Big media news.

Big money.

Penn National Gaming, an owner of casinos and racetracks across the country which last year entered into a market access deal with the likes of DraftKings Sportsbook and FOX Bet, purchased a minority share in Barstool Sports at a $450 valuation.

Penn National will now own 36% of Barstool, with the investment and equity increasing to roughly 50% in three years, with further options to take a controlling stake of the company.

From Penn National:

Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or the “Company”) announced today that it has entered into an agreement to acquire a 36% interest in Barstool Sports, Inc. (“Barstool Sports”), a leading digital sports media company, for approximately $163 million in cash and convertible preferred stock. Under the agreement, Penn National will be Barstool Sports’ exclusive gaming partner for up to 40 years and have the sole right to utilize the Barstool Sports brand for all of the Company’s online and retail sports betting and iCasino products.

Why do this? Penn National was already exceedingly well-positioned in the sports betting space given their reach and market access. But there were rumors they wanted to launch their own brand– not simply provide access for partners. Acquiring a piece of Barstool allows them to do just that. No one was playing a “Penn National Online Sportsbook,” not in Pennsylvania or elsewhere. But Barstool Bets? That will resonate everywhere.

Jay Snowden, the president and chief executive officer of Penn National, said part of the reason for the deal is decreased customer acquisition and marketing costs. A Barstool branded sportsbook will have to work way less hard than, say, PointsBet or BetMGM to activate young, male bettors– because they already have the audience.

Barstool Bets, as it exists today, is a Trojan Horse, a free-to-play game that amassed an undoubtedly massive list of interested players… segmented by state, of course.

The downside for Penn National in realizing Barstool’s half-billion valuation is that part of the value in Barstool was wrapped up in their ability to promote (and receive money from) many sportsbooks, which have been pouring money into Barstool to reach their audience. The focus will now be solely on one brand in the still-low-margin business of operating a sportsbook.

Of course, Barstool has many other ways to churn a profit, so this is a truly unique deal. But if recent ventures into the branded sportsbook space by FOX Bet and theScore – which admittedly don’t have nearly the brand loyalty of Barstool – are any indication, the build-it-and-they-will-come nature of media-backed sportsbooks hasn’t translated to huge commercial success just yet. Barstool has the best chance to be the first.

Also, this is very funny: