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Barstool To Dominate MI Mobile Sports Betting Market? One Investment Analyst Thinks So

With online sportsbooks and casinos set to launch in Michigan within weeks, one analyst of the space likes Barstool’s chances to succeed.




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With online sportsbooks and online casinos getting ready to launch in Michigan — possibly in time for Baby New Year to get a few bucks down on the Lions before the NFL season ends — a fair question is also a simple one: Who’s going to dominate the space?

And it’s not an academic question; millions of dollars are at stake from the jump, billions over time, and with no fewer than 15 operators battling for your betting dime, the rush out of the gate is going to be something else.

It also may be unique thus far in the early annals of legalized online gambling in America, as it’s possible, bordering on likely, that six, seven, eight or more of these sportsbooks are going to be going live within days — or even hours — of each other. This is “gold in them thar hills” territory, and those who are first to market, first to make their claims, will set themselves up for immediate — and potentially future — success.

So who’s best positioned to win this duel and become the king of Michigan? 

According to one watcher of the space, not the companies with “duel” or “king” in their name.

Barstool set for success

“I would actually say Barstool could be the favorite to be the number one sportsbook in Michigan,” said Matias Dorta, an associate at Roundhill Investments who spends his professional life analyzing gaming companies for the firms’ BETZ ETF, the largest sports betting ETF in the market. “I think it will be a focal point for Barstool and Penn National Gaming to make sure that happens. So when they launched in Pennsylvania, you literally had half the Barstool team living half the time in Pennsylvania. I think for Michigan they’re going to go full throttle.”

While predicting that Barstool will leap to number one in Michigan may sound like a bold call, Dorta has numerous reasons why he thinks it will come to pass.

“For starters, this will be the first time we actually see Penn start at the starting line with everybody else,” he said. “They were late to party with the Barstool app in Pennsylvania, and in just their first six weeks they were able to take up what we estimate as 12% of the online market share, which puts them in third place for online in Pennsylvania and fourth place overall. And that’s pretty interesting because Pennsylvania is a mature market, and DraftKings and FanDuel Michigan, the two leaders, had an extensive period of time to pick up users.”

So there’s one reason. A second? The Portnoy Effect, namely the cult of personality surrounding Dave Portnoy, who’s practically a modern day P.T. Barnum with special advantages in Michigan.

“They have a huge presence there,” Dorta said. “Portnoy went to the University of Michigan, there is a huge ‘Stoolies’ following there, and to top it off, Penn owns Greektown, one of the more popular casinos in Michigan. They’re building out a branded Barstool Sportstbook inside of the casino and hotel. All of it together gives Barstool a really unique opportunity to go in there and try and pick up their first state where they’re the leader in terms of market share.”

Dorta also notes the guerrilla marketing Barstool does as yet another signpost of things to come.

“The part that’s always so crazy to us amongst our team is that DraftKings spent $200 million on marketing last quarter, and they’ve foreshadowed that’s what they’re going to continue doing, spending $200 million a quarter,” he said. “Penn bought Barstool for around $160 million. And Barstool — and they’ve pointed this out — in that first month in Pennsylvania spent zero dollars on marketing. So for what DraftKings spends in one quarter in marketing, Penn spent in one acquisition and that’s now their marketing engine for the sportsbook.”

DraftKings, FanDuel top dogs

Speaking of DraftKings, Dorta has them pegged — along with FanDuel — as obvious favorites to capture a large chunk of the Michigan market.

“The one thing that gives DraftKings and FanDuel an advantage is their large DFS user base,” Dorta said. “They can’t offer the sportsbook through the app, but they can run ads in the DFS app to go to the sportsbook app. It gives them a substantial advantage.”

Another advantage for DraftKings? Well, they are spending a kingdom’s worth of money …

“With DraftKings, yes they’re spending a ton of money on marketing, but it’s working,” Dorta said. “So one of the things that came out last week that was interesting is that by brand, they’re the number one online casino in the country. It really shows how they’re expanding what they’re doing, from DFS to sportsbooks to the casino product. For them, in any state they open up, there’s a high likelihood they’re going to be the market leader, based on what they’ve been able to do so far. And FanDuel is always a threat. Right now Flutter (its parent company) claims to be the number one sportsbook operator in the U.S.”.

The fourth sportsbook Dorta has his eye on in Michigan is BetMGM.

“They’ve made a huge push in Detroit, signed partnerships with the Lions, with the Red Wings, and plenty of BetMGM advertising clearly on the screen during Lions games,” Dorta said. “They own the MGM Grand Detroit, the largest casino in this state. And for the same reason Greektown provides value in the Barstool situation, this provides value for BetMGM, probably more so. One, it’s the biggest casino in the state, which gives them a huge database of gamblers they already have locked in and can convert to the sportsbook through email marketing, social marketing, things like that, and two, they can then parlay their luxurious hotel with loyalty points; they can translate that to real life experiences. Promotions for tickets, free stays at hotel, something DraftKings or FanDuel can’t offer.”

Golden opportunity?

As for a dark horse candidate to swipe some market share? Dorta is looking at Golden Nugget, specifically its casino product.

“Golden Nugget has had so much success,” he said. “They are the number one online casino in New Jersey and are in the top five nationally — but they only operate in New Jersey. A big test for them is Michigan. If they go into Michigan and can take a market share lead there, then people are going to have to pay attention and ask what they’re doing. There’s no reason they should have the number one casino in Michigan, but if they do, then clearly it’s something they’re offering from a game and user experience perspective that their competitors aren’t offering. And if that happens, it’s going to be a really interesting story.”

Due to the mad dash nature of what might happen in Michigan, Dorta thinks it’s important for all the sportsbooks to act as quickly as possible to gain customers.

“I think with sportsbooks, it’s kind of like a brokerage in that you sign up and create your account and it’s kind of hard to pull you off it,” he said. “There are promotions, but it’s important to get that initial loyalty.”

Launch of the online sportsbooks and casinos in Michigan is expected to happen within three to five weeks. Stay tuned.