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Casino Company Buys $163 Million Stake in Barstool Sports

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  • Casino operator Penn National Gaming agreed to buy a minority stake in Barstool Sports for $163 million, a deal that now values the popular sports and pop culture blog at $450 million.
  • Since sports gambling was legalized in 2018, media and gambling companies have been rushing to enter the market. 
  • By combining their forces, media companies get access to revenue streams outside of advertising, while gambling companies get access to new consumers and a broader reach.
  • While some believe this model will spread, others note that Barstool has a unique following and ability to monetize its audience that sets it apart from others.

Penn National Buys Barstool Stake

Casino operator Penn National Gaming announced Wednesday that it bought a $163 Million stake in sports pop culture blog Barstool Sports, valuing the media company at $450 million.

In a press release, Penn National said that they had acquired a 36% stake in Barstool, adding that in three years the casino operator will “increase its ownership to approximately 50% with an incremental investment of approximately $62 million.”

Penn National will now be the “exclusive gaming partner” of Barstool for “up to 40 years,” according to the press release. 

Penn National will also have “the sole right to utilize the Barstool Sports brand for all of the Company’s online and retail sports betting and iCasino products.” 

Barstool founder Dave Portnoy separately announced the deal in a video on Twitter, where he talked about how he started Barstool as a “gambling rag” 17 years ago, and how the company has a deep history connected to gambling.

“We just needed a company with a shared vision,” he said. “That vision is Penn National Gaming. They have one of the biggest infrastructures in the country for gambling. They have sports tracks, they have casinos, they’re all over the country.”

“They have the infrastructure, we have this rabid audience, this fan base craving it,” Portnoy added. 

“Together, we’re going to create an omnipresent approach to gambling, on-premise, off-premise: Barstool casinos, bars, pizza places, you name it, we’re going to build it. All fueled by the Barstool media engine.” 

Win-Win for Media and Gambling Companies

The deal is a significant step for Barstool and Penn National, but it is also representative of a broader change in the gambling industry. 

In 2018, the Supreme Court ruled that sports gambling was legal in the U.S., giving individual states the power to decide if they wanted to legalize. 

According to the Wall Street Journal, 20 states and DC have legalized sports gambling. While some of those states only allow it to take place in casinos, others do permit online betting.

Since the decision, there has been a rush by both the gambling industry and media companies to capitalize on that new market, specifically when it comes to online gambling.

Those efforts have proven to be incredibly lucrative. According to the American Gaming Association, gamblers have placed $15.8 billion in sports bets and generated $1.1 billion in revenue for sportsbooks since the Supreme Court ruling.

Online betting has been the most profitable in states where it is allowed like New Jersey, where nearly 84% of the $4.58 billion the state brought in from sports wagers last year came from online bets, according to the Journal

The thing that is so unique about this market is that media and gambling companies do not have to be competitors. When companies like Penn National and Barstool combine their resources, both benefit.

Working jointly is good for companies like Barstool because digital-media companies primarily depend on advertising revenue. But combing forces with a gambling industry giant allows them to diversify their revenue streams.

It is also beneficial for big gambling operations like Penn National because media companies give them access to their large, young audience.

For example, Barstool sports has 66 million monthly unique visitors. By pairing with a popular company like Barstool, Penn National— which is very lucrative but not very well known— can grow its profile nationally while simultaneously cutting down on costs.

This saves gambling companies money because attracting new customers through normal means like advertising Facebook and Google can be expensive.

According to filings from the sports betting company DraftKings, the company paid an average of $406 for each new customer acquired in New Jersey in the first half of 2019. 

Future of Sports Gambling

While some predict that this model will be used for other media and gambling company pair-ups in the future, others are not so sure.

In an article for Forbes, writer Daniel Marcus argued that from the get-go, Barstool, “has been willing to leverage its’ rabid and loyal fan base into other revenue opportunities outside of the traditional advertising model.”

