What Happened: Thanks in part to its 30% ownership stake in Barstool Sports, shares of Penn National Gaming (NASDAQ:PENN) were up over 230% in 2020. In fact, the stock passed the $100 per share. 2 days ago  Penn National Gaming (PENN +3.0%) jumps in early trading after trends with the Barstool sports betting app take the sting off a Q4 earnings miss.

WYOMISSING, Pa. & DETROIT--(BUSINESS WIRE)--Dec. 22, 2020--Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or the “Company”) announced today that it expects to open its Barstool Sportsbook at Greektown Casino Hotel (“Greektown Casino”) on December 23, 2020, subject to any final regulatory approvals.

“We are thrilled to be opening our new Barstool Sportsbook,” said John Drake, Vice President and General Manager at Greektown Casino. “The new design showcases the spirit of the Barstool Sports brand, resulting in an outstanding sports wagering experience that we expect our customers will thoroughly enjoy.”

The new Barstool Sportsbook is located on the second floor of Greektown Casino adjacent to the table games area. It features a captivating entryway, sports viewing area and dining space, betting counter that features large odds boards, numerous sports betting kiosks and ticket writer stations that will support thousands of sports wagering options for customers. Guests will enjoy a first class wagering experience in close proximity to dining and numerous televisions showcasing sports action from across the country and around the world. Guests will also be able to earn tier points and mycash using the Company’s myChoice© loyalty program when wagering at the sportsbook.

“The passionate sports fans in Detroit and throughout Michigan have been excitedly awaiting the opening of our new Barstool Sportsbook,” said Mr. Drake. “We look forward to welcoming them when we reopen the casino tomorrow evening.”

About Penn National Gaming
With the nation's largest and most diversified regional gaming footprint, including 41 properties across 19 states, Penn National continues to evolve into a highly innovative omni-channel provider of retail and online gaming, live racing and sports betting entertainment. The Company's properties feature approximately 50,000 gaming machines, 1,300 table games and 8,800 hotel rooms, and operate under various well-known brands, including Hollywood, Ameristar, and L'Auberge. Our wholly-owned interactive division, Penn Interactive, operates retail sports betting across the Company's portfolio, as well online social casino, bingo, and iCasino products. In February 2020, Penn National entered into a strategic partnership with Barstool Sports, whereby Barstool is exclusively promoting the Company's land-based and online casinos and sports betting products, including the Barstool Sportsbook mobile app, to its national audience. The Company's omni-channel approach is bolstered by the myChoice loyalty program, which rewards and recognizes its over 20 million members for their loyalty to both retail and online gaming and sports betting products with the most dynamic set of offers, experiences, and service levels in the industry.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201222005620/en/

Eric Schippers Sr. Vice President – Public Affairs, Penn National Gaming, Inc. 610/373-2400

Source: Penn National Gaming, Inc.

Penn National Gaming’s Barstool Sports brand seems to have shrugged off the devastating impacts of COVID-19 in 2020 and is upbeat heading into 2021. Despite a net loss of $669 million in 2020, there was no shortage of positive signs for Penn National or optimism from their management team about Barstool Sportsbook heading deeper into this year.

It was just over a year ago that Penn National purchased a 36% interest in Barstool Sports and married two Heavyweight brands in the sports industry. Since then, Barstool has become an important and successful entity in their existing states, Pennsylvania and Michigan with an eye on rapid expansion in the next 12 months.

Penn National Misses Estimates… but Not Because of Barstool

Penn National last weeks, came out with its financials for Quarter 4 and not-all-that-surprisingly, it missed estimates albeit slightly. Q4 total revenues came in at $1.03 billion, off of the $1.09 billion estimate before commencement of the quarter.

The main reason for Penn National’s struggle to hit estimates comes as no surprise either. COVID-19 forced closures of their Illinois, Michigan and Pennsylvania retail locations, which obviously affected the company’s bottom line. Penn revenues had been trending in the right direction ahead of the coronavirus shutdowns.

Along Comes Barstool

There wasn’t much doubt about the impact that a Barstool Sportsbook would have on the industry when the media brand crossed over into the legal betting space. Barstool boasts 66 million dedicated viewers as well as 52 million Instagram followers, over 26 million followers on TikTok almost 5 million on Facebook, and 27 million on Twitter nationally. Their reach is massive.

The first state in which they launched, Pennsylvania saw the sportsbook downloaded 72,000 times with approximately $300 million in bets with limited marketing. In their second market-launch, Barstool Sportsbook was downloaded by 48,000 new customers in Michigan and saw $27.5 million in betting handle in the first 10 days and reported net earnings of $12.7 million in Q4.

Singing the praises of their new brand, Penn National CEO Jay Snowden said in a statement: “We view Barstool Sports not only as a fantastic channel to promote our offerings, but also an undervalued media asset that has evolved from primarily a sports brand into a highly relevant sports and life-style brand,”.

Customer Acquisition Perks

The Barstool sportsbook was expected to benefit from the media brand’s 66 million dedicated monthly viewers. The betting brand’s attempts to flip a portion of those users, mostly younger, to online sportsbook customers has so far gone very well… and has done so cheaper than other participating sportsbooks.

The average customer acquisition cost for sportsbooks is said to range anywhere from $300 to $800. Barstool’s costs have bested those averages. In fact, Barstool’s costs are estimated to be just under $200 per customer.

In an investors’ call this week, Penn CEO Jay Snowden went on record saying: “For Penn, so far from the first four months in PA, despite all of the Barstool Fund matching that we’ve done as well as in Michigan in our first month, we are well below the bottom end of that range. We have so much room, we have so much cushion to be opportunistic and figure out what we want to do and how we want to do it.”

Where Do They Go From Here?

Penn expects the Barstool Sportsbook to be live in 10 states by the end of 2021. Indiana, New Jersey, Colorado, Virginia, West Virginia, Iowa and Tennessee are some of the states on the brand’s radar. The brand hopes to add a new jurisdiction every 3-5 weeks this year.

Penn National Gaming And Barstool Sports

Illinois, one of the most exciting new markets in the US scene looks to be first in line to gain a Barstool Sportsbook. The Chicago-area market is Barstool Sports’ second-largest market in the country, giving the company an immediate leg-up before going live. The goal for Penn National is to have something in place in Illinois by March Madness, which is approaching quickly,

Maryland looks to be in Barstool’s immediate future as well. In mid-December, Penn National announced an agreement with Gaming and Leisure Properties to acquire Hollywood Casino Perryville with the plan to have the Barstool betting brand live some time this year.

Hopes Becoming Reality?

Barstool Sports Sale To Penn National Gaming

Barstool Sportsbook launched with an ideal to become a true Heavyweight in the US legal sports betting scene and those desires haven’t gone away. In fact, hope seems to be becoming reality for the brand.

Barstool Sports Penn National Gaming App

Barstool Sports Bought By Penn National Gaming

Jay Snowden backed up his company’s desires last week when he said: “What I think you should assume is that we are going to be top three, we said that before we ever launched and we’re delivering on that. We’re going to be profitable faster than anyone else, and we’re delivering on that and continue to deliver on that pledge, again, faster than anybody else.”

Barstool Sports Penn National Gaming

“And as we scale, we just end up with a lot more dry powder to be more aggressive in the areas of widening that funnel and customer acquisition that we believe is driving the best return.”