Penn National Gaming completed in $163 million deal Thursday that gave the casino operator 36% ownership in sports media platform Barstool Sports.
The transaction, which comprised of $135 million in cash and $28 million in non-voting convertible preferred stock will allow the regional gaming giant to utilize the Barstool Sports brand for all of its online and retail sports betting and iCasino products.
Penn National, which currently operates 41 gaming facilities in 19 states is now Barstool Sports’ exclusive gaming partner.
“Since announcing our groundbreaking partnership with Barstool at the end of January, we have seen first-hand the power of the Barstool brand to generate significant consumer interest and increased engagement between Barstool, their loyal audience of ‘Stoolies’ and our own nationwide platform,” Penn National CEO Jay Snowden said in a statement.
“Our two teams have hit the ground running and are working on plans to roll out the Barstool Sportsbook brand through both our retail sportsbooks and our interactive products,” Snowden added.
Penn National will increase its ownership in Barstool Sports to approximately 50% after three years (or earlier, at Penn National’s election) with an incremental investment of approximately $62 million.
The company also designated Chief Strategy Officer Chris Rogers and Senior Vice President of Interactive Gaming Jon Kaplowitz, to join Barstool Sports’ seven-member board of directors.
Entities affiliated with The Chernin Group, a New York-based media holding company, now own approximately 36% of Barstool Sports with the remaining approximately 28% held by Barstool Sports’ current and former employees.
Snowden said Penn and Barstool’s interactive product development is working toward launching a sports betting app in August. Snowden said the deal with Barstool will help the company create an omni-channel provider of retail and online gaming and sports betting entertainment.
Penn National is banking on at least a portion of Barstool’s 66 million monthly visitors becoming customers at the company’s casinos and, ideally, wagering on Barstool-branded sports betting app. The average age of the more than 20 million customers in Penn’s loyalty program is in the mid-50s. Roughly half Barstool’s audience is Millennial or Generation X, a group younger by more than a decade.
Barstool Sports was founded in 2003 as a Boston-area print publication focused on fantasy sports and sports betting before evolving into a broader sports and pop culture website. In 2016, the Chernin Group acquired 60% of Barstool.
Shares of Penn rocketed up almost 11% on the Nasdaq on the day the deal was announced. The company’s stock price closed Thursday at $38.17, up $1.07 or 2.88%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.