- 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)
Target Joins Walmart in Offering Free College Tuition To Attract and Retain Workers
The decision makes Target the latest major company to dangle such incentives before employees, joining the likes of Walmart, Chipotle, and Starbucks.
Target Launches Debt-Free Education Asssitance Program
Target announced new employee perks on Wednesday that it likely hopes will help attract and retain workers.
Starting this fall, Target will cover the cost of tuition, fees, and textbooks for both part-time and full-time workers who pursue degrees or certificates at more than 40 participating institutions.
Employees will have at least 250 different business-aligned programs to choose from, including Business, Computer Science, Design, and more.
Target will also fund advanced degrees, paying up to $10,000 each year for master’s programs at those schools, and it’s offering up to 5,250 for those pursuing non-master’s degrees or business-aligned programs at one of the select schools.
The company said it plans to invest a total of $200 million in the education program over the next four years, and employees in the U.S. will qualify as soon as their first day.
“Target employs team members at every life stage and helps our team learn, develop and build their skills, whether they’re with us for a year or a career. A significant number of our hourly team members build their careers at Target, and we know many would like to pursue additional education opportunities. We don’t want the cost to be a barrier for anyone, and that’s where Target can step in to make education accessible for everyone,” said Melissa Kremer, Target’s Chief Human Resources Officer.
Companies With Similar Perks
Places like Chipotle and Starbucks have already had similar education programs in place, but more companies have been introducing or expanding on similar policies as businesses across the country struggle to find and retain workers amid the coronavirus pandemic.
Just last week, Walmart announced that it will cover the full cost of college tuition and books for itsemployees, after previously requiring them to pay $1 a day for the assistance. Those workers can now select from around 10 academic partners.
While many have applauded these actions from big corporations, others have noted that it makes it tougher for smaller businesses to compete since they don’t have the same resources at their disposal.
There is some concern about how this could change the business landscape in the future as a handful of large companies dominate in their own sectors and siphon a lot of the talent, forcing smaller competitors to close. Still, others argue that this was already happening. At least now, the big players are investing and support their workforce while doing it.
Tencent Stock Plummet as Company Weighs Video Games Ban for Kids in China
The world’s largest game developer appears fearful that the Chinese government will launch another crackdown on gaming similar to one it launched in 2019 when it limited game time for minors.
No More Video Games
Tencent Holdings, Ltd. — China’s most valuable corporation and the world’s largest gaming company — announced Tuesday that it would consider completely banning games for those under 12-years-old in China.
Tencent also announced that it will now limit playtime for Chinese minors to just 1 hour during weekdays and no more than 2 hours during weekends and holidays. Under a Chinese law set up in 2019, game developers are required to limit minors to just 1 hour and 30 minutes of playtime during weekdays and 3 hours during weekends and holidays.
Additionally, the company explained that it will move forward with plans to enact systems that bar those under 12 from engaging in microtransactions, starting with the largest mobile game, “Honor of Kings” (王者荣耀). It’s possible the ban will extend to some of Tencent’s other holdings, such as “League of Legends” (Riot Games) and “Path of Exile” (Grinding Gear Games), although these changes will likely only affect Chinese users.
Tencent’s decision comes just a day after the Economic Information Daily, a subsidiary of state media giant Xinhua News, said in a now-deleted article that video games were “spiritual opium” and that no industry should continue in a manner that will “destroy a generation.”
Likening video games to opium holds cultural significance in China, which has long disliked narcotics and is sensitive to comparisons to the drug. Using such language, especially by state media, is often seen as a sign that the government is ready to crack down on the industry.
Those fears largely played out over a 24-hour period as shares for Tencent and NetEase, another large game developer in China, plummeted. Tencent’s shares dropped by 11% on the Hong Kong Stock Exchange, although it eventually settled at just a 6% loss by the end of Tuesday.
It wasn’t just Chinese gaming companies that were worried. The announcement sent ripples across the entire industry as Nintendo, Capcom, and Nexon shares all were heavily affected as well. One of the reasons that such an article can cast widespread concern is that China has increasingly become the largest market in the $180 billion video game industry, making it larger than the global movie industry and North American professional sports, combined.
Coupled with the recent fall of ActivisionBlizzard’s stock over the last two weeks due to its sexual assault lawsuit and other industry shakeups, over a trillion dollars of market value was wiped out at one point on Tuesday.
See what others are saying: (Associated Press) (Time) (Fox Business)
Google Is Banning “Sugar Dating” Apps as Part of New Sexual Content Restrictions
The change essentially targets apps like Elite Millionaire Singles, SeekingArrangements, Spoil, and tons of other sugar dating platforms.
Sugar Dating Crackdown
Google has announced a series of policy changes to its Android Play Store that include a ban on sugar dating apps starting September 1.
The company’s Play Store policies already prohibit apps that promote “services that may be interpreted as providing sexual acts in exchange for compensation.”
Now, it has updated its wording to specifically include “compensated dating or sexual arrangements where one participant is expected or implied to provide money, gifts or financial support to another participant (‘sugar dating’).”
The change essentially targets apps like Elite Millionaire Singles, SeekingArrangements, Spoil, and tons of other sugar dating platforms currently available for download.
What Prompted the Change?
The company didn’t explain why it’s going after sugar dating apps, but some reports have noted that the move comes amid crackdowns of online sex work following the introduction of the FOSTA-SESTA legislation in 2018, which was meant to curb sex trafficking.
That’s because FOSTA-SESTA created an exception to Section 230 that means website publishers can be held liable if third parties are found to be promoting prostitution, including consensual sex work, on their platforms.
It’s worth noting that just because the apps will no longer be available on the Play Store doesn’t mean the sugar dating platforms themselves are going anywhere. Sugar daters will still be able to access them through their web browsers, or they can just sideload their apps from other places.
Still, the change is likely going to make the use of these sites a little less convenient.