Penn Entertainment to Launch ESPN Bet As Sportsbook
Transcript
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00:03 All right, so boy, it's actually not a confusing story.
00:07 It seems pretty clear cut to me, Pat.
00:09 I don't know about you when you heard this.
00:12 As Penn basically decided they didn't wanna do business anymore with Barstool.
00:17 For whatever reasons they're saying, I don't know that they all add up,
00:20 except for the bottom line, which is they just were not doing well, Pat.
00:23 I mean, that's just all there is to it.
00:24 So they took their ball and went home.
00:27 And instead of taking their ball home, they went over to ESPN and said, hey,
00:30 we're gonna give you a couple billion.
00:32 You guys promote us, let's throw your name on the betting app and
00:35 see if this works.
00:36 Barstool goes about their business now,
00:38 they're out of the sports betting business.
00:40 I'm sure they'll still talk sports betting, but
00:42 they're not gonna be taking bets anymore.
00:45 What did you make of the announcements?
00:47 And what do you think this holds for the future of ESPN and Penn Gaming?
00:51 >> I mean, from the get go, this is a huge story.
00:56 I mean, we've all been waiting to see how ESPN gets into the sports betting
01:01 industry.
01:02 I don't think we anticipated it to happen this quickly out of nowhere.
01:08 Maybe they should have done it a long time ago.
01:11 Of course, in October, they had been in talks, supposedly,
01:15 according to Bloomberg, with DraftKings.
01:17 That obviously didn't happen.
01:18 And here we are, waiting a few months, probably November,
01:23 it sounds like, for a launch of ESPN bet.
01:26 But it's, of course, something we've all been waiting for,
01:29 is when is the sports, the worldwide leader in sports, getting into sports betting?
01:33 We've heard Disney talk about how they need growth and
01:36 they need money to come in from ESPN.
01:39 And this is certainly a way to do it, 1.5 billion over ten years from Penn
01:43 to license a sports book.
01:45 Now, what this means for Barstool?
01:49 Well, Dave Portnoy, according to the 10Q last night, bought it back for $1.
01:56 That's pretty insane.
01:58 Penn estimates it's gonna lose more than $800 million of stuff,
02:03 money, I guess, from that deal, which is pretty insane amount of money,
02:08 just to kind of burn away.
02:10 But yeah, I think you're right.
02:12 I think when it all breaks down, Barstool just wasn't cutting it.
02:16 They spent a lot of money, I think it was, again,
02:21 more than 800 million or so to acquire it.
02:24 And now they just sold it for $1 back.
02:27 Now, of course, Barstool has a non-compete.
02:31 They can't relaunch a sports book.
02:33 They can't take sports betting advertising money.
02:35 They get 50% if Dave Portnoy ends up selling it again or lets investors come in.
02:44 So there is some benefits there.
02:47 So watching what Barstool does over the next couple of years will be interesting.
02:51 If they're still talking sports betting, which I imagine they will,
02:55 it's not gonna be in terms of promoting a sports book.
02:59 So that's gonna be fun to watch.
03:01 And then ESPN, it'll be interesting, again, to see how Penn gets customers.
03:08 I mean, they were banking on this massive Barstool audience
03:13 to come and bet at Barstool Sportsbook.
03:16 They didn't, really.
03:18 There was a promised 66 million user database or content consumption database from Barstool.
03:25 And they said yesterday they had about 1.5 million customers they acquired through this.
03:31 And that equated up to like a 3.5% market share in the markets they're in.
03:35 So really, it wasn't a big needle mover for them.
03:39 And ultimately, they said, "That's not worth it.
03:41 We'll get rid of it, and then we'll spend more money on ESPN."
03:45 A bigger version, I would say, of Barstool,
03:48 maybe a little bit less influential in culture, maybe, now.
03:53 But, you know, how do they use that now?
03:56 How do they acquire users from that?
03:58 Are they just gonna hope that having the ESPN brand brings customers in?
04:02 We're gonna have to wait until they launch in November to see if that's true.
04:05 But, I mean, hey, they're making a bet that this time it'll work.
04:10 And we'll see if it does.
04:12 I want to ask you, you know, in Florida, if you ever get sports betting again,
04:17 and it's more than just Hard Rock,
04:19 is that a sports book that intrigues you just because of the name?
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