Fanatics Betting and Gaming, the renowned sports apparel and memorabilia giant is making a significant move in the American sports betting and online casino markets by acquiring the U.S. operations of Australian sportsbook PointsBet for a hefty sum of $150 million.
The deal, pending approval from PointsBet shareholders and various regulatory bodies, aims to bolster Fanatics’ market share and capitalize on its massive customer base of 95 million individuals who have purchased a wide range of sports merchandise from the company.
While Fanatics already operates sports betting services in Tennessee and Ohio, with a retail sportsbook in Maryland, the acquisition of PointsBet will expand its reach to approximately 14 additional states once all necessary regulatory clearances are secured. This move represents Fanatics’ strategic push to establish a stronger presence in the highly competitive U.S. sports betting market.
PointsBet, which set itself apart from competitors through a unique betting option where closer predictions to the actual result yield higher winnings, faces challenges in the American sports betting landscape dominated by the likes of FanDuel and DraftKings. Over the past year, these two industry leaders have accounted for over 70% of the legal sports betting market.
While the fate of PointsBet’s distinctive betting option remains uncertain following the acquisition, both Fanatics and PointsBet expressed enthusiasm about the agreement, acknowledging the remaining steps in the acquisition process but exhibiting confidence in the ultimate outcome.
PointsBet acknowledged the difficulties of competing against well-capitalized operators in a state-by-state environment and noted the need to achieve significant scale. In light of these challenges, PointsBet explored various options and ultimately decided to pursue the sale.
Despite being the seventh largest sports betting company among more than 60 online licensees in the U.S., PointsBet anticipated continued negative cash flow and recognized its current cash reserves as insufficient to fund its American business until it becomes profitable. As a result of the acquisition, PointsBet will maintain its Australian and Canadian operations, and the proceeds from the sale will be distributed to its shareholders.
One significant advantage that Fanatics brings to the table is its unparalleled access to its vast registered customer base of 95 million individuals. Unlike other sportsbooks that face significant costs in acquiring and retaining new customers, Fanatics can tap into its existing customer pool at no significant expense.
CEO Matt King emphasized this advantage at a recent sports betting conference in New Jersey and stressed that while immediate profitability is not a major concern for the company, its long-term goal is to establish and sustain a profitable business. King sees this endeavor as a decade-long journey, highlighting the company’s dedication and commitment to long-term success.
Fanatics is eager to launch its operations in the new states it gains through the acquisition, targeting a timely rollout before the highly anticipated NFL season kicks off in September. With the fervor and excitement surrounding American sports betting, Fanatics Betting and Gaming’s foray into this burgeoning industry is poised to make waves and offer a compelling new player in the market.
