Barstool Sports is selling part of its business to a casino operator in a deal that values the company at $450 million

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Barstool Sports,
the sports media site, has agreed to sell a 36% interest stake in its business
to casino operator Penn National Gaming. That’s approximately $163 million in
cash and convertible preferred stock. The deal would value Barstool at $450
million.

The deal would give Penn National exclusive rights to use
the Barstool brand for all of its online and retail sports betting and iCasino
products. In the fall, Barstool launched Barstool Bets, a platform that offers
free-to-play betting contests. 

“With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database,” said Penn National CEO Jay Snowden in a news release.

What’s interesting here is that Penn National isn’t exactly
focused on Barstool’s content. It’s looking more at monetizing a
cult-like, sports-obsessed audience. The partnership would allow Penn National
to market its products to Barstool’s audience of nearly 66 million monthly
unique visitors. According
to Vox
, Barstool generated between $90 million and $100 million in revenue
last year, with the majority coming from podcasts, merchandise sales, and
gambling deals.

I spoke with the CEOs of fantasy sports companies DraftKings
and FanDuel after the U.S. Supreme Court cleared
the way
in 2018 for states to legalize sports betting, striking down a 1992
federal law that had banned the practice in most states. FanDuel CEO Matt King
told me at the time that a market expansion like that one was bound to attract
many new competitors.

Many sports publishers, including Bleacher Report, ESPN and
Sports Illustrated, have established
content verticals
dedicated to sports betting. It’ll be interesting how
many of them begin rolling out sports betting apps a la Barstool. It’s only
just the beginning for this brave new world.

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Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com 

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