A legal sports betting operator is continuing to address a previous partnership.
PENN Entertainment — the part-owner of ESPN Bet — is facing scrutiny by the Massachusetts Gaming Commission over its previous relationship with Barstool Sports. In 2020, PENN purchased a 36% stake in the media company for $163 million. That same year, the two entities launched Barstool Sportsbook. Penn would acquire the remaining 64% of Barstool in February 2023 for $388 million. Six months later, PENN agreed to a long-term deal with ESPN to launch online betting sites across the United States through a rebrand of Barstool Sportsbook.
As a result of PENN’s new deal, the company’s previous partnership with Barstool has been under a microscope. An IEB report revealed that in order for Barstool and PENN to be awarded an online wagering license the companies were required to have no one under the age of 21 attend Barstool College Football shows — a live weekly program that broadcasts on YouTube.
Massachusetts Sports Betting
— Bill Speros (@billsperos) October 2, 2023
IEB report on relationship and between Penn and Barstool Sports in regard to the @barstoolsports College Football show
In order to get licensed, Penn agreed to make sure no one under 21 would attend the Barstool College Football shows
-MORE- pic.twitter.com/Es45XBcToD
PENN was fined $250,000 in 2022 following a college football show. The then-Barstool owner was fined for targeting underage bettors because the show was held at the University of Toledo.
Questioning management
Barstool’s leadership was also a focal point of the report. Barstool founder Dave Portnoy, who bought back the company for $1 in August, was included due to his relinquishing of a leadership role under PENN ownership. Portnoy’s role came into question after he made public comments on social media regarding the salary negotiations and firing of several Barstool employees.
The IEB would inquire with PENN regarding Portnoy’s leadership and management roles. PENN would vow that under its ownership of Barstool Portnoy lacked any leadership responsibilities.
Despite the looming end of its sportsbook, Barstool holds a non-gaming vendor registration with the MGC. The company is also still licensed in seven jurisdictions, including Massachusetts.
Financial results
PENN generated $1.67 billion in revenue in Q2 2023 — a 2.9% increase year-over-year. The company reported a net income of $78.1 million during the quarter, up from $28.1 million in Q2 2022. PENN’s adjusted EBITDA reached $330.4 million in Q2 2023 — down 30.7% from Q2 2022.
The results were attributed to expansion and growth in the company’s interactive segment, which includes online sports betting operations. PENN’s interactive segment generated $88.5 million in revenue in Q2 2023 compared to $55.4 million for the same period last year.
PENN will continue to maintain sports betting operations in Ontario under theScore Bet. The media and gaming company was acquired by PENN in 2021 in a deal valued at $2 billion.
