Barstool Sports Penn National Gaming
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BOSTON — Results from other states where Penn National Gaming, the operator of Plainridge Park Casino, has launched its Barstool Sports-branded sports betting offerings offer a peak at the power. What’s Next: Since the end of the fourth quarter, Penn National Gaming launched the Barstool Sportsbook in Michigan, the second state for the brand. Barstool Sportsbook was downloaded by 48,000 new.
- Penn National records US$1.027bn revenue for Q4; finishes 2020 with turnover of US$3.58bn
- Launch of Barstool Sportsbook app in Michigan registered more than 48,000 new customers and generated US$27.5m in first ten days
US casino operator Penn National Gaming has reported revenue of US$1.027 billion for the fourth quarter of 2020, a 23 per cent drop on the same period a year earlier.
The Pennsylvania-based company was still able to finish the three months that ended 31st December with net income of US$12.7 million, compared to a net loss of US$92.9 million during Q4 of 2019.
Penn finished the year with revenue down 32 per cent to US$3.58 billion as the coronavirus pandemic forced the temporary closure of the company’s casinos.
Despite the revenue hit, Penn’s shares have soared 26 per cent since the start of the year and its stock has more than tripled in the 12 months since it acquired a 36 per cent stake in Barstool Sports for US$163 million.
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The company cited its investment in the media company as a reason to be optimistic for the future, noting that the launch of the Barstool Sportsbook app in Pennsylvania in September has registered over 72,000 customers in the state and generated a total handle of nearly US$300 million.
The platform, which is expected to be up and running in ten states by the end of the year, was also launched in Michigan in late January, registering more than 48,000 new customers and generating a total handle of US$27.5 million during the first ten days of operation.
Jay Snowden, president and chief executive at Penn National Gaming, said: “Our investment in Barstool Sports provides us with a fully integrated media platform to support our evolution from the nation’s largest regional gaming operator to the best-in-class omnichannel provider of retail and online gaming and sports entertainment.”
Penn also highlighted the fact the Barstool was able to significantly increase its media reach during the pandemic, growing its following on TikTok to 26 million, while it now has 52 million followers on Instagram. The company also said it recorded its highest revenue figure since its inception.
Snowden added: “We view Barstool Sports not only as a fantastic channel to promote our offerings, but also an undervalued media asset that has evolved from primarily a sports brand into a highly relevant sports and life-style brand. We are excited about the opportunity to unlock additional value in Barstool Sports as they continue their strong growth trajectory.”
Penn National Gaming’s Barstool Sports brand seems to have shrugged off the devastating impacts of COVID-19 in 2020 and is upbeat heading into 2021. Despite a net loss of $669 million in 2020, there was no shortage of positive signs for Penn National or optimism from their management team about Barstool Sportsbook heading deeper into this year.
It was just over a year ago that Penn National purchased a 36% interest in Barstool Sports and married two Heavyweight brands in the sports industry. Since then, Barstool has become an important and successful entity in their existing states, Pennsylvania and Michigan with an eye on rapid expansion in the next 12 months.
Penn National Misses Estimates… but Not Because of Barstool
Penn National last weeks, came out with its financials for Quarter 4 and not-all-that-surprisingly, it missed estimates albeit slightly. Q4 total revenues came in at $1.03 billion, off of the $1.09 billion estimate before commencement of the quarter.
The main reason for Penn National’s struggle to hit estimates comes as no surprise either. COVID-19 forced closures of their Illinois, Michigan and Pennsylvania retail locations, which obviously affected the company’s bottom line. Penn revenues had been trending in the right direction ahead of the coronavirus shutdowns.
Along Comes Barstool
There wasn’t much doubt about the impact that a Barstool Sportsbook would have on the industry when the media brand crossed over into the legal betting space. Barstool boasts 66 million dedicated viewers as well as 52 million Instagram followers, over 26 million followers on TikTok almost 5 million on Facebook, and 27 million on Twitter nationally. Their reach is massive.
The first state in which they launched, Pennsylvania saw the sportsbook downloaded 72,000 times with approximately $300 million in bets with limited marketing. In their second market-launch, Barstool Sportsbook was downloaded by 48,000 new customers in Michigan and saw $27.5 million in betting handle in the first 10 days and reported net earnings of $12.7 million in Q4.
Singing the praises of their new brand, Penn National CEO Jay Snowden said in a statement: “We view Barstool Sports not only as a fantastic channel to promote our offerings, but also an undervalued media asset that has evolved from primarily a sports brand into a highly relevant sports and life-style brand,”.
Customer Acquisition Perks
The Barstool sportsbook was expected to benefit from the media brand’s 66 million dedicated monthly viewers. The betting brand’s attempts to flip a portion of those users, mostly younger, to online sportsbook customers has so far gone very well… and has done so cheaper than other participating sportsbooks.
The average customer acquisition cost for sportsbooks is said to range anywhere from $300 to $800. Barstool’s costs have bested those averages. In fact, Barstool’s costs are estimated to be just under $200 per customer.
In an investors’ call this week, Penn CEO Jay Snowden went on record saying: “For Penn, so far from the first four months in PA, despite all of the Barstool Fund matching that we’ve done as well as in Michigan in our first month, we are well below the bottom end of that range. We have so much room, we have so much cushion to be opportunistic and figure out what we want to do and how we want to do it.”
Where Do They Go From Here?
Penn Gaming And Barstool
Penn expects the Barstool Sportsbook to be live in 10 states by the end of 2021. Indiana, New Jersey, Colorado, Virginia, West Virginia, Iowa and Tennessee are some of the states on the brand’s radar. The brand hopes to add a new jurisdiction every 3-5 weeks this year.
Illinois, one of the most exciting new markets in the US scene looks to be first in line to gain a Barstool Sportsbook. The Chicago-area market is Barstool Sports’ second-largest market in the country, giving the company an immediate leg-up before going live. The goal for Penn National is to have something in place in Illinois by March Madness, which is approaching quickly,
Maryland looks to be in Barstool’s immediate future as well. In mid-December, Penn National announced an agreement with Gaming and Leisure Properties to acquire Hollywood Casino Perryville with the plan to have the Barstool betting brand live some time this year.
Hopes Becoming Reality?
Barstool Sportsbook launched with an ideal to become a true Heavyweight in the US legal sports betting scene and those desires haven’t gone away. In fact, hope seems to be becoming reality for the brand.
Jay Snowden backed up his company’s desires last week when he said: “What I think you should assume is that we are going to be top three, we said that before we ever launched and we’re delivering on that. We’re going to be profitable faster than anyone else, and we’re delivering on that and continue to deliver on that pledge, again, faster than anybody else.”
Penn National Gaming And Barstool
“And as we scale, we just end up with a lot more dry powder to be more aggressive in the areas of widening that funnel and customer acquisition that we believe is driving the best return.”