Penn National Will Win
Why I Believe BarStool Sports Will Lead Penn to Being a Winner in Sports Betting
“Whoever is closest to the end consumer wins” -Gary Vaynerchuk
What’s up Guys today’s newsletter will be about why I think Penn National/Barstool Sports is destined to win in the sports betting space.
In the past five years, sports betting has become legalized in over two dozen states, which has allowed for the space to become very crowded with competitors state to state. As of 2020, the U.S sports betting industry was worth $9.5 billion, and according to Ark Invest, it’s projected to be worth $37 billion by 2025. Some of the names in the space currently are Fanduel, Draftkings, BetGM, and so many others and since the industry will be worth so much in the future there will be room for multiple winners. I like to compare the space to browser usage, many browsers are used every day, some people use Firefox, some use Microsoft Edge, some somehow use Internet Explorer (Yuck), but there is only ONE Google Chrome and that’s how I believe this ends up playing out. Whether or not one of the newer companies in the sportsbook world Penn/Barstool Sports turns out to be Google Chrome is beyond me, but I believe with STRONG conviction Barstool will end up being one of the major winners, even though Barstool was a little late to the Sportsbook scene.
The reason I believe they will undoubtedly be a major player is due to the above quote: “Whoever is closest to the end consumer wins”. In my opinion, nobody in this space is closer to the end consumer than Barstool which is a reason Penn National acquired a 36% equity stake for $163 million (cash & stock) in January 2020 and will increase their ownership to 50% after three years for another $62 million. While other companies that have a big market share in many states like Draftkings and Fanduel have to spend $495 million on marketing and sales in a year, Penn National was able to buy a content-making machine that can drive sales for a third of the price overall. Barstool is able to be so close to the consumer due to them having personalities that people care about that are also active on social media (135 million+ followers), through YouTube, and podcasts. We as a society are becoming more attached/loyal to people rather than brands and that ends up playing out in Barstools favor.
Being so close to the consumer, allows Barstool the permission to do so many things, that other players are not able to do yet, or will ever do. Back in July, Barstool Sports announced they were the sponsor of the college football bowl game the Arizona Bowl. You’re probably saying, “so what? Any of the big-name brands can be a sponsor of a bowl game.” You would be correct, but in this case, they aren’t just putting the name of Barstool on it and not doing anything else. Barstool also has exclusive broadcasting rights (which means it will only be able to be watching on Barstool Sports channels) and will have Barstool’s personalities announcing the broadcast.
You still may not be impressed, so let me go deeper into some other things Barstool now has going on that get them closer to the consumer and gives them a creative advantage.
You may or may not know the origin story of how Pink Whitney by New Amsterdam Vodka was created, but the idea was sparked through a Barstool Sports podcast moment that went viral in 2018 and last year the drink sold 800k cases. Already being embraced by big-box giant Walmart due to the Pink Whitney, they are doubling down on that connection. Barstool founder Dave Portnoy, who has a One Bite Pizza Review channel with roughly 481k subscribers is launching a frozen pizza brand called....you named it, “One Bite” that will hit 3,600 Walmart stores by the end of September. But that’s not all…the company’s planning its first standalone bars in Chicago and Philadelphia this fall…but that’s not all…..Barstool is also jumping into the Ghost Kitchen trend. A ghost kitchen is a virtual restaurant that does delivery only and does not have a physical storefront, and Barstool is partnering up with Planet Hollywood founder Robert Earl, to create a virtual restaurant around the Barstool Brand. Barstool Bites, which debuts in October, will offer an array of food sports junkies love. 14-inch sandwiches, super spicy chicken wings, dips, and buckets of flavored popcorn, are some of the things Barstool Bites plans to offer to the customer. “We’re going to experiment with giving our fans the ability to order the types of food we eat when we’re sitting on our couch watching football on Saturdays and Sundays,” said Erika Nardini, Barstool’s CEO, as reported by Bloomberg.
Barstool will win because they have shown they are dedicated to getting as close to the consumer as possible, which will help $Penn also win.
Disclaimer: I am a shareholder of Penn National Gaming and this is purely an opinion-based newsletter meant for entertainment value only. Please, do your due diligence and form your own opinions.