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MGM, Draft Kings scrapped tie-up with Dave Portnoy for NY sports betting license

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MGM Resorts, DraftKings and Fanduel had considered teaming up with Barstool Sports to apply for a New York online sports-betting license this summer — and scrapped the idea because of Dave Portnoy’s past erratic behavior, sources told The Post.

Instead, the trio — whose bloc was one of two that won the high-profile license from the state gaming commission on Monday, beating out a group led by Jay-Z, Fanatics and Portnoy’s Barstool Sports — chose Bally’s Corp. to meet a state requirement that they have four parties in their bid, according to sources close to the situation.

The tie-up with Ballys happened this summer, several weeks after a sex tape surfaced that showed a naked Portnoy yanking a leash on a collar around the neck of 22-year-old model Sydney Raines.

Portnoy and Raines both said the encounter was consensual, with Raines adding that she had “no regrets.” But shares of Barstool Sports owner Penn National Gaming got hit at the time, and it was enough to rattle execs at MGM, DraftKings and Fanduel, according to sources.

Jay-Z in formal clothes
Jay-Z’s consortium ultimately lost out on the sports betting bid.
Getty Images for The Rock and Ro

“One of the reasons Bally’s was chosen was they were the least offensive,” a source with direct knowledge of the talks said. “They saw a risk with Portnoy.”

Monday’s outcome — which puts the MGM group in line to split an estimated $500 million in profits with the state next year — was a shocker for many insiders, who until recently had anticipated New York would choose the Jay-Z consortium. In addition to the rapper’s star power and Fanatics’ clout in sports merchandising, Barstool Sports already has a successful online betting operation.

Model Sydney Raines said that her sex tape with Dave Portnoy was consensual.
Model Sydney Raines said what happened on the tape was consensual.
Leah Perry Photography

“Bally’s didn’t have the market share to bring to the table,” one surprised source noted. “Barstool had market share.”

A gaming official on Monday insisted the state’s rejection of Jay-Z/Barstool/Fanatics group, which had planned to add a fourth partner if it won a license, had nothing to do with sexual misconduct claims against Portnoy, saying the bids had already been rated early last week.

But the MGM camp had hedged its bets just the same. (“We always considered ourselves a class above Barstool,” one source close to the MGM bidding group said, explaining why they nixed the Portnoy tie-up.)

On Thursday, Business Insider published a bombshell story detailing allegations from women who accused Portnoy of overly rough and violent sex.

Three of the women said they had sex with Portnoy, calling the experience “frightening and humiliating,” with two saying he choked them and filmed them without permission. Portnoy responded on Thursday that allegations he has a kinky penchant for rough and violent sex are “100 percent not true.”

As Portnoy mounts a fight, it now looks more doubtful whether Barstool Sportsbook will win state gaming licenses, an analyst requesting anonymity said. Penn National earlier in the year predicted a 10 to 12 percent market share by this time, the analyst said. It’s currently about 7 percent, the analyst estimates.

DraftKings building
DraftKings has a 20 percent share of the US online sports betting market.
AP

Indeed, even before these new allegations Barstool Sportsbook was not meeting its own market share projections, the analyst said. Presently, FanDuel has a leading roughly 40 percent share of the US online sports betting market. DraftKings is at 20 percent, with BetMGM, which on Monday announced a partnership with Madison Square Garden, at 13 percent.

Penn National, which in January 2020 bought 36 percent of Barstool, has seen its shares slide nearly 20 percent since the Portnoy allegations were published. On Tuesday, they were recently up 1.3 percent at $59.75. They had been trading above $130 in March.

Another bidding group — Caesars, Wynn Interactive, Empire Resorts, PointsBet and Rush Street Interactive — also were awarded a license on Monday. New York required four parties to be in each bid because it is taking 51 percent of the betting profit. In return, it is giving the winners a duopoly on sports betting so they have limited competition.

FanDuel logo
FanDuel has a 40 percent share of the market.
Bloomberg via Getty Images

New York State is expected within a few years to generate $1.2 billion in gambling revenue, representing six percent of the national take, according to a Truist analyst report. That would make New York the state with the fourth largest sports betting revenue, with California being the biggest with $3.4 billion. New Jersey is projected to be $800 million and Connecticut $200 million.

Barstool did not return calls for comment.

BetMGM, FanDuel and DraftKings also did not return calls.

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Luban Lee

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