Penn Entertainment will acquire full ownership of Barstool Sports

Penn Entertainment, the parent company of Charles Town Races, Mahoning Valley Race Course, Penn National Race Course and Zia Park, plans to acquire full ownership Barstool Sports.

The Barstool Sports brand remains popular among younger sports consumers despite controversies that have surrounded its founder and figurehead, Dave Portnoy. The issues surrounding Portnoy include allegations of sexual assault, union-busting and encouraging harassment of his critics.

According to a Form 8-K that Penn filed with the SEC on Wednesday, the company had call rights for all of the shares of Barstool that it did not already own, and chose to exercise them.

As first reported by Gerry Smith of Bloomberg, the terms of the purchase were outlined in Penn's second-quarter SEC filing. The Form 10-Q filing, dated Aug. 4, explained that Penn purchased a 36 percent interest in Barstool in February 2020 for $161.2 million, including $135 million in cash and $23.1 million in stock.

Penn also explained in the filing that it agreed to increase its ownership in Barstool to 50 percent "(within) three years after the closing the transaction or earlier at [its] election", and had the call rights to purchase the rest of the shares in Barstool. 

Penn expects to buy the remaining shares in two phases that add up to $387 million.

Penn, which was known as Penn National Gaming until a name change was announced in the Aug. 4 quarterly filing, started operating sportsbooks under the Barstool brand in 2020. The first one was located in Pennsylvania; the brand now offers sports betting in twelve states.

Sports betting has been part of the Barstool brand since the company's beginning as a leaflet that included sports betting and fantasy sports content.