- 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)
Kim Kardashian to Pay $1.26 Million to SEC Over Unlawful Crypto Promotion
According to the agency, stars and influencers must disclose how much money they earned for crypto advertising.
Kardashian Pays Up
The U.S. Securities and Exchange Commission announced Monday that it has charged reality TV star Kim Kardashian for “unlawfully touting crypto security.”
Kardashian has agreed to pay $1.26 million in penalties, disgorgement, and interest while cooperating with the SEC’s investigation. The media mogul did not admit to or deny the SEC’s findings as part of the settlement, but she did agree to not promote crypto assets for three years.
According to a statement from the SEC, federal regulators found that Kardashian “failed to disclose that she was paid $250,000 to publish a post on her Instagram account about EMAX tokens.”
“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chair Gary Gensler said in a statement.
The investigation stemmed from a post that Kardashian made on her Instagram story in the summer of 2021 promoting EthereumMax. In it, she asked her 330 million followers if they were interested in cryptocurrency while giving information about the coin. The post included a swipe-up link for users to get more information and potentially invest in it themselves.
While Kardashian did include a hashtag denoting the post as an ad, the SEC said that did not go far enough. In the group’s statement, Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, explained that anyone advertising crypto assets “must disclose the nature, source, and amount of compensation they received in exchange for the promotion.”
A “Reminder” For Crypto Promoters
As a result, the billionaire businesswoman is paying a $1 million penalty fee. On top of that, she has to pay $260,000 in disgorgement, accounting for the payment she received from Ethereum Max and interest.
Kardashian’s lawyer released a statement saying the star has “fully cooperated with the SEC from the very beginning.”
“She remains willing to do whatever she can to assist the SEC in this matter,” the statement continued. “She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”
This is not the first time Kardashian’s EMAX post landed her in hot water. A U.K. watchdog previously condemned her for shilling the coin, and she was sued earlier this year over allegations that she artificially inflated the coin’s value.
Gensler said that he hopes the charges from the SEC will serve as “a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”
Misinformation Makes Up 20% of Top Search Results For Current Events on TikTok, New Research Finds
According to the report, the app “is consistently feeding millions of young users health misinformation, including some claims that could be dangerous to users’ health.”
Misinformation Thrives on TikTok
As TikTok becomes Gen Z’s favorite search engine, new research by journalism and tech group NewsGuard found that the video app frequently suggests misinformation to users searching for news-related topics.
NewsGuard used TikTok’s search bar to look up trending news subjects like the 2020 election, COVID-19, the invasion of Ukraine, the upcoming midterms, abortion, school shootings, and more. It analyzed 540 videos based on the top 20 results from 27 subject searches, finding false or misleading claims in 105 of those posts.
In other words, roughly 20% of the results contained misinformation.
Some of NewsGuard’s searches contained neutral phrases and words like “2022 election” or “mRNA vaccine,” while others were loaded with more controversial language like “January 6 FBI” or “Uvalde TX conspiracy.” In many cases, those controversial phrases were suggested by TikTok’s own search bar.
The researchers noted that, for example, during a search on climate change, “climate change debunked” showed up. While looking up COVID-19 vaccines, searches for “covid vaccine injury” or “covid vaccine exposed” were recommended.
Dangerous Results Regarding Health and More
The consequences of some of the false claims made in these videos can be severe. NewsGuard wrote in its report that the search engine “is consistently feeding millions of young users health misinformation, including some claims that could be dangerous to users’ health.”
Among the hoards of hazardous health claims were videos falsely suggesting that COVID-19 vaccines are toxic and cause permanent damage to organs. The report found that there are still several videos touting the anti-parasite hydroxychloroquine as a cure-all remedy, not just for COVID, but for any illness.
Searches regarding herbal abortions were particularly troublesome. While certain phrases like “mugwort abortion” were blocked, the researchers found several ways around this that lead to multiple videos touting debunked DIY abortion remedies that are not only proven to be ineffective, but can also pose serious health risks.
NewsGuard claimed that the social media app vowed to remove this content in July, but “two months later, herbal abortion content continues to be easily accessible on the platform.”
Other standard forms of conspiracy fodder also occupied space in top search results, including claims that the Uvalde school shooting was planned and that the 2020 presidential election was stolen.
