When any for-profit corporation spends almost $400 million to acquire a property, it’s fair to expect the purchaser to check in on whether that purchase is paying off. Apparently, that isn’t always the case.
During a Massachusetts Gaming Commission (MGC) hearing on Wednesday, an attorney representing Penn Interactive said the company has no data on whether people who consume its Barstool media products are also patronizing Penn’s gambling products. It’s an odd revelation given the original spin of the acquisition from Penn National’s CEO.
Adjudicatory hearing reveals Penn has no Barstool crossover data
On Wednesday, the MGC held its postponed hearing on a potential regulatory violation for Barstool Sportsbook. The MGC had originally scheduled the hearing for April 24. The hearing was over Barstool’s wording of a promotion within its online sports betting app.
The incident in question was the app’s March 10, 2023 use of a promotion entitled a “Can’t Lose Parlay.” In Massachusetts, regulations ban gambling advertisements that state bets are without risk. According to Mike Mazzeo of Legal Sports Report, Penn Interactive reported the incident to the state and voluntarily suspended the promotion.
During Wednesday’s discussion of the alleged violation, Commissioner Jordan Maynard posed a question to Penn’s representatives.
“Does data exist on how many people download or follow the entertainment arm, the Barstool entertainment, podcasts, socials, how many of those exist, and they also wager on the sportsbook application?” Maynard asked. “Is there crossover data that exists?”
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.”
The hearing lasted about another hour and a half from that point. The commissioners and the Penn representatives discussed many other facets of the situation. There was no publicly announced resolution, however.
If the MGC determines the promotion did violate the regulations, it has many options for possible discipline for Penn. Options range from a written reprimand up to revoking Penn’s license to offer sports betting in Massachusetts.
While the MGC could announce its decision in the forthcoming days, the revelation of Penn’s internal functions is interesting. It seems to clash with the original sales pitch for Penn’s investing in Barstool in the first place.
Crossover was the whole point in 2020
When Penn National first invested in Barstool in 2020, the potential payoff for Penn was clear; convert Barstool media consumers into Penn customers.
At the time, Penn CEO Jay Snowden said, “the question has been asked over and over again around how do you attract younger generations – Gen X. millenials. We have the opportunity with Barstool to do that now.”
Snowden also added that, “with its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database.”
Three years later, after Penn has only deepened its investment into Barstool by becoming its sole owner, people representing the company cannot share any data with regulators about whether that is actually happening. According to them, under oath, that is because the data does not exist.
The non-existence of such data becomes even more peculiar in light of Snowden’s comments during Penn’s most recent earnings call regarding that facet of the company.
“Barstool has more than doubled its annual revenues since our initial investment in February of 2020 by providing relevant and entertaining content to their growing, loyal audience,” Snowden stated. “Looking forward, we expect to unlock even greater value from the Barstool audience as we refine our cross-sell strategies and pursue new growth channels.”
It would seem difficult to refine cross-sell strategies with zero data on whether any of those sales are happening. According to the people representing Penn to Massachusetts regulators, though, that’s exactly the challenge that Penn has created for itself.