Marcus notes that Portnoy has always mobilized Barstool’s fans in a unique way, like through selling merchandise and convincing fans to actually buy that merchandise in a way other companies have not.

He also said that while other media companies have leaned into premium subscription models, Barstool has always supported growth without doing so.

“For those assuming this deal will trigger some sort of domino effect that will benefit the other sports media entities that are currently in play, I wouldn’t count on it, as few of them have proven they are able to effectively monetize their audiences beyond advertising,” he wrote.

While Portnoy has been effective at reaching his fans, he has also been a controversial figure. In August, he came under fire after he threatened to fire Barstool employees who talked to union activists in a series of tweets.

He was later forced to remove the tweets in a settlement with the National Labor Relations Board.  

See what others are saying: (The Wall Street Journal) (Forbes) (Business Insider)

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Apple Raises Worker Pay as Unions Gain Ground

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The company’s vice president of people and retail was caught trying to dissuade employees from unionizing in a leaked video.


Labor Squeezes Apple into Submission

Apple announced Wednesday that its U.S. corporate and retail employees will see a pay increase later this year, with starting wages bumped from $20 per hour to $22, though stores in certain regions may get more depending on market conditions.

Starting salaries are also expected to increase.

“Supporting and retaining the best team members in the world enables us to deliver the best, most innovative, products and services for our customers,” an Apple spokesman said in a statement. “This year as part of our annual performance review process, we’re increasing our overall compensation budget.”

Some workers were told their annual reviews would be moved up three months and that their pay increases would take effect in early July, according to a memo reviewed by The Wall Street Journal. Furthermore, they were told the increased compensation budget would be in addition to pay increases and special awards already received within the past year.

Feeling squeezed by low unemployment and high inflation, tech companies like Google, Amazon, and Microsoft have changed their compensation structures in recent weeks to pay workers more, and Apple is the latest to bend to market pressure.

Unions Gaining Traction

On Wednesday, The Verge received a leaked video of Apple’s vice president of people and retail, Deirdre O’Brien, explicitly dissuading employees from unionizing.

“I worry about what it would mean to put another organization in the middle of our relationship,” she said. “An organization that does not have a deep understanding of Apple or our business. And most importantly one that I do not believe shares our commitment to you.”

She vocalized more anti-union talking points, like the idea that the company will not be able to make important decisions as quickly with a collective bargaining agreement.

O’Brien has been personally visiting retail stores over the past few weeks in an apparent bid to combat budding union activity.

Apple stores in three locations — New York, Georgia, and Maryland — are currently pushing to unionize, with the latter two set to vote in elections on June 2 and 15, respectively. In response to these efforts, Apple has hired anti-union lawyers, given managers anti-union scripts, and held anti-union captive audience meetings.

In the United States, unionized workers make about 13.2% more than non-unionized workers in the same sector, according to the Economic Policy Institute.

As of Wednesday, Apple’s shares had fallen 21% since the start of the year, but sales grew 34% last year to almost $300 billion.

See what others are saying: (The Wall Street Journal) (CNBC) (The Verge)

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Employees at Activision Blizzard’s Raven Software Form First Union at a Major Gaming Company

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Organizers say the decision has the potential to upend labor practices in the gaming industry.


Raven Software QA Testers Win Union Bid

A group of 28 workers at Activision Blizzard subsidiary Raven Software voted to form the first-ever union at a major U.S. gaming company. 

While the Game Workers Alliance is a small union, organizers in the space say its formation represents a major shift for the gaming industry and will encourage others in the sector to follow suit.

The newly unionized workers are quality insurance (QA) testers working at the Wisconsin-based studio to develop “Call of Duty.” QA testers work to sort out any glitches in games, and the jobs are notoriously known for extreme crunch periods where staffers work long stretches of hours before a game’s release.

During crunch periods, employees are regularly given 12- to 14-hour shifts with just a few days off each month in order to meet release deadlines.

Many QA testers have said they are treated as second-class to others in the industry. They are paid much lower — often minimum wage or close to it — work on contract cycles and, as a result, feel disposable.

