Fanatics Wins PointsBet Sweepstakes

The sale of Australian-based sportsbook PointsBet's U.S. assets came to a quick conclusion on Friday, thanks to a PointsBet extraordinary group meeting (EGM) that took place in Sydney.

There had been two competing bids for PointsBet’s U.S assets with American betting behemoth DraftKings going up against Fanatics, a company hoping to parlay their standing as the top sports apparel business on the planet into a viable and lucrative sports betting presence.

Fanatics has been in the legal sports betting industry for a few years but was finding traction difficult in the increasingly competitive market featuring the best sports betting apps. So far, Fanatics has gained market access into just three states - Maryland, Ohio, and Tennessee.

The company goal was to be active in at least a dozen states by the start of the NFL season and could do so after their latest acquisition.

The purchase of PointsBet pours jet fuel on Fanatics desire to become a player in the broad American sports betting industry. PointsBet has a presence in 14 states across America, including Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia. 

New York, New Jersey, Pennsylvania, and Ohio are frequently inside the top-five most successful legal sports betting states in the country and will be major adds to Fanatics’ sportsbook desires.

$225 million gets it done

Fanatics started the bidding for PointsBet's U.S. assets shortly after the Australian-based sports betting provider announced their desire to exit the American market. Fanatics bid $150 million a couple of weeks ago, only to have DraftKings trump that with a $195 million offer.

Last week, prior to a shareholder vote, Fanatics upped their bid by 50% to $225 million while DraftKings stood firm on their $195 million offer. Even prior to the jump in bid, however, the PointsBet board had been recommending that their shareholders approve a sale to Fanatics.

In the end, the $225 million all-cash offer from Fanatics to PointsBet was enough to secure a 99.16% "Yes" vote from PointsBet shareholders.

According to a Fanatics Spokesperson: "We are thrilled that the shareholders of PointsBet Holdings Inc. voted to approve our acquisition of the U.S. businesses of PointsBet. This is a pivotal moment for Fanatics Betting and Gaming that will accelerate our growth in the legal online sports betting, advance deposit wagering, and iGaming markets in the United States." 

Why the sale?

PointsBet has been active and successful in the U.S. market with 14 states taking PointsBet wagers. Out of the 60 or so online sports betting sites currently operating on U.S. soil, only seven have captured a 1% or more market share - PointsBet is one of them.

But expenses in the American market were cited by Brett Paton, PointsBet's Chairman, as the main reason for departing the U.S. scene. "Continuing to operate the US business would require significant capital and further capital raises," he said. 

It’s something the company obviously wasn’t willing to do. The PointsBet sale will allow the company to focus on their platforms in Australian and Canadian markets.

Fanatics going forward

Fanatics immediately thrust their name into the U.S. legal sports betting spotlight with not only their defeat of DraftKings, but their acquisition of one of the major players among the best sportsbooks.

It will take some time before the transition from PointsBet to Fanatics is complete, but the timing couldn't be better. Fanatics has two slow summer months to integrate their product into markets before the kickoff of the NFL season.

It is said that Fanatics will take over PointsBet operations in three states at a time. It remains to be seen which jurisdictions will be included in the initial batch, but Fanatics brass is holding out hope that New York sports betting is included on that list.