Introduction

Dave Portnoy, now 100% owner of Barstool Sports after former parent Penn Entertainment sold it back to him — concurrent with Penn’s major 10-year sports-betting deal with ESPN — has admitted that Barstool isn’t a good fit in the gambling industry.

Challenges in the Regulated World

“[W]e underestimated just how tough it is for myself and Barstool to operate in a regulated world, where gambling regulators, the New York Times [and] Business Insider hit pieces, fucking with the stock price every time did something,” Portnoy said in an “emergency press conference” video posted on X (aka Twitter) Tuesday.

“We got denied [gambling] licenses because of me, you name it,” Portnoy said. “So the regulated industry probably not the best place for Barstool Sports and the type of content we make.”

Freedom after Separation from Penn

Now that Barstool is no longer part of Penn, Portnoy said, “For the first time in forever, we don’t have to watch what we say, how we talk, what we do. It’s back to the pirate ship.”

Legal Battles and Controversies

In November 2021, an article published by Insider cited three women who said they had sex with Portnoy and that the encounters “turned into frightening and humiliating experiences that have taken a toll on their mental health.” Portnoy sued Insider in February 2022 over that piece and a follow-up story, alleging defamation and invasion of privacy; the lawsuit was dismissed in November, with a federal district court judge ruling Portnoy had not provided enough evidence that Insider acted with “actual malice” or a reckless disregard for the truth. Portnoy appealed the decision before agreeing to drop the claim earlier this year.

Portnoy’s reference to the New York Times “hit piece” appears to be about a November 2022 story headlined, “Desperate for Growth, Aging Casino Company Embraced ‘Degenerate Gambler,’” which noted that Portnoy has described himself in those terms.

Penn’s Acquisition of Barstool Sports

Penn’s stated rationale for buying Barstool was that its “authentic voice and vast, loyal audience” would serve as “a strong top-of-funnel for new customer acquisition and organic cross-selling opportunities” for Penn’s online sports betting businesses, as Penn CEO and president Jay Snowden said earlier this year in closing the full acquisition of Barstool.

About Barstool Sports

Barstool Sports, founded in 2003, describes itself as “a sports & pop culture blog covering the latest news and viral highlights of each and everyday with blogs, videos and podcasts.”

Controversies and Criticisms

Barstool has a loyal fanbase for its brash brand of sports commentary, while critics have pointed to staffers’ past sexist and racist content. In 2020, Portnoy posted a defiant video hitting back at “cancel cops” who resurfaced clips of him using racist language including the N-word in past videos, complaining that they took video from the “comedy site” out of context. “I’m uncancellable,” he said at the time.

History with ESPN

Meanwhile, there’s history between Barstool and ESPN: ESPN in 2017 canceled “Barstool Van Talk,” a late-night comedy/interview show on ESPN2, after just a single episode aired. That came after ESPN correspondent Sam Ponder called out sexist attacks against her by Portnoy and other Barstool writers.

Penn’s Stock Purchase Agreement with Portnoy

On Tuesday, Penn announced a stock purchase agreement with Portnoy under which Penn sold 100% of the outstanding shares of Barstool to him “in exchange for certain non-compete and other restrictive covenants.” Per the terms of the deal, Penn has the right to receive 50% of the gross proceeds received by Portnoy “in any subsequent sale or other monetization event of Barstool.”

Portnoy’s Ownership of Barstool Sports

“For the first time in a decade, I own 100% of Barstool Sports — not since the Chernin deal have I been in total control over everything,” Portnoy said. He said he is “never going to sell Barstool Sports, ever, I’ll hold it ’til I die” — in part, one assumes, because in that case he’d half to fork over half of the proceeds to Penn.

Financial details of Portnoy’s buyback of Barstool weren’t disclosed. Portnoy said “I still own a ton of Penn stock, I’ll probably hold it because I think it’s gonna go up.”

Previous Ownership and Acquisitions

In 2016, Portnoy had sold majority control of Barstool to Peter Chernin’s Chernin Group. In January 2020, Penn Entertainment, then known as Penn National Gaming, paid $163 million for a 36% stake in Barstool, with Chernin Group left with the same percentage stake. This past February, Penn completed the previously announced acquisition of Barstool, paying $388 million for the 64% stake in Barstool did not already own.

Penn’s Deal with ESPN

Under terms of Penn’s deal with ESPN, Penn will pay $1.5 billion in cash to ESPN over a 10-year term and grant ESPN approximately $500 million of warrants to purchase approximately 31.8 million Penn common shares that will vest over 10 years, in exchange for media, marketing services, brand and other rights.