That particular sentiment was underscored for workers at Raven Software in December when the company ended the contracts of about a dozen QA testers. The decision prompted the remaining QA testers to hold a walkout and, shortly after that, they began organizing to form a union, which they dubbed the Game Workers Alliance.

Activision’s Battle Against Unionization Effort

Activision did not support the push for unionization and actively fought against it. The company refused to voluntarily recognize the union, and just days after the group filed a petition with the National Labor Relations Board, it moved QA testers to different departments across its properties.

Activision also announced it would convert over 1,000 temporary QA workers to full-time employees, give them a pay raise to $20 an hour, and provide more benefits. However, management said the move would not apply to the unionizing workers because, under federal law, they could not try to encourage workers from voting against unionization by offering pay hikes or benefits. Union leaders repudiated that argument.

Additionally, Activision fought against the union petition, arguing that any union would need to include all of the studio’s employees, but the Labor Board rejected the claim and let the effort proceed.

According to multiple reports, Activision management continued to push against the union in the weeks leading up to the vote. Some Raven employees told The Washington Post company leaders had suggested at a town hall meeting that unionization could hurt game development and impact promotions and benefits. The following day, the managers allegedly sent an email urging workers to “vote no.” 

On Monday, Labor Board prosecutors announced they had determined that Activision illegally threatened workers and enforced a social media policy that violated bargaining rights. Activision denied the new allegations.

The two parties will have until the end of the month to file an objection, and if none are filed, the union becomes official. It is currently unclear how Activision and Raven will respond, but they have signaled that they might not make the transition period easy for the union.

According to internal documents seen by Bloomberg, the company has repeatedly mentioned that it can take a while for a union to negotiate its first contract.

In a statement following the vote, an Activision spokesperson told The Post that the company respects the right of its employees to vote for or against a union, but added: “We believe that an important decision that will impact the entire Raven Software studio of roughly 350 people should not be made by 19 of Raven employees. We’re committed to doing what’s best for the studio and our employees.”

See what others are saying: (The New York Times) (The Washington Post) (Bloomberg)

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Uber Forks Over $19 Million in Fine for Misleading Australian Riders

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The penalty is just the latest in a string of lawsuits going back years.


Uber Gets Fined

Uber has agreed to pay a $19 million fine after being sued by the Australian Competition and Consumer Commission for making false or misleading statements in its app.

The first offense stems from a company policy that allows users to cancel their ride at no cost up to five minutes after the driver has accepted the trip. Despite the terms, between at least December 2017 and September 2021, over two million Australians who wanted to cancel their ride were nevertheless warned that they may be charged a small fee for doing so.

Uber said in a statement that almost all of those users decided to cancel their trips despite the warnings.

The cancellation message has since been changed to: “You won’t be charged a cancellation fee.”

The second offense, occurring between June 2018 and August 2020, involved the company showing customers in Sydney inflated estimates of taxi fares on the app.

The commission said that Uber did not ensure the algorithm used to calculate the prices was accurate, leading to actual fares almost always being higher than estimated ones.

The taxi fare feature was removed in August 2020.

A Troubled Legal History

Uber has been sued for misleading its users or unfairly charging customers in the past.

In 2016, the company paid California-based prosecutors up to $25 million for misleading riders about the safety of its service.

An investigation at the time found that at least 25 of Uber’s approved drivers had serious criminal convictions including identity theft, burglary, child sex offenses and even one murder charge, despite background checks.

In 2017, the company also settled a lawsuit by the Federal Trade Commission (FTC) for $20 million after it misled drivers about how much money they could earn.

In November 2021, the Justice Department sued the company for allegedly charging disabled customers a wait-time fee even though they needed more time to get in the car, then refused to refund them.

Later the same month, a class-action lawsuit in New York alleged that Uber charged riders a final price higher than the upfront price listed when they ordered the ride.

See what others are saying: (ABC) (NASDAQ) (Los Angeles Times)

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