Since 2018, 22 states and the District of Columbia private legalized gambling. With estimates on the scale of sports gambling’s murky market pushing $150 billion and prohibition slowly ending, the different is largely colossal.
There are quite quite a bit of the way to make investments in this trend, but Penn National Gaming‘s (NASDAQ:PENN) chance to put off a 36% stake in — and associate with — Barstool Sports locations it in the very top long-term put to receive the massive different. Here is why:
Picture supply: Getty Photos.
Celebrity Travel: sports gambling associate
As of a couple of months in the past, Barstool Sports attracted 66 million month-to-month full of life users (MAUs) to its ecosystem of media offerings. What’s extra provocative: Its gigantic, cult-like following of gamblers is supreme for Penn National’s formula.
Out of Barstool’s 66 million MAUs, 44% gamble on sports weekly, totaling correct over 29 million weekly sports betters. For comparison, this will receive the complete season for the NFL — the most standard sports betting league in the nation — to be triumphant in 33.2 million total sports gamblers, in step with the American Gaming Association.
Barstool’s following is moreover critical youthful and skews extra male than Penn’s fashioned customer perilous had been sooner than the partnership. Sports gambling is dominated by youthful generations and is engaged with predominately by males, making those two traits of Barstool’s following enviable as properly. Whereas Penn’s demographic pre-Barstool was older and extra female than the widespread-or-garden sports gambler, Barstool’s following now enables Penn to find entry to a extra viewers for sports gambling.
The sports-media behemoth’s scale and demographic is glorious from a user acquisition cost standpoint for Penn. Opponents like DraftKings has to present equity away to Michael Jordan — who joined the corporate as a special guide in September — and fund costly TV advert campaigns in inform to entice fresh users. Barstool’s personalities — like Dan Katz and Kevin Clancy — merely must post videos of themselves drinking meals, gambling, playing video games and talking to promote to thousands and thousands of americans for free and on ask.
Even without costly advertising and marketing and marketing applications, Penn National was in a receive 22 situation to interrupt DraftKings’ report for quite quite a bit of opening-weekend gambling app downloads. For Penn: No TV classified ads, no celeb partnerships, no procedure back; that’s what a partnership with Barstool supplies. The real fact that Barstool’s gambling characteristic is extremely top currently live in Pennsylvania makes that every the extra impressive. Novel states will likely be added in the coming quarters.
Celebrity Travel: Numerous money-producing resources
Whereas Penn’s customer acquisition formula for sports gambling is extraordinarily efficient, working and growing the sportsbook aloof will not be free. That’s why the make-up of Penn National Gaming’s casino portfolio is moreover significant.
Penn’s properties consist completely of regional resources. Reasonably than flying to locations in the case of MGM Accommodations World or Wynn Accommodations, clients extra step by step pressure to Penn’s locations, a ample income as air whisk stays poor.
The kill consequence? Penn’s casinos returned to free money drift in June and had been already reduction to 94% of pre-COVID income. This roughly comparatively fast recovery makes funding Barstool’s launch simpler, and the portion label has if truth be told answered.
Picture supply: YCharts.
Whereas Penn’s brick-and-mortar resources are not as provocative as Barstool Sportsbook, they’re alternatively significant for offering money and balance to fund the corporate’s divulge initiatives. Having $2.05 billion in money on the balance sheet helps with that as properly. Barstool will gasoline Penn’s divulge, but money-producing resources and liquidity will allow that divulge to continue unimpaired.
Celebrity Travel: Investing in sports gambling
I mediate Penn’s chance to put off a stake in Barstool Sports will lunge down as one among the very top merger and acquisition decisions of my lifetime. Barstool’s gigantic, linked following is hungry for a Barstool-themed sportsbook. Happily, that has officially arrived.
Bradley Freeman owns shares of Penn National Gaming. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.