The agreement totals $163m in cash and stock.
Barstool Sports was valuated at $450m.
Investors were quick to take notice, as Penn National stock peaked as high as 29.88 before closing at 29.02.
Penn National will pay $135m in cash and $28m in stock.
In three years the company plans to pay another $62m to increase its ownership to 50%.
Barstool Sports, which formed in 2003 as a regional digital sports media outlet, has grown its audience to 66m unique monthly visitors.
Penn National currently operates 41 properties in 19 states.
Penn National President and CEO Jay Snowden said: “With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database.”
The deal gives Penn National the rights to use the Barstool brand across its gaming marketing.
The Chernin Group will retain 36% ownership of Barstool Sports while the remaining 28% will be held by company employees.
