Four years ago the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), paving the way for the online gaming industry.
To reach those bettors, companies are expected to spend an estimated $1.8 billion in advertising this year, Front Office Sports reported, citing a Wall Street Journal article. That is nearly double the $1 billion the big operators spent on seemingly ubiquitous television ads over the past two years.
Meanwhile, Las Vegas rival Caesars Entertainment (CZR) has spent nearly $500 million less on marketing than anticipated this year, according to FOS.
Penn Buys Rest of Barstool
Penn announced in an SEC filing that it is exercising its call rights and purchasing the rest of the stake of popular online sports media company Barstool Sports that it does not already own.
Penn purchased a 36% stake in Barstool in February 2020 for $163 million at a $450 million valuation. Now the company is exercising its option to purchase the rest of the stake, bringing its total investment to $387 million.
The company will spend $62 million to push its stake to 50% at the $450 million valuation, then purchase the rest of the company for $325 million, according to an SEC filing.
"Our Barstool branded retail sportsbooks resonate with the younger demographics and create meaningful cross-sell opportunities," CEO Jay Snowden said in the company's second quarter earnings call. "Barstool Sports, Inc. has further expanded its reach across social media platforms by delivering highly engaging and relevant content."
Penn says it has $1.7 billion in cash and cash equivalents with debt of $1 billion. Total liquidity as of the end of June was $2.7 billion for the company. Penn did not say whether the purchase will be made in cash, but did say it expects the deal to close in February 2023.
State of Gambling
Sports betting is in a state of flux. While there may be concerns that interest in sports gambling has peaked, there are new states expected to come online over the coming months and years, leading to the expected growth.
There are currently five states with laws pending to legalize the practice, according to Action Network, and there are other states where retail sports betting is legal but online betting isn't.
Those states could also soon join the online gaming trend.
Nearly 1 in 5 U.S. adults said they bet on sports at least once a month last year, according to an analysis by Morning Consult. The share of adults who bet on sports at least weekly more than doubled from 5% in January to 12% in December.
The global sports betting market is expected to grow to about $168 billion by 2029, representing a compound annual growth rate of 10.26%, according to an analysis from Data Bridge Market Research.