DraftKings and Barstool Sports Betting Partnership Could Be in the Cards

Article ByDavid Weir

January 25, 2024

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Posted in: US Gambling News, Massachusetts Gambling News, US Sports Betting News

Recent reports suggest that Barstool Sports and DraftKings are in discussions about a potential sports betting partnership.

Both companies started from Boston, Massachusetts, and share a core target audience in some respects.

Barstool Sports was founded by current owner Dave Portnoy in 2003 as a weekly sports news and betting pamphlet. It has been a controversial but popular presence in American sports media in the decades since, evolving from local sports and party news to an online media giant offering gambling advice and picks as critical parts of its content.

DraftKings is one of the leading two U.S. sportsbooks, alongside FanDuel. It started in 2012 in Massachusetts as a daily fantasy sports operator, and is now one of the biggest U.S. gambling companies, reporting $790 million in revenue in Q3 2023.

The potential partnership may have to wait. According to Sportico, who broke the story, deal insiders suggest that it will not begin until after February’s Super Bowl. That’s because Barstool’s previous owner, Penn Entertainment, signed a lock-up clause when it dropped Barstool Sportsbook to replace it with ESPN Bet.

The 2023 deal saw Penn take a huge loss on its $500 million purchase, as it sold the media brand back to founder Portnoy for just $1.

DraftKings previously had ESPN as its sports media partner. However, Penn’s licensing deal to form ESPN Bet ended that promotional partnership early. Now, speculation is the two Massachusetts-founded businesses could be ready to partner.

However, neither party has yet to officially comment on the potential pairing.

DraftKings’ Expansive Marketing

DraftKings, known for its aggressive marketing strategies, spent $1.19 billion on sales and marketing in fiscal 2022, and is expected to exceed this figure for 2023. In Q3 2023, it spent more than $300 million on marketing alone. That contributed to a loss-making quarter of $283 million, despite pulling in $790 million in revenue.

That 2023 total marketing spend is expected to be lower than 2022, when the final reports are published, partly attributed to the ESPN deal termination.

DraftKings has been actively exploring creating its own media brand for advertising, including purchasing Vegas Stats & Information Network (VSiN) and partnering with various sports podcasts and media companies.

Last year, it announced the launch of its own sports media streaming platform, funnily enough encouraging a few big names to move from ESPN in the process.

Revolving Doors

A partnership between Barstool and DraftKings could be a profitable one for Barstool and Portnoy, given that sports betting has always been part of the Barstool brand. But it doesn’t currently have a main sponsor.

For Barstool, aligning with DraftKings offers an opportunity to integrate a financial partner with its betting-focused content and audiences. Conversely, DraftKings would benefit from Barstool’s established brand and reach, potentially filling the gap left by the terminated ESPN partnership. Both companies also share a culture and audience, both being from the Boston area.

A promotional only deal would be advantageous for both companies. The controversial Portnoy (which was part of the reason Penn dropped Barstool) would have free reign to continue his bare knuckle approach without having to think of new shareholders or state gambling regulators.

The move would also fit with the well-known petty nature of Portnoy’s business dealings. Linking up with market leader DraftKings, that was unceremoniously forced out if its ESPN deal by the ESPN Bet launch, would not only be profitable, but also a middle finger to Penn Entertainment.

According to Investors Business Daily, Penn stock actually fell some 2% after this story broke, while DraftKings saw a smaller boost.

Playing some high stakes tit-for-tat might not be above DraftKings, either. In 2023, it filed a last-minute $195 million bid for the U.S. division of PointsBet, which was in advanced talks for a sale to sports merchandiser Fanatics.

Although Fanatics eventually upped their bid to $225 million and completed the deal, speculation was DraftKings didn’t particularly want PointsBet, and just used the opportunity to force a competitor to pay more for an acquisition.