Benzinga - by Chris Katje, Benzinga Staff Writer.
One of the most famous voices in sports media could be re-entering the sports betting sector after making an exit last year.
Here's a look at the latest on Barstool Sports, the company founded by media personality Dave Portnoy.
What Happened: Sports betting and casino company PENN Entertainment (NASDAQ:PENN) shocked many in the sector when it announced it was selling the Barstool Sports brand back to Portnoy and licensing the ESPN Bet brand from The Walt Disney Company (NYSE:DIS).
The deal put an end to the Barstool Sports ownership by Penn, which led to the creation of the Barstool Sportsbook and Penn's online sports betting initial efforts.
A new report from Sportico Wednesday said that Barstool Sports could be nearing a sports betting deal with Penn rival DraftKings Inc (NASDAQ:DKNG).
Unlike the original ownership of Barstool Sportsbook by Penn and the branded Barstool Sportsbook, the partnership with DraftKings would be closer to a traditional marketing partnership, according to the report.
DraftKings told Benzinga it has no comment on the Wednesday report. Barstool Sportsbook did not respond to an emailed request for comment.
The report said Barstool would promote DraftKings odds and refer customers to the sportsbook. A potential multiyear deal is being discussed that could be worth low eight figures annually, according to the report, which cited unnamed people familiar with the situation.
The deal between Barstool Sports and DraftKings cannot be finalized until after Super Bowl LVIII due to a lock-up agreement as part of the divestiture from Penn Entertainment.
The sale of Barstool Sports to Portnoy included several non-compete clauses that were not made public.
Barstool CEO Erika Ayers Badan, who recently announced her exit from the company, hinted in December at a return to sports betting for the company.
"I would still argue that (sports betting) is a huge part of what we do today," Ayers Badan said. "Our crew bets obsessively on games, we always have…But I think you'll see, into next year, that we start to establish ourselves back in that space."
Related Link: DraftKings Q3 Earnings Highlights: Shares Climb On Revenue, EPS Beat; Company Raises 2023 Guidance, Provides Initial 2024 Guidance
Why It's Important: Penn paid $163 million for an initial 36% stake in Barstool Sports, before acquiring the remaining 64% for $388 million, paying a total of over $500 million. The company sold Barstool Sports back to Portnoy for $1 when it moved on to the ESPN Bet partnership.
Penn reported an $850-million write-off on its Barstool acquisition.
In his announcement of the separation from Penn, Portnoy praised Penn and said the companies underestimated how tough it was to operate in a regulated world. Portnoy called Penn's deal with ESPN a win-win for Penn.
On Wednesday, sports reporter Darren Rovell reacted to the news with shock.
"Absolutely insane that the Penn non-compete in the gambling space with Barstool was only for six months. Makes no sense," Rovell tweeted.
ESPN Bet launched in 17 states in November and saw strong initial success, including a third-place market share finish in Pennsylvania in December. The sportsbook spent heavily on promotions, which could help its market share gains from previously being the Barstool Sportsbook brand.
DraftKings and FanDuel, which is owned by Flutter Entertainment (OTC:PDYPY), have dominated the online sports betting sector with the top two market share positions and several companies battling it out for third place and beyond.
DKNG, PENN Price Action: DraftKings shares are up 4% to $39.68 on Wednesday, hitting new 52-week highs.
Penn shares are up 1% to $24.11 versus a 52-week trading range of $18.35 to $36.25.
Read Next: Dave Portnoy Welcomes Back Full Ownership Of Barstool Sports, Calls Penn-ESPN Deal Win-Win: ‘I Am Never Going To Sell’
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