Penn Entertainment has exercised its rights to acquire the remainder of Barstool Sports roughly two and a half years after the gambling and entertainment giant purchased its first stake in the company.
Barstool & Penn History
On January 29, 2020, then-called Penn National Gaming announced an “exclusive sports betting and iCasino partnership” with sports and entertainment company Barstool Sports. At that time, Penn purchased 36% of Barstool for roughly $135 million in cash and $28 million in convertible preferred stock. This would give Penn the rights to utilize the Barstool Sports name for all sports betting and iCasino products and services, and make Penn the exclusive gaming partner of Barstool for 40 years.
Under terms of the initial purchase agreement, Penn would increase its ownership of the company by 14% after three years to own 50% of Barstool by investing another $62 million in the company, valuing the company at $450 million.
The Future of Barstool & Penn
On August 4, Penn released its quarterly report which detailed their plans for acquiring the remainder of Barstool. It stated that on October 1, 2021, the terms of the initial agreement were amended “to set a definitive purchase price of $325.0 million on the second 50% of Barstool Sports common stock.” With the $62 million to acquire the rest of the first half of the company, along with an additional $325 million to acquire the second half, Penn will have ultimately valued, and purchased Barstool for a total of $550 million.
Penn filed a Form 8-K with the Security and Exchange Commission on August 17 which states “PENN Entertainment, Inc. (“PENN” or the “Company”) has call rights with respect to all of the outstanding shares of common stock of Barstool Sports, Inc. (“Barstool”) not already owned by PENN. PENN has exercised these call rights to bring its ownership of Barstool to 100%. The acquisition of the remaining Barstool shares is expected to be completed in February 2023, after which Barstool will be a wholly-owned subsidiary of PENN.”
theScore And More
Penn has had a busy last year otherwise, having also acquired theScore. They discontinued theScore’s U.S. betting operations on July 1, to focus their efforts on the Canadian market, specifically in Ontario, where they launched this year, transitioning to their own proprietary risk and trading platform. Meanwhile, they were to focus their U.S. efforts on expanding Barstool Sportsbook which is currently legal in Pennsylvania, Michigan, Illinois, Colorado, Virginia, New Jersey, Tennessee, Arizona, West Virginia, Iowa, Indiana and Louisiana. Casino games are available in Pennsylvania, New Jersey, Michigan and West Virginia.
In their second quarter financial presentation to investors, Penn announced that their next goal is to migrate Barstool Sportsbook to the same in-house trading platform as theScore, which they plan to achieve by the third quarter in 2023. “Migration of the Barstool Sportsbook mobile app to our in-house player account management and trading platforms will provide the benefits of a fully integrated tech solution,” the presentation read. “Integration of the Barstool Sportsbook into theScore media app in the U.S. will drive increased engagement, revenue, and retention.”