Penn National Gaming has entered into a multi-faceted deal with Barstool Sports which sees the firm acquire a 36 per cent interest for approximately $163m.
Unveiling the igaming and sports betting partnership, the casino and racetrack operator becomes Barstool’s exclusive gaming partner for up to 40 years and gains the sole right to utilise the brand for all online and retail sports betting and online casino products.
Jay Snowden, president and chief executive officer of Penn National, said of the announcement: “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.”
After a three year period, Penn will increase its ownership to approximately 50 per cent with an incremental investment of approximately $62m, consistent with the implied valuation at the time of the initial purchase.
Furthermore, the firm also has the option to bring in another partner who would acquire a portion of Penn National’s shares of Barstool Sports. Penn National will have customary governance rights, including initially two seats on Barstool Sports’ seven-member board of directors.
Following the close of the transaction entities affiliated with The Chernin Group, which previously owned approximately 60 per cent of Barstool Sports, will own 36 percent, with the remaining 28 per cent being held by its employees.
Dave Portnoy, founder of Barstool Sports, commented: “This opportunity is a dream of mine and why I started Barstool Sports in the first place. 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.”
The company expects to close the transaction in the first quarter of 2020, subject to customary closing conditions set forth in the purchase agreement.