I want you to image a betting company that has free advertising, a low cost infrastructure and generates $100 million in revenue before someone places a bet. Welcome to Barstool Sportsbook.
Oh, and it can also draw sports fans into casinos.
To run a successful betting company you need to spend vast sums of money on advertising and give various websites and partners affiliate fees from bets they generate. Barstool Sportsbook is different. Very different.
Barstool Sportsbook will use the existing brand and reach of Barstool Sports to attract customers with almost no advertising spend. It’s like a movie being released and all the TV stations, magazines and billboards give the movie free advertising space targeted directly at the most relevant demographic possible. It just doesn’t happen.
But Barstool Sports has managed to launch and attract customers by renting a (large) house in Philadelphia and some regular launch promotions. No need to spend millions on advertising or fees to affiliates. The infrastructure to build and run the betting website and app will come from assets within Penn. The guys who built the app probably work for Penn full-time anyway. Resulting in a much smaller capital investment needed to launch the app. Barstool Sportsbook is basically a white label of Penn’s current infrastructure and gambling data, marketed by Barstool Sports to Barstools growing audience.
Yes, there will additionally costs. Potentially running into millions of dollars to get Barstool Sportsbook off the ground. But this will be a fraction of what Barstool’s competitors have to spend just to keep their ship floating. Take for example Bet365 who’s owner pays herself around $300,000,000 each year. Bet365 have massive overheads in running the business, advertising on TV and affiliate fees to partners. Those costs are simply non-existent for Barstool Sportsbook.
Now some of you may refer to the myriad of promotions Barstool Sportsbook are running. But businesses of Penn’s scale make long-term investments and don’t expect to make a return for several years. You’ll always have to spend money to make money.
But it’s not just about Barstool Sportsbook that will roll in the dough. Penn are also launching a range of Barstool Sports branded bars. Perfect for pulling in sports fans into Penns casinos and gambling terminals. Whilst other sports bars operate to make a profit, Penn and Barstool can operate sports bars that break even or make a loss because it generates more traffic and merchandise sales for Barstool and more gamblers to Penn.
Barstool Sports has also shown through Zillion Beers that it has the ability to create and market its own products. Let’s say a customer pays $4 for a pint of beer in a sports bar, the sports bar may pay $2 to the brewery. Yet by brewing its own beer Barstool will keep that $2 as its own revenue. Increasing its profits. Paying the brewery $1.50.
Then there’s the video content produced by Barstool which will appear in the sports bars. Generating more advertising revenue opportunities for Barstool Sports. Barstool Sports will become a sports bar content provider for its own sports bars, with more opportunity to pull in advertisers, including the snack foods sold in the Barstool Sports bars.
Each of these revenue opportunities with lower cost than their competitors will turn Barstool Sports, its Sportsbook offering and its relationship with Penn into a huge success.
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