TikTok’s Search Engine Vs. Google
As part of its research, NewsGuard compared TikTok’s search results and suggestions with Google and found that, by comparison, the latter “provided higher-quality and less-polarizing results, with far less misinformation.”
“For example, searching ‘covid vaccine’ on Google prompted ‘walk-in covid vaccine,’ ‘which covid vaccine is best,’ and ‘types of covid vaccines,’” NewsGuard wrote. “None of these terms was suggested by TikTok.”
This is significant because recent reports show that young Internet users have increasingly turned to TikTok as a search engine over Google. While this might elicit safe results for pasta recipes and DIY tutorials, for people searching for current affairs, there could be significant consequences.
NewsGuard said that it flagged six videos containing misinformation to TikTok, and the social media app ended up taking those posts down. In a statement to Mashable, the company pledged to fight against misinformation on its platform.
“Our Community Guidelines make clear that we do not allow harmful misinformation, including medical misinformation, and we will remove it from the platform,” the statement said. “We partner with credible voices to elevate authoritative content on topics related to public health, and partner with independent fact-checkers who help us to assess the accuracy of content.”
Over 70 TikTok Creators Boycott Amazon as Workers Protest Conditions and Pay
As the company fends off pressure on both fronts, the Amazon Labor Union continues to back election petitions around the country including one filed Tuesday in upstate New York.
Gen Z Goes to War With Amazon
More than 70 big TikTok creators have pledged not to work with Amazon until it gives in to union workers’ demands, including calls for higher pay, safer working conditions, and increased paid time off.
Twenty-year-old TikToker Elise Joshi, who serves as deputy executive director for the advocacy group organizing the boycott, Gen Z for Change, posted an open letter on Twitter Tuesday.
“Dear Amazon.com,” it reads, “We are a coalition of over 70 TikTok creators with a combined following of 51 million people. Today, August 16th, 2022, we are joining together in solidarity with Amazon workers and union organizers through our People Over Prime Pledge.”
Amazon has refused to recognize the Amazon Labor Union (ALU) since workers voted to unionize at a Staten Island warehouse in April, and it has resisted collective bargaining negotiations.
Although the ALU is not involved in the boycott, its co-founder and interim President Chris Smalls expressed support for it in a statement to The Washington Post, saying, “It’s a good fight to take on because Amazon definitely is afraid of how we used TikTok during our campaigns.”
While the ALU posts videos on TikTok to drum up popular support for the labor movement, Amazon has sought to win large influencers over to its side. In 2017, it launched the Amazon Influencer Program, which offered influencers the opportunity to earn revenue by recommending products in personalized Amazon storefronts.
Last May, the company flew over a dozen Instagram, YouTube, and TikTok stars to a luxurious resort in Mexico.
Emily Rayna Shaw, a TikTok creator with 5.4 million followers who has partnered with Amazon in the past, is participating in the boycott.
“I think their method of offering influencers life-changing payouts to make them feel as if they need to work with them while also refusing to pay their workers behind the scenes is extremely wrong,” she told The Post.
“As an influencer, it’s important to choose the right companies to work with,” said Jackie James, a 19-year-old TikTok creator with 3.4 million followers, who told the outlet she will cease doing deals with Amazon until it changes its ways.
The ALU is demanding that Amazon bump its minimum wage to $30 per hour and stop its union-busting activities.
Slogging Through the ‘Suffocating’ Heat
Amazon is also facing challenges from workers themselves, with some walking out this week at its largest air hub in California, where company-branded planes transport packages to warehouses across the country.
They are asking for the base pay rate to be raised from $17 per hour to $22 per hour.
A group organizing the work stoppage under the name Inland Empire Amazon Workers United said in a statement that over 150 workers participated, but Amazon countered that the true number was only 74.
The Warehouse Worker Resource Center counted 900 workers who signed a petition demanding pay raises.
Inland Empire Amazon Workers United has complained about the “suffocating” heat in the facility, saying that temperatures at the San Bernardino airport reached 95 degrees Fahrenheit or higher for 24 days last month.
Amazon spokesperson Paul Flaningan, however, claimed to CNBC that the temperature never surpassed 77 degrees and said the company respects its workers’ right to voice their opinions.
On Tuesday, the ALU backed another warehouse’s decision to file a petition for a union election in upstate New York, roughly 10 miles outside Albany.
The National Labor Relations Board requires signatures from 30% of employees to trigger an election.