The Boys Are Back In Town
The return of Barstool Sports to the sports betting space (through a marketing deal with DraftKings) caused a lot of confusion and speculation. So let's try to sort it out.
The Bulletin Board
NEWS: Let’s talk Barstool-DraftKings.
WEEKEND CATCHUP: A DFS scandal; A college betting scandal; Former MGM Grand President indicted; PrizePicks New P2P DFS game
VIEWS: Does the Missouri ballot initiative have a wording problem?
BEYOND the HEADLINE: Sportsbooks give millions to Missouri petition effort.
WAY BEYOND the HEADLINE: The Missouri Legislature is in utter turmoil.
AROUND THE WATERCOOLER: BetMGM rolls out a new Super Bowl ad.
STRAY THOUGHTS: Encountering quality RG commentary in the wild.
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What Is REALLY Going with Barstool and DraftKings
A lot has already been written on the rumored return of Barstool Sports to the legal US sports betting space via a deal with DraftKings. And as promised last week, I have some thoughts.
Assuming the deal goes through, the first thing to address is the seemingly short noncompete term. First, this did not surprise me. I’m on record that Barstool would be back in the US sports betting space in short order, considering the divorce with Penn was brokered in two weeks.
And I’m not the only one. Vanity Fair reported the noncompete running through the end of the current NFL season in August:
Again, not surprising to me.
Second, no, it doesn’t speak to Penn’s negotiating skills. A lot is made of the hundreds of millions Penn sunk into Barstool. Yes, big mistakes were made, and no one denies them, but Penn decided to avoid the sunk cost fallacy.
The “bad” deal it got was due to its need to drop the Barstool brand to seal the deal with ESPN. As Jo (Gretchen Moll) told Mike (Matt Damon) in Rounders, “Throw away your cards the moment you know they can’t win.” the outcome wasn’t good; it was terrible. But hanging on would have been far more costly. So Portnoy and Barstool got a sweetheart deal.
As Taylor Caby said on X, “I assume they [PENN] were the ones that wanted to do the ESPN deal and wind down the Barstool book. He [Portnoy] had to be on board for the transition, otherwise they have a huge headache to deal with. They also get a six-month period where he’s speaking positively about Penn, not undermining the new brand, etc. The optics if they didn’t at least get “something” (the 50%) would look far worse than this outcome.”
The next point(s) to address is what DraftKings is getting. Some of the questions raised appear legitimate:
Won’t Barstool run into the same regulatory issues with DraftKings?
The Barstool Sportsbook was a “failure,” so why will this be different?
If Stoolies were valuable, why would PENN sell it back for $1?
How big is the pool of non-DraftKings users Barstool can activate?
The first question is easy to answer: No.
#1: Barstool will undoubtedly run into some regulatory pressure, but there is a vast chasm between being the customer-facing brand of a licensed sportsbook and advertising a sportsbook.
As for questions #2 and #3, I would argue against Barstool Sportsbook being a failure. It didn’t meet its expectations and tried and failed to create a new marketing approach. That said, it was still among the better-performing second-tier sportsbooks. More importantly, this is an affiliate marketing deal, something Barstool is uniquely built for.
Question #4 is the most intriguing question. Part of the answer can be found in the wise words of Chris Grove, who tweeted that the deal is unlikely to “materially expand market share” for DraftKings, but “there could be some interesting opportunities to drive incremental revenue on the online casino side.”
“It should be quite difficult for this to be a bad deal for DraftKings. High floor, moderate ceiling,” Grove added. “It’s also hard for it to be a bad deal for Barstool insomuch that they have already had arguably among the best outcomes to date from regulated sports betting.”
One additional point I feel is being overlooked (I haven’t seen anyone discuss this) is retention. Barstool is known for a loyal, engaged audience, and whether they are current DraftKings bettors or not, the deal could help DraftKings on the retention front.
I’ll place a bow on this entry with the words of Alun Bowden when it was first reported: “Excited to see more takes on Barstool from industry commentators who have consistently proven they don’t understand how most of the business works.”
Weekend Catchup: A DFS scandal; A college betting scandal; PrizePicks New P2P DFS game
Why we can’t have nice things Volume 1: Per reporting by ESPN’s David Purdum, an employee working for SportsHub’s National Fantasy Football Championship “used internal controls to make advantageous changes to a contestant’s roster after games had kicked off, including swapping in a player who had already scored a touchdown.” The contest had over 1,500 entries and featured a first-place prize of $150,000.
Why we can’t have nice things Volume 2: Patriots WR Kayshon Boutte was arrested on Thursday and charged with computer fraud and underage gambling. It’s alleged that Boutte placed nearly 9,000 wagers over 13 months while a member of the LUS Tigers - Boutte was 20 at the time. That’s an average of 20 wagers per day, which might indicate (speculation Klaxon) that there is a bit more to this story than Boutte merely placing bets for himself.
