership with the Malta-based White Hat Gaming to provide a player account management platform.

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