Dave Portnoy: DraftKings, FanDuel Will Knock Each Other Out As Barstool Sportsbook Focuses On Loyalty

A leader in the sports betting space could be a long-term winner with a unique approach to acquiring and retaining customers.

Marketing Approach: Barstool Sportsbook, which is partially owned by Penn National Gaming PENN, utilizes a rent vs. buy strategy.

“We are the marketing,” Barstool Sports founder Dave Portnoy said Friday.

Advertising on television is expensive with the NFL charging people for the opportunity to attract customers, Portnoy told listeners of a Twitter TWTR Spaces video with the team of Roundhill Investments.

“There is no customer loyalty,” Portnoy said of rivals DraftKings Inc DKNG and Flutter Entertainment PDYPY-owned FanDuel.

Portnoy said Barstool Sportsbook and Penn is the only company that has loyalty from its customers and users.

“We think we have our market share and they’re going to play with us.”

Everyone else is fighting in a race to the bottom that will eventually shake out, Portnoy added: “Once you stop spending, you’ll lose your market share.”

Portnoy noted Barstool was late to online sports betting and DraftKings and FanDuel have an early lead. The Barstool founder believes the two companies will knock each other out and one will take the major share eventually.

Related Link: Exclusive: Penn National CEO Says Company Is Finding Success With New Features On Barstool Sportbook App

Michigan Market Share, New States: One of the items discussed by Portnoy and the Roundhill team, which owns PENN shares as the seventh-largest position in the Roundhill Sports Betting & iGaming ETF BETZ, was the decline of market share in Michigan for Barstool Sportsbook.

In August, Barstool Sportsbook ranked fourth in Michigan with a betting handle of $13.1 million and a 6.8% market share. That total trails leaders DraftKings, FanDuel and BetMGM with respective market shares of 31.9%, 24.8% and 22.7% in the state.

Portnoy mentioned Michigan having a strong start and noted the drop off. He sees Barstool Sportsbook doing well in the state during the football season.

“MGM, I never would’ve gathered how strong they would be there,” Portnoy said of the BetMGM brand that's a joint venture between MGM Resorts International MGM and Entain.

Barstool Sportsbook is trying to get three more states live by the end of 2021, Portnoy said. The company won’t spend on new states and utilize their current method of sending in the Barstool team to show up and promote.

Score Acquisition: Penn National Gaming announced the acquisition of Score Media and Gaming SCR, a leading sports content company with sports betting operations in several U.S. states and expected to be a leader in the Canadian market.

“I also think theScore integration is going to give us a huge advantage,” Portnoy said.

Acquiring Score can help the technology for Barstool Sportsbook and allow it to create its own back-end software.

Portnoy was a fan of Score for a while and has openly said he has used it for over a decade. He told listeners he researches and looks at betting lines on the Score app and then places his wagers on Barstool Sportsbook.

This is something Portnoy hopes to have integrated into one all-inclusive platform in the future.

Media and Streaming Expansion: Barstool Sports gained the streaming rights to the Arizona Bowl, an NCAA bowl game and has also been rumored to be lining up Major League Baseball streaming.

“We want to do that, we’re actively pursuing that,” Portnoy said of streaming rights.

Portnoy talked about the competitive advantage Barstool Sports has with its personalities who know sports and can turn into pre-game commentators and announcers.

“Is Jamie Foxx going to announce a bowl game?” Portnoy said of the BetMGM spokesperson.