PENN Entertainment Completes Barstool Sports Acquisition

After paying $163 million for a 36% interest in Barstool back in 2020, PENN completed the acquisition by purchasing the remaining 64%.

Last Updated: Feb 20, 2023 2:36 PM ET Read Time: 4 min
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Photo By - USA TODAY Sports

PENN Entertainment has completed its takeover of Barstool Sports after paying $388 million for the remaining 64% stake in its coveted sportsbook brand which it did not already own.

The completion of the takeover represents a milestone for PENN, which is still seeking to carve out a significant market share in the highly competitive U.S. legal sports betting market.

This brings to a close the deal that was first set in motion on January 2020 when U.S. casino and entertainment giant PENN Entertainment — then known as Penn National Gaming — announced that it had paid $163 million for a 36% interest in Barstool, the popular company founded by Dave Portnoy.

Ever since the process of folding Barstool into its gaming operations began, PENN has seen impressive growth in its online sports betting sites division while rebranding its retail operations under the Barstool brand. 

Following the initial rollout of Barstool Sportsbook in Pennsylvania, the state which is home to PENN's corporate headquarters in, Barstool Sportsbook is now available in 16 states and is set to go live in Massachusetts when the Bay state launches mobile sports wagering on March 10.

"We are extremely pleased to welcome Barstool Sports fully into the PENN Entertainment family," said PENN Entertainment CEO and President, Jay Snowden in remarks accompanying the Friday announcement.

"Barstool is a proven, powerful media brand with an authentic voice and vast, loyal audience that provides us with a strong top of funnel for new customer acquisition and organic cross-selling opportunities across our growing interactive division. Barstool, combined with theScore’s reach and highly engaged user base, creates a massive digital footprint and ecosystem that will serve to propel Barstool Sportsbook and our uniquely integrated media and gaming business."

Evolution of Barstool

Barstool occupies a unique position as a combined sports betting and entertainment site that delivers sports and comedic content via a network of over 100 shows and more than 90 sports and media celebrities.  

During the three years in which PENN was anxiously building towards full ownership of the sportsbook, Barstool has grown its audience by 194%, expanded its customer base to over 200 million followers, and evolved into what PENN describes as a "multimedia powerhouse."

"Barstool Sports is bigger than ever and has become more than I ever dreamed of," said Dave Portnoy, the voluble and controversial Founder of Barstool Sports. "I’m very thankful to the Barstool team and Stoolies who have been along for the ride. I’m looking forward to this next chapter with PENN."

Not done yet

PENN is counting on Barstool to lead its digital segment towards profitability in FY2023 as a result of the transition of the Barstool Sportsbook platform that is currently provided by Kambi to PENN's wholly-owned proprietary tech — a process expected to be completed this summer.

"Through our experience in Ontario, we’ve identified some real opportunities to build market share once we migrate to our own tech stack in the U.S. in Q3, and of course, we’ll do that profitably," said Penn CEO Snowden during the operator's November third quarter earnings call.

Earlier this month, PENN reported that its Penn Interactive division — its digital arm which houses its online casino and sports betting operations under the Barstool Sportsbook brand in the U.S. and theScore Bet in Ontario — had recorded its first profitable quarter ever.

Penn Interactive posted Q4 EBITDA of $5.2 million despite a massive $10 million payout to Jim "Mattress Mack" McIngvale for his winning World Series wagers on the Houston Astros.

PENN Interactive recorded a $5.2 million profit on $208 million in revenue during the fourth quarter of 2022, largely on the strength of theScore Bet's impressive iGaming and online sports betting online performance which continues to exceed expectations in Canada's largest (and only) regulated sports betting market.

"Ontario is now our top market in North America for both sports betting and iCasino, with strong growth and positive trends through our first NFL season, including record growth and net revenues in December," said Snowden. 

"The impressive Ontario numbers were partly due to PENN's completion of the initial integration of the Barstool Sportsbook into theScore media app in October, highlighting the benefits of our owned media strategy."

Once PENN completes the tech migration to its U.S. Barstool sportsbook, the operator will see its interactive unit profits rise correspondingly. In addition, using its own tech will provide the operator with greater marketing flexibility by means of the same proprietary player account tech that has bolstered results at its theScore sportsbook in Ontario.

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