Even as the global pandemic makes the return of sports uncertain, Penn National Gaming is expanding its footprint in sports betting to hopefully offset the aging audience of its more traditional casino games. In early January, Penn National Gaming entered into a $450 million deal to buy Barstool Sports so it could, as Penn National CEO Jay Snowden put it, “attract a new, younger demographic.” A few weeks later, it entered into a multiyear deal as the first authorized sports betting partner of NASCAR.
Before sports came to a standstill in mid-March, the U.S stock car racing series was able to host four races with Penn’s new free-to-play mobile game, NASCAR Finish Line, which offers users a weekly chance at a $50,000 jackpot. When it became clear NASCAR was going to shift strategy with the eNASCAR iRacing Pro Invitational Series, Penn asked if NASCAR would be interested in a game adaption.
Scott Warfield, NASCAR’s managing director of gaming, says the league was happy with the game’s initial results and gave the go-ahead. The game was easily adaptable because “the mechanics are basically the same,” says Jeff Kaplan, VP of strategic marketing for Penn Interactive. It was up and running by the second week of the virtual series. And just like that, Penn had its first live esports product.
Penn had been eyeing the industry for a while and waiting for the right time to make a move. “We as a company are very bullish on esports. We see the prize pools are growing and interest is growing. We think there’s a new audience there,” Kaplan says. “Their definition of sports might be different than my definition or my parent’s definition of sports. But that’s OK. We need to adapt to the demands of our consumers, and esports, we believe, will be a big part of the gaming and gambling future.”
The game did not have as many entrants as the real NASCAR races, though Kaplan says that’s to be expected: “virtual cars … not the same hype.”
But he says they have been “really pleased” with the interest they’ve been able to generate. “It was less-than our real races but it hasn’t been drastically less,” he says. “And we got a significant amount of new accounts, probably higher than we anticipated. There were probably a lot of people who maybe had not followed NASCAR previously, or hadn’t had as much exposure to sports in general, but maybe there were in video games and now they see that this as something that’s cool and unique.”
Just like its investment in Barstool, Penn is attracted to esports because it promises access to a younger demo. It also likes the industry because esports can help fill gaps in the sports calendar. And as we’ve learned over the past few weeks, it’s largely pandemic proof.
“Esports can happen anywhere, you don’t have to have 20,000 people sitting in an arena, and you can get that experience remotely, which lines up well with the potential future we’re looking at where we’ll all be a little more distant,” says Kaplan. “NASCAR runs from February to November, but from the end of November to Daytona, there’s not a lot on the racing sports calendar. If you can maybe fill that with some esports, that drives interest in the sport, it keeps people engaged, and it’s also a cool way for fans to connect with the legends.”
Jeff Gordon, driver of the No. 24 Axalta Chevrolet, races during the eNASCAR iRacing Pro Invitational Series North Wilkesboro 160 at virtual North Wilkesboro Speedway on May 9. (Chris Graythen/Getty Images)
With the esports version of racing, NASCAR can experiment with bringing back former drivers as it did with Dale Earnhardt Jr. (he’s semi-retired) and Jeff Gordon (retired in 2015) in the eNASCAR Pro Invitational. For that reason, Penn will likely keep some version of the esports game even when it gets back to the higher-stakes real-racing version of NASCAR Finish Line.
Across the board, sports blackouts have accelerated the adoption of esports fantasy games and betting. The Nevada Gaming Control Board has approved wagering on a number of esports events over the past two months, including Counter-Strike: Global Offensive’s ESL Pro League Season 11 in North America and Germany, ESL Dota 2, eNASCAR, 2020 Call of Duty League, Overwatch League, and the League of Legends championships in Europe and North America, to supplement the losses from brick-and-mortar casinos and sports betting.
DraftKings began offering daily fantasy games on Counter-Strike: Global Offensive at the end of March. Fanduel hosted the first daily fantasy esports game for drone racing at the beginning of April for the finals of the 2020 Drone Racing League global simulator tryouts.
Warfield says the convergence of esports and sports betting was “well underway” before the coronavirus struck, but that the past five or six weeks have “really shined a spotlight on it and probably accelerated the phenomenon.”
NASCAR has operated two esports series for years, including the eNASCAR Coca-Cola iRacing Series for the last decade. The Coca-Cola esports series takes place every other Tuesday and features the world’s top simulator drivers competing for a $300,000 prize pool. If NASCAR were to expand fantasy and betting to these virtual series, Warfield suspects interest would only grow among the coveted demographic.
“We now have the five highest-rated esports events in the history of U.S. television,” he says. “We reached a million people plus that hadn’t watched any other NASCAR event so far this year. And 33% of the audience is between the age of 18-49. This is why we’ve been investing over the last 11 years with iRacing, why we built out our esports strategy. This is one of the tools in our toolbox that should allow us to get younger and more diverse.”
NASCAR has been investing in esports for the past decade and investing in fantasy and betting heavily for the past year. Last May, it entered into a multiyear betting data partnership with Genius Sports to begin offering bettable products for legal sportsbooks. NASCAR has a “robust sports betting strategy,” says Warfield, and is leaning on “live in-play products” that help make its races more digestible to fresh audiences outside of the league’s core fanbase.
“We think our sport lends itself nicely to what everyone refers to as in-play betting because they’re long events, 300 to 400 laps, and the data we have in our sport is unparalleled,” he says. “So it’s just a matter of packaging it right and having partners like Penn that can market it to the casual gaming audience.”
For Penn, Barstool and eNASCAR offer exciting opportunities to reach young people. But more than that, they award it the opportunity to reimagine what gambling might look like in the future.
“That’s a big part of why we acquired Barstool,” says Kaplan, adding that Penn’s current demographic averages customers in their 50s. “With the introduction of sports betting, that certainly is something that drives a new audience to some of our casinos. But when you throw Barstool on top of that, it gives us a way to reimagine what our casinos might look like. Maybe there’s a Barstool sportsbook or lounge that might cater to a different demo than we’ve traditionally had visit our casinos.”
The real value, though, isn’t in just getting young fans to visit brick-and-mortar casinos, but for Penn to meet them where they already spend much of their time: interacting with brands online. Barstool has roughly 66 million unique visitors each month, most of whom are Gen X, Millennial and younger.
“The Stoolies are digital natives, they interact with the brand and are fiercely loyal,” he says. “It’s a partnership that will take us into the future.”
To use Kaplan’s words, the “cherry on top” is that Barstool also has a relationship with NASCAR. There’s now a “triangle of a sports league, media company and gaming operator” all converging around new generations of sports fans. “We’ve just really started to get beneath the surface on what that can look like going forward and how we all can grow together: the sport, our business, and Bartstool’s media empire,” he says.
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