Fanatics, the world’s largest sports apparel and collectibles company, has acquired the U.S. business of Australian sportsbook PointsBet in a deal worth $150 million. The acquisition will enable Fanatics to enter the sports betting market in New York, the largest market with no licenses available, as well as the second largest market, New Jersey, and others in the Top 5 including Pennsylvania and Illinois. The acquisition will also give Fanatics access to the iGaming marketplaces of four states, including Michigan, which have substantially higher margins than sports betting.
Former FanDuel CEO Matt King is the CEO of Fanatics, which entered the sports betting market just recently with the opening of a Fanatics Sportsbook at FedEx Field.
With the acquisition of PointsBet, Fanatics will have access to a mailing list of 95 million people, which executives believe will help the company boost its brand as it competes with DraftKings and FanDuel. In spite of being in stealth mode, Fanatics’ betting department now has more than 200 employees and has partnered with a software company to manage player accounts. The book also has a promotional system set up, with users receiving “Fan Cash” that can be used to buy gear on Fanatics.
PointsBet made a big splash in the U.S. by getting into important markets with relative speed, but its Pointsbetting feature did not catch on due to its high-risk profile, and the book was criticized for its low limits and the railroading of successful gamblers. PointsBet signed a deal with NBC that guaranteed it would spend $90 million a year on the network, but the deal was recently renegotiated down to $58 million a year in ad buy. Drew Brees, an analyst on NBC, was also signed for extra synergy, but he was let go after just one season.
It has been a strategic success to build a valuable asset in the United States, but PointsBet has explored a number of options because of the costs of operating in a state-by-state environment and the need to build significant scale to compete against well-capitalized operators, according to PointsBet’s managing director and group CEO Sam Swanell.
Shareholders of PointsBet are expected to receive between 71 and 73 cents a share for the acquisition, which is less than what they would have received on PointsBet’s lowest trading day in its history on March 15, 2020, when the world was about to shut down due to the pandemic. Even though PointsBet has successfully built a valuable asset in the U.S., its operating costs in state-by-state environments, as well as its requirement for significant scale, led PointsBet to explore a number of options, according to Sam Swanell, the company’s CEO and managing director.