Outside. Well, half the time out on the grass I think and half the time on his new bed in the laundry (which is sort of external).
He used to have a kennel, but tore apart the mat that was in there, I never bought him a new one because he'd only do the same thing and after that he wouldn't use it. We got rid of the kennel
When we moved and for the last two years he hasn't had a bed..figured I better get him one of those trampoline style ones this year so he's not always sleeping on the hard laundry floor.