Wait, What: Penn Entertainment Doesn't Know How Well Barstool Converts?
I am not going to reinvent the wheel this morning, but I wanted to highlight this fascinating (dare I say crazy) nugget from Derek Helling on PlayUSA.
According to a lawyer representing Penn Entertainment at a Massachusetts Gaming Commission meeting, the casino company has very little idea how effective the Barstool media operation is in converting fans into sports bettors.
If that’s true, that’s genuinely nuts. From Derek:
Morgan Lewis Partner Jonathan M. Albano, who was on the call representing Penn to the commission, responded.
“May I have a moment to, uh?…Right, and so the answer I’m getting, and I’d be happy to follow up after the hearing with a submission but what I’m hearing now is that the short answer is no,” Albano shared. “But again, I’d be happy to submit a letter after the hearing to explain.”
Some caveats here. Albano isn’t internal counsel, but Penn did decide to trot him in front of a gaming regulator to answer questions. Don't put him up there if you don’t want him facing those questions. He very much could have said “I don’t know the answer to that question” instead of “no.”
I also don’t expect Penn and Barstool to know with 100% accuracy if a Barstool fan converts to the sportsbook. But to say “Nope, we don’t know” is borderline nuts. Barstool was acquired entirely because of its acquisition funnel for sports betting, not because Penn was frothing at the mouth to get into the media business. How can you have no idea? My guess is they have a decent idea, and the lawyer here spoke out of turn.
Also, the other crazy part is I can almost answer this question for them: The acquisition from Barstool accounts for most of the marketshare Penn has for online sports betting. If Penn had deployed some generic sportsbook brand or tried to trade on its Hollywood Casino brand nationwide, it would be a rounding error in how much handle and revenue it generates from sports betting, instead of the 3-5% of the market it garners in most states.
Barstool has done very little external/paid marketing; again, this was a selling point of the whole acquisition. You can chalk up a large portion of their acquisition to a customer finding, downloading and betting at Barstool Sportsbook to the efforts of the media operation.
Anyway, this comment is crazy if either of these things is true: 1. Penn doesn’t know how well Barstool is at converting or 2. Penn is offering up lawyers to regulators who are giving out answers that aren’t correct. Pick your poison.