Blockbuster: Penn Ditches Barstool For ESPN
Penn Entertainment shocked the gambling world on Tuesday, announcing it was severing its relationship with Barstool Sports and inking a $2 billion deal with ESPN.
The Bulletin Board
NEWS: Penn inks deal with ESPN; returns Barstool to Portnoy.
NEWS: Quarterly and yearly revenue numbers from iGaming Ontario help make the case for legalizing online casinos.
NEWS: Senators draw a line in the sand on election betting.
AROUND the WATERCOOLER: Insights and hot takes on the Penn-ESPN-Barstool news from social media.
STRAY THOUGHTS: Jake Paul fights and what makes a sport dull.
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This Is a Big F’ing Deal
It’s not too often I use the term blockbuster, but yesterday’s news definitely qualifies. Penn’s sale of Barstool Sports back to Dave Portnoy, coupled with the news it has inked a $2 billion deal with ESPN to create ESPN Bet, caught the entire gambling world by surprise - Hell, yesterday’s Straight to the Point newsletter took a look at the new Barstool Sportsbook app, which several hours later, was put out to pasture. On the plus side, my analysis is still relevant, as it appears Penn will rebrand its current app with ESPN.
So, what to make of the news? First, the details are still rolling in, and it’s unclear what Penn sold Barstool for or what the nuts and bolts of that $2 billion deal with ESPN are.
I’m still gathering my thoughts on the situation (and awaiting more details), but I think from the macro level, Chris Grove hit the nail on the head: “Penn / Barstool was always a bit of an awkward match at the corporate and brand levels. Once it became clear that Barstool the media company was worth more than Barstool the betting brand, the writing was on the wall.”
And as Chris Krafcik wrote on LinkedIn, many have tried to replicate Sky Bet, and thus far, no one has succeeded: “Sky Bet nailed the media integration model, but that was slow-burn + lightning-in-a-bottle. In U.S. OSB, meanwhile? So far, not good for that model (see, e.g., Fox Bet, theScore, Fubo, and MaximBet).”
I’ll have more on this story in tomorrow’s newsletter, and you can scroll down to The Watercooler section to see some of the best takes from social media.
Casino Dominates In Ontario iGaming Revenue Report
On April 4, 2022, legal online gambling went live in Ontario. Sports betting, online casino, and online poker were all made available throughout the province.
Just over a year later, we see how these three online verticals perform.
Unsurprisingly, online casino is the bigger moneymaker, accounting for two-thirds of all online gambling revenue generated.
This newsletter will continue to hammer this point home until the US wakes up and treats online casino and poker like it treats sports betting. Casino is the better financial opportunity for operators and the state, and as I said in yesterday’s newsletter, “Why is it so critical to protect sports bettors from unscrupulous offshore operators but not poker and online casino players?”
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US Senators: Just Say No To Election Betting
Several high-profile US Senators have penned a letter to the Commodity Futures Trading Commission (CFTC) urging them to reject a proposal from Kalshi, a predictions market operator, to wade into US elections as a betting market.
Kalshi submitted a proposal to the CFTC on June 12 to offer a market on which political party will control each chamber of the US Congress.
The group of Senators, which includes Chris Van Hollen (D-MD), Jeff Merkley (D-OR), Sheldon Whitehouse (D-RI), Edward J. Markey (D-MA), Elizabeth Warren (D-MA), and Dianne Feinstein (D-CA), urged the CFTC to “reject Kalshi’s Congressional Contracts on which political party will be in control of each chamber of the U.S. Congress.”
Contrary to popular belief, election markets are available in the US, but the Senators are concerned about the for-profit nature of the current request, writing:
“The CFTC has never allowed a for-profit venture to operate a political event contract, nor has the agency permitted any entity to operate a political event contract of such scale. Establishing a large scale, for-profit political event betting market in the United States by approving Kalshi’s requested contracts, would profoundly undermine the sanctity and democratic value of elections. Introducing financial incentives into the elections process fundamentally changes the motivations behind each vote, potentially replacing political convictions with financial calculations.”
Anyone interested in the legal hurdles and CFTC’s role in election markets can read this 2020 article I wrote when FanDuel appeared to offer lines on the presidential election for all of 15 minutes in West Virginia.
Around the Watercooler
Social media conversations, rumors, and gossip.
This entire section will be devoted to Penn-Barstool-ESPN takes, starting off with a sober look at the situation from Steve Bittenbender (@BittGDCG), who noted the next 24 hours would include Flutter’s Q2 earnings call overnight, followed by Penn’s at 9 AM.
And another GDC employee, @CraigRCummings, comes in with one of the better 30,000-foot-view takes on the numerous attempts to mashup sports betting and media.
We haven’t seen details on the non-compete, but this, by @AdamRy_n, would be a massive hit to Barstool’s advertising opportunities and might explain the sale price.
And it looks like (LOOKS LIKE) Portnoy was handed the keys to Barstool for $0 and some contingencies, according to @JNucci23.
Which, if true, may mean the gambling world loses one of its more insightful commentators - make sure to visit @DustinGouker in the looney bin.
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Stray Thoughts
David Purdum noted on Twitter that “Jake Paul-Nate Diaz was the second-most heavily bet boxing match (most bets and money) in the history of DraftKings (behind only Davis-Garcia April 2023). Paul-Diaz attracted more than 2x as many bets as the entire six-fight card of Saturday's UFC 291 at BetMGM sportsbooks.”
Unlike the Penn-ESPN-Barstool news, this phenomenon is something I have been able to give some thought to. Why do certain sports or events grab our attention more than others? I think that when certain activities are done at the highest level, they become increasingly boring.
Why is a karate kata competition a blip on the radar, but a floor routine in gymnastics or a figure skating program is must-see TV? Because karate kata competitors don’t make glaring mistakes at the highest level, the difference between first and last place is barely perceptible to a casual sports fan. With gymnastics and figure skating, you see the falls and near-falls. You see or are informed that one technique is more challenging. High-level karate kata all look the same; only diehards can spot the differences.
Closer to home, poker was far more exciting to engage with (as a viewer or casual player) when people played faster and implemented radically different styles. Now it is only intriguing to aficionados; a channel surfer isn’t going to stop on poker programming anymore.
So maybe boxing (and, to a lesser extent, the UFC) is becoming boring at the highest levels as the top athletes’ skill sets continue to merge. There is little boxing can do to change that outside of something like significant KO bonuses. Go down a few rungs on the skill ladder, and things look more attractive. That helps explain the interest in Jake Paul-type fights, where the defense isn’t impeccable. And, of course, the spectacle of it all and the sizable number of viewers wanting to see Paul get KO’ed.
Author note: Straight to the Point is a one-person show at the moment. Apologies in advance for any spelling or grammatical errors.