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00:03 >> One of the bigger announcements that was made after the Super Bowl, and
00:07 I think caught people by surprise because they hit it so well, is that not long
00:11 after Barstool decided to stop their operations as far as taking bets.
00:17 They've partnered up here with DraftKings to do a lot of their promotions and
00:21 advertisers.
00:22 So I would ask you, did this catch you by surprise?
00:26 >> Yeah, definitely, Craig, in the sense of was Barstool's sports book
00:32 just six months ago?
00:33 You wouldn't even think about a universe where Barstool would be partnering with
00:39 DraftKings or anybody else for that matter.
00:41 Fast forward six months after the Super Bowl, all of a sudden,
00:46 Portnoy is doing free throw competitions with DraftKings branding everywhere.
00:51 And they're talking about DraftKings as the premier sports book of Barstool.
00:55 So it leads to the question, what happened?
00:58 So basically what happened was Penn, as has been reported,
01:03 moved on from Barstool about six months ago in favor of paying ESPN bet
01:10 about $2 billion, or ESPN about $2 billion to do a sports betting venture with them
01:16 under the name ESPN Bet.
01:18 And as part of that deal, essentially, Barstool was sold back to Portnoy for $1.
01:24 Remember, Penn paid about three years ago $551 million for it, so
01:28 took a loss on that.
01:30 Then as part of that agreement, it was announced that there would be this non
01:34 compete cause for Barstool, meaning that they couldn't partner with any other
01:39 sports book, obviously DraftKings and other sports books are seen as kind of
01:43 competitors of Penn, even though Penn really hasn't been competitive with it at
01:49 all, they've held about a 4% market share under Barstool and DraftKings has had
01:54 about 35%.
01:56 So basically when the news came out a few weeks ago that there was a rumor this
02:01 non compete would actually be over after football season, the end of the Super Bowl,
02:04 it was really surprising to me, really surprising to the rest of the reporters
02:08 at LSR and the whole industry really that all of a sudden it would only be six
02:12 months and Barstool could now partner.
02:15 What it really shows us is one, kind of how desperate or how quickly Penn wanted
02:21 to move off of Barstool.
02:23 You know, there had been a lot of regulatory pushback in different states,
02:27 like New York, Massachusetts, over some of the content Barstool has, people
02:32 concerned that maybe they're promoting problem gambling, things like this can't
02:35 lose parlay, doing shows in college campuses, was sort of a headache for Penn.
02:42 It might have impacted their license in New York that they didn't end up getting.
02:46 And we saw that they sold it back to Barstool and now Barstool is in this
02:51 position where they're doing their own thing again.
02:54 They were pretty vocal or, in important ways, pretty vocal about the things he
02:59 couldn't do under Penn and now the things that he can do.
03:02 So if you're DraftKings, you're kind of like laughing it up probably looking at all
03:07 the money that Penn has spent on Barstool, all the money they've spent on ESPN bet,
03:11 and where they are right now.
03:13 So it was definitely a surprise, but it probably won't be this huge
03:18 moneymaker for DraftKings.
03:20 It's pretty much just this positioning thing where, "Hey, we got your old kind
03:24 of customer base and are able to make money off of it."
03:27 And, you know, Penn is now focused on ESPN bet.
03:30 They haven't really addressed this at all.
03:32 They actually just reported their earnings today, which was really below
03:35 expectations, primarily due to having to spend so much on ESPN bet and promos.
03:41 More than they anticipated, actually.
03:44 So moving forward, you know, it's kind of just Barstool's with DraftKings and,
03:50 you know, Penn is with ESPN now.
03:51 But it's definitely weird to think about, like, all the people who change hands and
03:55 the partnerships that change hands in this industry.
03:57 Once upon a time, Barstool actually was partnered with DraftKings and now they
04:00 are again, lo and behold, six months after Barstool Sportsbook is no more.
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