Why we can’t have nice things Volume 3: Former MGM Grand President Scott Sibella pleaded guilty “to failing to file reports of suspicious transactions required to be made by casinos to federal officials,” per the Las Vegas Review-Journal. “Sibella admitted to knowing Nix ran an illegal bookmaking business but still allowed him to gamble.”
PrizePicks launched a new P2P fantasy game last week, dubbed PrizePicks Arena. The game will initially be available in four locales: Alabama, Tennessee, West Virginia, and Wyoming. Per the press release, “Users compete for guaranteed prizes by being placed into groups matching their number of entries, selected entry fee, and experience level on the PrizePicks platform.”
Technicality Puts MO Sports Betting Petition in Jeopardy
A sports betting petition supported by Missouri’s professional sports teams has run into a hiccup following a fiscal review of the proposal.
Per the St. Louis Post-Dispatch, the fiscal review concluded, “the initiative petition fails to include a mechanism for allowing state agencies to collect or deposit taxes and fees generated by a legalized sports betting program.”
Because of the technicality, the fiscal analysis assumes zero revenue would be generated (which is obviously not the case):
“It should be noted that the commission is not expressly authorized under this proposal to collect any of the fees described in this proposal… Without the identification of an agency to collect the tax, no tax can be collected.”
Supporters of the ballot initiative say the oversight was intentional, as it gives “both the Missouri Constitution and our statutes give the Missouri Department of Revenue independent authority to collect all taxes imposed by law and deposit the funds,” Jack Cardetti, a spokesman for the Winning for Missouri Education told the Post-Dispatch.
In addition to the ballot petition, Missouri will have competing bills to choose from. As I noted in my analysis earlier this month, the bills are almost identical in every way but one: State Sen. Denny Hoskins’ bill seeks to legalize VLTs, and State Sen. Tony Luetkemeyer’s bill doesn’t.
Beyond the Headline: FD and DK Back Initiative
As Steve Bittenbeder reports, FanDuel and DraftKings are financially backing the petition.
The $2 million ($1.5 million from FanDuel and $500,000 from DraftKings, per Bittenbender) is in addition to $250,000 donations each entity made a couple of weeks ago.
Way Beyond the Headline: MO Politics Go Off the Rails
To say the Missouri Senate is in a state of disarray is putting it mildly.
Several members of the Republican Freedom Caucus were punished by leadership, with Senate President Pro Tem Caleb Rowden calling them the “Chaos Caucus.”
One of the members, State Sen. Denny Hoskins, who has derailed sports betting legislation in recent years, was very vocal on social media about the situation.
In a statement, Hoskins said he was removed as the chair and member of the Committee on Economic Development and Tax Policy because “my use of strategies and motions that are within the rules of the Senate but are not part of the usual process… I cannot help but feel this action is an attempt to silence me for the policies I have supported and those I have opposed, both in the committee and on the Senate Floor.”
A divided legislature is not a hospitable place for legislation, particularly an issue as divisive as sports betting.
Around the Watercooler
Social media conversations, rumors, and gossip.
BetMGM is tripling down on celebrity endorsers with its Super Bowl campaign ad featuring Tom Brady, Wayne Gretzky, and Vince Vaughan. The latter is, interestingly, the tallest in the commercial.
Definitely outside of my area of expertise, but I often wonder how effective these celebrity endorser campaigns are. A big name certainly brings people to theatres and sports events, but that doesn’t feel like an apples-to-apples comparison as people are there to see them do what they do best, not pitch a product they have little connection to - this isn’t Michael Jordan with sneakers.
If the ad is good, does it matter who delivers the message? If the names are huge (like they are here), does the star power overshadow the message - “Did you see the new Brady ad,” rather than, “Did you see the new BetMGM ad?”
Back to the ad, the gist of which is Tom Brady is barred from betting because he wins too much. That certainly caught the attention of social media, where so many professionals have expressed their frustration for being banned or limited for… winning too much - below is a smattering of quote retweets.
Stray Thoughts
RG messaging in the wild. It’s interesting to see someone simply discussing gambling without worrying about ticking off certain boxes or playing to a specific audience (gamblers or anti-gamblers). It’s also refreshing to hear why people don’t gamble.
As an aside, if you’re looking for a great striking coach for virtual training, Gabriel is your guy. My son does private lessons with him over Zoom and improves by leaps and bounds every session.
1. Regarding Barstool, there's also the reputational risk to DK that Portnoy and his merry band will do something crazy. It was of some concern of PENN and certainly to ESPN, which is already going out on a ledge with its involvement in betting. Is there an affiliate marketing deal that's really working?
2. Regarding BetMGM, they've used Gretzky before, so they must think they're some Brady magic. I don't get it. Didn't Tom appear in another Super Bowl ad for FTX, how'd that turn out? The whole premise that he can't bet makes no sense. It may build awareness for BetMGM, but then what? There are many more places they could have spent their money.