The 1 Strategy Barstool Sports is Leveraging to Conquer the Sports Gambling Market
Dave Portnoy took Barstool sports from handing out newspapers in 2003 to a media company worth a $450 million valuation in 2020.
The Barstool sportsbook is leveraging its media content as a customer acquisition tool for its sports gambling app. Barstool sports currently has 91 shows/podcasts, 10 million followers on Instagram, 810K YouTube subscribers. Barstool has three podcasts in the top 30 of all podcasts.
The media company is setting its sights on the sports gambling market.
The total addressable market for sports gambling is estimated between $67-$87 million. Sports gambling is legal in 19 U.S. states and counting. The other states will follow suit and there is massive potential in the sports gambling market.
Portnoy is the secret weapon to Barstool capturing the sports gambling market.
Penn National Gaming
PENN National Gaming acquired 36% of Barstool sports for $162 million in early 2020.
Penn can increase its ownership stake of Barstool to 50% in 2 years for an additional $62 million. Penn is a brick and mortar casino and racetrack company. They run 43 properties in the U.S.
The acquisition of Barstool is a customer acquisition tool to leverage Barstool’s audience and brand to build out a sports gambling book.
Sales and Marketing
Having an audience is a cheaper and more effective way to reach customers than advertising.
Penn’s biggest competitor in the sports gambling space is Draft Kings. Draft King’s sales and marketing costs increased 167.3% year-over-year to $495.2 million. The cost of which as a percentage of revenue in 2020 was 80.5%.
Contrast that with Barstool, who one can assume has a profitable content business.
Draft Kings acquired Vegas Stats & Information Network (VSIN) for an estimated $100 million. DraftKings announced it will distribute Dan Le Batard’s sports podcast. Le Batards podcast averages 10–12 million monthly downloads. The deal is for a reported $50 million over three years. Draft Kings is copying Barstool’s customer acquisition strategy with an inferior product.
Barstool’s strategy draws parallels to Amazon, where they take cost centers and turn them into profit centers.
Social Media presence
Portnoy has 2.4 million followers on Twitter, 3.6 million on Instagram. The One Bite Pizza reviews channel has 417K followers on Youtube.
Nobody knows how to stir the pot on Social media quite like Portnoy. Just this week, Dave got into a Twitter exchange with Elon Musk after he called out Tesla’s pump and dump of bitcoin. During the Robinhood and Gamestop debacle, Portnoy interviewed Robinhood CEO Vlad Tenev.
Portnoy is always up for drama on the internet and he knows better than anybody that all press is good press.
Speaking of good press, Portnoy stepped up to support small businesses hurt by the pandemic. Barstool raised $39 million to support more than 332 businesses. Portnoy posted the facetime conversations he had congratulating the small business owners on being included in the fund. Those videos were a pleasant moment during a dark time for the nation.
Draft Kings isn’t going to compete with Barstool with their social media presence.
Flexibility
Barstool is in a position now where they can throw content at the wall and see what sticks.
Call Her Daddy is a raunchy sex advice podcast with a female perspective hosted by Alex Cooper. Cooper was a college graduate who was approached by Barstool. Cooper now has 2.2 million followers on Instagram. The podcast was the fifth most popular podcast on Spotify in 2020.
Davey Day Trader Global is a series Portnoy began where he live-streams his day trading at the opening and close of the stock market. Portnoy and Barstool have limited downside risk and unlimited upside potential to trying new ventures.
This optionality is a luxury Draft Kings doesn’t have with their media by acquisition strategy.
Capturing the Youth
Barstool is extremely popular in the college community and with Millenials under the age of 30.
They’re called Stoolies, and they are as devoted of a fan base as you’ll find. The media company gained traction on Instagram, posting humor videos and memes that cater to younger audiences. They are always capitalizing on trends. The first notable slogan of the company was “Saturdays are for the boys.”
Barstool Sports is positioned nicely to capture the college audiences for the foreseeable future.
Six months ago, Dave started a podcast with 19-year-old TikTok star Josh Richards. The podcast has 296K subscribers on Youtube and currently ranks in the top 200 podcasts on iTunes. The 44-year-old Portnoy and the 19-year-old TikToker have chemistry.
Portnoy’s power is in his ability to reach new demographics.
