David Portnoy Plugs Penn Stock, Flirts with Florida Move in Interview

Barstool Sports founder David Portnoy is bullish on Penn Entertainment (NASDAQ:PENN) stock. And he’s open to legal, tax-advantaged strategies to reduce his obligations to the federal government.

In an interview earlier today with “Varney & Co.” on Fox Business, Portnoy was enthusiastic about the future for Penn. That makes sense because with the casino operator announcing earlier this week that it’s moving to acquire Barstool in its entirety, the bulk of his net worth comes by way of Penn equity.

Portnoy also responded to assertions that he’s using methods often deployed by the ultra-wealthy to avoid paying their fair share of taxes. Critics claim he’s borrowing against his Penn stake to avoid paying capital gains levies.

I don’t know where all these tricks are coming from, but I don’t have them and I’m paying out the guts for it,” Portnoy said in the interview. “So if you know any little inside tricks on how to get around taxes legally, I’m all ears. But I pay 50%. I feel like an idiot.”

He also entertained the idea of establishing residency in Florida, which doesn’t have a state income tax. He currently lives in high-tax New York. Portnoy wouldn’t be the first to make that move.

In 2020, the tax bases in California and New York shrank by a combined $37.3 billion, while the tax bases in Florida and Texas jumped by $30 billion combined, according to IRS data.

Portnoy Bullish on Penn

The Barstool Sports founder has good reason to be bullish on Penn stock. As the shares rise, so does his net worth. But he’s frustrated the investment community isn’t looking at the stock in the proper light.

“If you look at the Penn stock, it trades with the rest of the gambling stocks almost lockstep for the past year, year and a half. We don’t operate like those guys,” Portnoy said. “Those guys are spending billions of dollars on advertising and literally burning money and losing hundreds of millions of dollars. And we trade exactly like them. There’s no actual differentiation.”

His argument that Barstool Sportsbook operates differently than rivals is relevant. That’s because the business leverages the media entity’s vast database of fans to convert them to sports bettors cost-effectively. That means the operator is spending significantly less on marketing than competitors.

Penn Potential

Portnoy’s optimism on Penn stock isn’t unfounded. It’s up 18.28% since the start of the third quarter, and the company’s digital business is nearing profitability.

“On the Interactive side of the business, management continues to execute on their targets put forth. If you go back to close to a year ago, PENN was guiding to an $80M loss for 2022. Now even after adding $12.5M in expenses around the CA ballot initiative, management remains committed to their $50M loss target,” wrote Stifel analyst Steven Wieczynski in a recent note to clients.