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Barstool Sportsbook Quickly Grabs Pennsylvania Share, Analyst Sees Large National Footprint

In September, Pennsylvania notched a record sports betting handle of $462.8 million. This topped the previous high mark set just a month earlier by $100 million. The newest entrant to the state’s online sports wagering fray, Barstool Sportsbook, quickly accumulated market share.

Penn National Gaming and Barstool Sports executives ringing the bell at the Nasdaq market site in February. Barstool Sportsbook is off to a solid start in Pennsylvania. (Image: Reading Eagle)

Penn National Gaming’s (NASDAQ:PENN) Barstool Sportsbook app debuted on Sept. 18 in the state and rapidly flexed its muscles, pilfering business from rivals.

Barstool was 7.2% of the total online sports betting handle in the month of September, despite only officially launching the product on 9/18. Barstool took the most share from FanDuel, whose share declined by 440 basis points month-over-month,” said Wolfe Research analyst Jared Shojaian in a recent note to clients.

Shojaian notes Barstool was heavily promotional in its Pennsylvania debut, with promotional credits accounting for 7.2 percent of its handle, compared to 2.6 percent for other competitors in the market. Most of that was driven by Penn offering gamblers a $500 risk-free bet to sign up and use the app.

Good Place to Start

Penn National is headquartered in the Keystone State, making it a logical starting point for the much-ballyhooed Barstool Sportsbook app. Fortunately for the operator, there are benefits to the initial focus on its home market.

Neighboring New Jersey posted a blistering September handle of $748.6 million, affirming its status as the largest US sports wagering market ahead of Nevada. But some experts believe Pennsylvania will eventually top the Silver State for the second spot, perhaps as soon as next year.

For now, Penn National is taking a pragmatic approach to rolling out Barstool Sportsbook, opting to focus on its home state this year, with eyes on launching in Michigan over the next several months. The operator is likely to roll out the app in more states over the course of 2021, along with rebranding its retail sportsbooks under the Barstool name.

Late last month, the company forecast third-quarter earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) of $410 million to $450 million on revenue of $1.04 billion to $1.14 billion. Both estimates easily top Wall Street projections.

Carving Out a Niche

Shojaian, the Wolfe Research analyst, says Barstool’s initial Pennsylvania data supports the notion that the company will find success in the highly competitive US sports betting landscape going forward.

“Over the longer-term, we expect DraftKings and FanDuel to be one and two in terms of US online sports betting market share, and we expect number three through five to be Caesars/William Hill, PENN/Barstool, and MGM/GVC, and we think all three are capable of getting 10%+ share,” he said.

FanDuel, a unit of Flutter Entertainment, and DraftKings combine for over 62 percent share of the domestic online sports wagering market. Shojaian has a “peer perform” rating on Penn stock, which is lower by 8.17 percent over the past month.

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