Inside Barstool Sports' strategy to become advertising's gateway to gamblers with its new sports betting app, Barstool Bets

Barstool Sports

Dave Portnoy and Erika Nardini.

• Barstool Sports, which originally launched as a print newsletter for gamblers and fantasy sports players, is returning to its roots with a new app dedicated to sports betters, called Barstool Bets. 
• Founder Dave Portnoy and CEO Erika Nardini broke down the strategy for Business Insider.
• Barstool wants to own the audience of US sports betters with the app, which launched earlier this month and is still being fine-tuned.
• Barstool Bets features a free, daily gambling game with cash prizes, live streams of Barstool personalities with actual money on the line reacting to games, and other content and analysis geared toward sports gamblers.
• A US Supreme Court ruling last year opened the door for individual states to legalize sports betting. Barstool is one of many US media brands trying to make money off the growing acceptance of sports gambling.
• Barstool wants to build a robust database of new and experienced sports betters to attract new advertising dollars, and revenue streams, like affiliate, as more states legalize the activity.
• "It's very, very new in terms of being legal and so there's a need for education," Nardini said. "We think that we can be that influence and that brand that experienced betters, new betters, sports betters, turn to."
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Barstool Sports is jockeying to become the home for a new generation of gamblers as sports betting becomes legal in more states in the US.

The digital-media brand launched a new app, Barstool Bets, earlier this month to familiarize more sports fans with betting, and draw in experienced gamblers with programming made for them.

Barstool CEO Erika Nardini and founder Dave Portnoy explained the strategy to Business Insider.

Barstool doesn't aspire to run a sportsbook, like Fox does through Fox Bet. Instead, the company wants to become the gateway to the nation's sports betters to pull in new advertising dollars and other potential revenue streams, like affiliate revenue. 

"We are trying to build really this huge database throughout the country that we know, these are people who know how to gamble," Dave Portnoy, founder of Barstool Sports, told Business Insider. "When the new states turn on and make it legal, we think we'll have a powerful database of people who enjoy doing this type of behavior."

Sports betting is in Barstool's DNA.

For Portnoy, the push into sports betting is a return to form.

Portnoy launched Barstool in 2003 as a print newsletter for gamblers and fantasy sports players, which drew in advertising support from offshore sportsbooks and poker companies, like Party Poker. Barstool later morphed into a more general audience sports brand, after US regulators cracked down on the online poker sites, limiting the advertising opportunities for a site focused solely on gambling.

Now that the regulatory tide has changed again, thanks to a 2018 US Supreme Court ruling that opened the door for individual states to legalize gambling, Barstool sees an opportunity to make a land grab for an audience that has always been close to its DNA.

Barstool is not the only media or sports brand trying to win over US gamblers. ESPN airs a sports gambling news show called "Daily Wager"; Turner Sports' Bleacher Report has a studio inside the sportsbook at the Caesars Palace Las Vegas hotel and casino; and Fox is operating a sportsbook, Fox Bet, with The Stars Group, to give a few examples. 

"Dozens of media companies that are trying to get a seat on that luxury ship known as sports betting," Tim Hanlon, media and marketing consultant at The Vertere Group, told Business Insider. "The coach ticket is stuff like [what Barstool Bets is doing] ... The other extreme is the beginnings of how to tie sports rights into the actual sports betting itself."

Sports betting could bring in as much as $7 billion in extra advertising revenue in 2019, analysts at Evercore ISI estimated last year, with about half of that going toward digital advertising, a space dominated by Google and Facebook.

Barstool thinks it's in a prime position to get those dollars. About 65% of its audience already say they bet on sports, the company said, based on a survey of its audience in August.

Barstool Bets, which is still being fine-tuned, has a daily sports betting game and mobile-forward content made for gamblers.

The new app, Barstool Bets, launched in the US on September 5 to coincide with kickoff the 2019 NFL season.

It features a free, daily betting game where players can win cash prizes - the cost of which is offset by advertising - inspired by the daily fantasy sports games from companies like FanDuel.

The contest is designed to get Barstool's audience more familiar with live sports betting, and draw in experienced betters in places where gambling is not yet legal.

"It's very, very new in terms of being legal and so there's a need for education," Nardini said. "We think that we can be that influence and that brand that experienced betters, new betters, sports betters, turn to."

Barstool also hopes the game will keep sports fans more engaged with its app during live matchups. On the Thursday through Sunday of launch weekend, there were over 70,000 contest entries, Barstool said.

The app also has content made for gamblers, including live streams of Barstool personalities with actual money on the line who are reacting to games, as well as other long and short-form video for a mobile audience, podcasts, blogs, live events, and analysis.

The execs said their content strategy will set Barstool apart from its broadcast competitors.

"The way they're approaching content is very similar to the way that they've approached typical sports commentary or traditional content," Nardini said. "There is no one who is going to be hungrier, more prolific, more engaging, more authentic around sports betting than us."

Advertising is Barstool Bets' main revenue stream, but it will also other revenue models, like affiliate.

Today, the app makes most of its money from advertising. Barstool Bets has three main advertising partners: PointsBet, FanDuel, and MGM, Nardini said. Ads for companies like Hooters have also appeared in the app.

Down the line, Barstool Bets will work with partners to host live events at sportsbooks and casinos, and incorporate brands into its content, Nardini said. It also plans to roll out an affiliate model, to earn revenue for referring its audience to other sites, possibly sportsbooks when gambling is legalized nationally.

Nardini told Digiday that Barstool, which raised $15 million from The Chernin Group last year, aims to reach $100 million in revenue by 2020. 

She told Business Insider that she expects sports betting to be a growing part of the company's revenue, starting next year.

"It's one of our single biggest areas of focus," Nardini said. "A lot of the revenue associated with sports betting will will be determined on the state rollout and where it's legal and when. But, strategically and proportionately, this will be a big driver for us going into 2020 all the way through 2023 and beyond."

Barstool, as whole, has been working to diversify its revenue streams, which include advertising, merchandising, subscription, and live and pay-per-view events. Podcasts are big business, too; Variety reported that podcasting now makes up about 35% of Barstool's revenue.

But the company's controversial culture can also be a turn off for some sports fans and advertisers. Its personalities, including founder Portnoy, are known for making unfiltered comments that offend many people. Portnoy recently threatened in a tweet to fire employees if they talked about unionization. Barstool, which Portnoy said has a core demographic of 21-40-year-old males, has also been accused of creating a culture of cyberbullying and sexual harassment online, as The Daily Beast has detailed.

Barstool Sports' website has averaged more than 5 million unique visitors per month, on desktop and mobile, this year, according to ComScore. That makes it larger than FanDuel, on par with Fox Sports, but smaller than Yahoo Sports and Bleacher Report.

The execs said Barstool, overall, has about 49 million followers across platforms, like Twitter, YouTube, and Instagram, where people can chat or otherwise engage with it personalities around sports betting.

"We also know that we can make sports-betting cultural, which is really what you're seeing us do," Nardini said.