DraftKings Rides Super Bowl Gambling Wave, New Barstool Sports Deal Into Q4 Earnings

Boston-based betting company and sportsbook operator DraftKings pared its breakout gains Monday, after wagering participation spiked ahead of Sunday’s Super Bowl LVIII, which saw the Kansas City Chiefs defend their title against the San Francisco 49ers. Barstool Sports Sunday night announced a new multiyear betting partnership with DraftKings (DKNG), ahead of DraftKing’s Q4 results late Thursday.

Barstool Sports Deal

Sports and pop culture media company Barstool Sports Sunday night officially announced a new multiyear sports betting partnership with DraftKings.

“We’re back to our roots,” owner David Portnoy said in a video announcement. “[DraftKings] is once again the exclusive betting partner of Barstool Sports.”

Financial terms were not disclosed but prior reports from Sportico indicated the deal would encompass a traditional marketing partnership in which Barstool promotes DraftKings odds. Barstool would benefit from customers referred to the sportsbook.

Barstool declined to lend its brand to a sportsbook or betting app, a venue or platform where people can wager on sports.

Previous reports indicated DraftKings would pay Barstool in the “low eight figures per year.” However, Barstool was unable to finalize a betting deal until after the Super Bowl due to a lockup as part of its recent separation from Penn Entertainment (PENN).

Last summer, Disney (DIS)-owned ESPN partnered with Penn on a gambling sportsbook. As part of that deal, Penn rebranded its Barstool Sportsbook as ESPN Bet and will use ESPN Bet exclusively. Penn agreed to pay ESPN $1.5 billion cash over 10 years, plus $500 million in warrants to buy PENN stock. In return, it will get exclusive rights to the ESPN Bet trademark in the U.S. for the next 10 years. ESPN Bet launched on Nov. 14.

Super Bowl Bets

Meanwhile, gambling interest spiked ahead of Super Bowl LVIII, the first Super Bowl hosted by Las Vegas.

A record 67.8 million American adults were expected to bet on Super Bowl this year, a 35% jump from 2023 and representing 26% of the eligible population, according to data from the American Gaming Association. Bettors were estimated to wager $23.1 billion on the game, leaping nearly 45% from the $16 billion last year.

Forecasts called for about 42.7 million Americans to place traditional sports wagers online via retail sportsbooks or through bookies, a 41% increase from 2023. Those participating in casual wagers with friends or part of a pool or contest increased 32% to 36.5 million people. Roughly 28.7 million adults, or 11% of the population, planned to place online wages with a legal U.S. sportsbook.

Pregame data showed 47% of bettors predicted the Kansas City Chiefs to win, while 44% expected the San Francisco 49ers to defeat the defending champions.

“As the Super Bowl comes to Las Vegas for the first time, this year’s record interest in wagering marks a full circle moment for the U.S. gaming industry,” AGA CEO Bill Miller said in the Feb. 6 release.

The states that report postgame data won’t do so for a month or so, an AGA representative told IBD.

DraftKings Earnings

FactSet forecast DraftKings to report Q4 adjusted earnings of 21 cents per share, improving from a loss of 17 cents per share last year. Analysts see GAAP earnings at 8 cents per share, compared to a loss of 53 cents per share last year.

Wall Street expects revenue growth will slow for the second quarter in a row, increasing 45% to a record $1.24 billion.

For Q3, the Boston-based gaming company narrowed losses to 61 cents per share on a 57% revenue jump to $790 million.