Fanatics Becomes Instant Player With PointsBet Acquisition

Guests at the Fanatics Super Bowl Party on Feb. 3, 2018 in Minneapolis, Minnesota, as we look at the PointsBet Q1 handle during its transition out of the American market — Guests at the Fanatics Super Bowl Party on Feb. 3, 2018 in Minneapolis, Minnesota. Photo by Daniel Boczarski/Getty Images for Fanatics via AFP.

Fanatics, the world’s largest sports apparel and collectibles company, took a significant step towards becoming a key player in the U.S. legal sports betting industry. They expanded from just one retail sportsbook at FedEx Field in Maryland and beta testing in two U.S. jurisdictions (Tennessee and Ohio) to full market access in 15 states, representing 35% of the American population, with the announcement of their acquisition of Australian-based PointsBet on Sunday.

Fanatics has been a prominent figure in the U.S. legal sports betting industry for a year, but despite the buzz, they have not yet captured a significant market share. The company has not fully introduced a sports betting product and utilized their extensive database of 95 million individuals.

PointsBet comes with a hefty price tag of $150 million in the United States.

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What it means for Fanatics

Fanatics’ acquisition of PointsBet, the seventh largest online sports betting provider in the U.S. market, is a strategic move to quickly establish a strong presence in the sports betting app industry. Despite their goal of becoming the leading sports betting destination globally within a decade, Fanatics has been relatively inactive until now.

At first glance, the $150 million acquisition of PointsBet’s U.S. assets appears to be a favorable deal for a company that possesses its own unique technology and has established market access in key sports betting markets such as New York, New Jersey, Illinois, Michigan, Colorado, and Pennsylvania.

Fanatics has chosen to bypass the application process in 15 jurisdictions, including some that are unlikely to welcome new sports betting providers. New York leads the nation in sports betting, followed by New Jersey. Pennsylvania and Illinois are also among the top five sports betting states consistently.

Fanatics has also acquired a deal that was previously signed between NBCUniversal and the brand, ensuring that the network will invest $90 million annually with the betting site.

Is it a win for Fanatics? Absolutely. Market access and massive exposure on a major television network are not easily obtained.

What PointsBet gets

PointsBet, which entered the U.S. market in 2019, has expressed interest in selling their American assets. Despite a swift entry into the market, they have struggled to compete with top sports betting sites.

Sam Swanell, managing director and group CEO of PointsBet, stated that despite successfully building a valuable asset in the US, the high costs of operating in a state-by-state environment and the need to compete against well-capitalized operators prompted the company to consider various alternatives.

Shareholders of PointsBet are anticipated to receive a payout of 71 to 73 cents per share, significantly lower than the company’s peak trading price of $12.69 in February 2021.

Is it a win for PointsBet and their shareholders?

Not quite. While the company is exiting the American market to focus on other global assets like their home-country Australia and successful platform in Canada, the current value of 71 cents is significantly lower than what the company was worth at the start of COVID when sports betting companies saw a sharp decline in value.

However, PointsBet was looking to exit the U.S. market, and Fanatics offered a chance for a swift and seamless departure.

Kentucky bettors, are you ready to get involved?

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In the end…

Fanatics has announced plans to expand into 12-15 states before the NFL season begins. CEO Michael Rubin has set a goal for the company to become the leading sports betting provider globally within the next decade.

They were definitely not on course to achieve that prior to the PointsBet acquisition.

Fanatics appears ready to challenge the market dominance of top sportsbooks such as FanDuel, DraftKings, BetMGM, and Caesars.

Written By:
Perry Sandra

Perry Sandra and betting go hand-in-hand. Both are characterized by “odds”. Dave fancies himself as one of the most dedicated sports and pop-culture junkies around, to the chagrin of his family and friends. Following sports for 50 years and writing about it for 20, Dave hasn’t found a sport yet that can’t contribute to 2-3 straight hours of couch time. That search remains ongoing. As a good old Canadian boy, hockey is in Dave’s heart, as is curling sadly. But evolution is a real thing and that’s why football, baseball, and just about every sport on the planet has become a passion. Dave isn’t afraid to kill some time obsessing over politics or the far-too-frequent awards shows the consume the airwaves.