In July 2023 Fanatics Betting & Gaming outbid DraftKings for the U.S. assets of Australian-based PointsBet. The price tag was $225 million and the deal has only now officially closed but the acquisition has allowed Fanatics to expand its footprint at a torrid pace.
Fait Accompli
PointsBet had been struggling in the U.S. online sports betting market, but it possessed several assets that a fledgling entity would find attractive. The licenses to operate were of paramount importance but the technology and tribal knowledge of the domestic mobile gaming market didn’t hurt the cause either.
Therefore, the synergy between the companies was obvious, and after a bid of $225 million was approved by 99% of the shareholders, the deal was done and the next hurdle would be getting regulators to transfer the PointsBet licenses to Fanatics Betting & Gaming.
PointsBet Chairman Brett Paton had faith that the acquisition would drive Fanatics sportsbook into an upward trajectory, saying, “Fanatics identified in PointsBet many of the attributes needed to be successful in entering the online market. In turn, Fanatics have a strong brand and an extensive sports customer base with a fanatical interest in sports.”
“We doubt anyone expected FanDuel and DraftKings to become effectively a sports betting duopoly. It points to the huge incumbency benefits these companies have in the US market. However, we are one of the only international operators to have gained a worthwhile market share. There are over 60 online sports betting operators in the market. Only seven brands, including PointsBet, have a market share of more than 1%, with the remaining 53 companies competing for the rest,” Paton added.
New Markets
That was a gap that the nascent mobile sportsbook brooked well as it initially morphed the PointsBet sites to a temporary rebrand called “PointsBet, A Fanatics Experience” in Colorado, Iowa, Kansas, Maryland, New Jersey, Pennsylvania, Virginia and West Virginia.
The company migrated those PointsBet customers to its platform and began incorporating some of PointsBet’s proprietary assets like Banach Technology to bolster the experience for old and new customers.
Eventually, any mention of PointsBet vanished and within nine months Fanatics had closed the deal, subsumed PointsBet, cleared or is in the process of clearing regulatory hurdles, and is now active in 19 states including Arizona, Colorado, Connecticut, Indiana, Illinois, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Vermont, Virginia and West Virginia.
iGaming Future
Fanatics Betting & Gaming has built its core customer base on the millions upon millions of names and addresses from the Fanatics sports apparel merchandising business. The PointsBet acquisition allowed it to more expediently expand into several other markets that otherwise would not have been immediately accessible to it.
Getting a foothold in the iGaming business is a boon for any gaming company as it is far more lucrative than booking sports. Currently, seven states offer online casino gaming and Fanatics is operating in three of them including Michigan, Pennsylvania and West Virginia, while setting its sights on New Jersey as well.
Matt King, CEO of Fanatics Betting and Gaming, said, “The acquisition of the US businesses of PointsBet has supercharged our expansion plans. In addition to our migration of PointsBet customers and technology to the Fanatics Sportsbook and Casino platform, we have also added an incredibly talented team of passionate leaders from the ranks of PointsBet USA that have already made an impact on our business.”
