How Barstool's deal with a casino company will change its business, from limits on ad deals to branded betting platforms - and maybe even sports bars

• Barstool Sports will soon have a new part owner in Penn National.
• The casino company is buying a stake in the sports-media outlet, in the hopes of using Barstool's brand and millennial audience to become a national name in sports betting.
• Business Insider breaks down the big changes to Barstool that could come from the deal, including a growing presence at casinos and possibly sports bars, as well as new advertising restrictions.
• Click here for more BI Prime stories.

Barstool Sports will soon have a new part owner: Penn National.

The regional-casino owner is buying a minority stake in the sports-media outlet - in a deal that values Barstool at $450 million - in the hopes of using Barstool's brand and millennial audience to become a national name in sports betting.

Penn will begin opening Barstool-branded sportsbooks at its casinos and other gambling properties in the coming months, leading up to the launch of a Barstool betting app in August.

The deal, which is supposed to close by the end of March, also gives Penn the option of building Barstool sports bars and restaurants.

Here are the biggest changes to Barstool that could come from the deal.

Barstool's top personalities including founder Dave Portnoy are sticking around

The good news for Barstool's "stoolies," the name for its legion of loyal followers who drive 66 million unique visitors to its platforms a month, is that Barstool's top personalities like founder Dave Portnoy and CEO Erika Nardini will be sticking with the company after the deal with Penn National closes.

Penn National bought a piece of Barstool in part because its talent knows how to rally an audience. Folks like Portnoy and Nardini will be key to pushing Barstool's followers to Penn National's properties.

As part of the deal, Portnoy, Nardini, and Barstool personality Daniel "Big Cat" Katz each signed new employee agreements and took a stake in Penn National, according to a company filing.

"We're buying a piece of Barstool because they make incredible content, and they have a loyal fan base based on their extraordinary roster of talent," Jon Kaplowitz, head of Penn National's interactive business, told Business Insider. "That's what drives a lot of the value of Barstool. Ensuring that key talent was part of Barstool for the longterm and foreseeable future was super important to us."

The Barstool brand will creep into casinos, and possibly sports bars and restaurants

The Barstool brand will make a big leap beyond the internet in 2020.

Penn National plans in the coming months to roll out Barstool-branded sportsbooks at its casinos and other gambling properties in US states where sports-betting is legal.

The retail sportsbooks will set the stage for a Barstool-branded betting app that is slated to launch in August. It'll be a full-fledged sports-gambling platform, not to be confused with Barstool's current Barstool Bets content hub that offers daily free-to-play games.

The two companies are still working out how to tie the two apps together, Kaplowitz said.

It's likely that Barstool Bets will remain. It's a national app for both casual and experienced bettors that can drive audiences to the forthcoming betting apps, which will be regional because of the way mobile-betting is regulated.

Barstool's deal with Penn National also opens the door for Barstool-branded sports bars and restaurants, the companies said. Barstool has been exploring more retail opportunities recently. It launched a vodka line last year and has a hub for pizza reviews, called One Bite.

Expect Barstool to film more content and host events from Penn National's properties as well. Nardini said Penn National's retail footprint sealed the deal for her.

"What we felt that Penn had that we did not have was a physical footprint," Nardini said on a conference call with investors on Wednesday. "It gives us a place to bring out audiences. We tour about 30 weeks a year. We have our personalities, our brands, our people on the ground across this country. And now we will do it in places where Penn has a physical presence."

Ads from FanDuel and Penn National's other competitors will disappear from Barstool

Barstool will stop running ads from other sports-betting or online-casino companies. It will exclusively promote Penn National's gaming properties.

Kaplowitz said Barstool's current ad commitments expire before next football season begins in August, at which point Barstool will no longer be able to accept ads from Penn National's sports-betting and online-casino competitors.

It'll be a loss for both Barstool and other sports-betting companies. Gaming operators including FanDuel, PointsBet, and MGM were among the first advertising on Barstool Bets, the company previously told Business Insider.

The change could drive other big gaming companies to Barstool's competitors that have similar millennial audiences and are not exclusive to any one gaming company at the moment.

Barstool, for its part, thinks the new arrangement will show "the full weight" of the audience Barstool can drive now that it will be exclusive to one partner, Portnoy said on the investor call.

Penn National will eventually take control of Barstool

After three years, Penn National will be Barstool's majority owner.

Penn National is buying 36% of Barstool for $163 million in cash and stock. When the deal closes by the end of March, Barstool's current majority shareholder, The Chernin Group, will give up part of its ownership and become an equal partner with Penn National, owning 36%. The rest of the company is owned by Barstool employees, including Portnoy and Nardini.

As part of the deal, Penn National also agreed to invest another $62 million in Barstool after three years, and boost its stake to 50%.

Read more about how media companies are leveraging legal sports betting on BI Prime:

• Barstool and Penn National execs share new details about their blockbuster $163 million deal, from the first meeting in July to plans for a new betting platform: Penn National's deal to acquire a minority stake in Barstool Sports started with a July meeting between the two companies in New York.
• Why a casino company just took a big stake in Barstool Sports, and how it sets the stage for more media-gambling deals: The Barstool deal could spur, and set the tone for, future deals between media companies and sports-betting operators.
• Inside Barstool Sports' strategy to become advertising's gateway to gamblers with its new sports betting app, Barstool Bets: 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.
• Inside Bleacher Report's strategy to win over sports gamblers, who it says are 5 times more engaged with its app than other sports fans: Bleacher Report wants to woo casual bettors with entertaining betting-related programming, like its forthcoming "B/R Betting Game Show," its CEO said.
• How much money media companies can make by referring gamblers to sports-betting platforms: The CEO of affiliate firm Gambling.com CEO breaks down exactly how much his company makes from sending gamblers to legal sports-betting apps.
• Meet the 22 power players leading the explosion of the US sports betting space: These are the top execs championing legal sports-betting at the major US media brands, sports leagues, and gaming companies.