Fanatics’ Plan to Catch DraftKings, FanDuel Has Regulators Pushing Back

Fanatics’ Plan to Catch DraftKings, FanDuel Has Regulators Pushing Back article feature image

Mike Coppola/Getty Images for Fanatics.

Fanatics has loads of ground to make up in its fight against sports betting behemoths FanDuel and DraftKings.

The sports merchandising company took its first step this week by acquiring PointsBet and its various state licenses — including New York, New Jersey, Michigan, Pennsylvania and Virginia — with an eye toward launching its sportsbook in at least 12 states ahead of the 2023 NFL season.

But PointsBet made up just 1.6% of all betting handle in New York — the country's leading state. DraftKings and FanDuel, meanwhile, took in about 74.5% of the total money wagered.

So how does Fanatics Sportsbook plan on closing that gap? By leveraging its merchandise in conjunction with sportsbook promos.

As of Thursday, users could gain access to Fanatics' beta app in Ohio and Tennessee by purchasing anything from its site. Any hat, jersey, shirt, mug or otherwise will qualify here. Fanatics will then match whatever your purchase was up to $500 in bonus bets.

"We've done a tremendous amount of consumer work against this concept and it tested very well," said Jason White, chief marketing officer of Fanatics Gaming and Betting. "We have a different acquisition model than the other guys, which allows us to reinvest in loyalty and reward our customers."

But one state is pushing back against Fanatics' efforts on this front. The Ohio Casino Control Commission is "working to get [Fanatics' promotions] removed," Sports Handle reported.

The Ohio regulators wouldn't specify which parts of Fanatics' merchandising promotion may have violated protocol.

White told Action Network that advertising its sportsbook on its merchandising site is fair game — even with plenty of underaged customers on the site.

"This is no different from a child seeing a billboard on the street or when they are watching a game," White told Action Network.

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Another way Fanatics is trying to integrate its two products? By allowing bettors to use FanCash to make wagers on the sportsbook. Fanatics customers receive 3% back in FanCash after every purchase.

In addition, Fanatics will roll out a system where users will receive 1% back in FanCash for every dollar wagered on straight bets, 3% for parlays and 5% for same game parlays.

The system is akin to ones used at DraftKings and Caesars — although at these books, you can exchange credits for straight cash.

This portion hasn't received pushback from any state regulators.

It's been a long time coming for Fanatics Sportsbook. It hired away FanDuel CEO Matt King nearly three years ago and has built out a team of more than 200 employees. On the backs of a nearly $31 billion evaluation, Fanatics has the capital to make this a real race. Expect them to use plenty of that cash to market their product in manners similar to the big boys.

But making sure that capital isn't wasted? That all comes down to how well the company can integrate its sportsbook and merchandising operations — and how well it can convince state regulators that it's fair practice.

"We treat everyone who has been in this market with tremendous respect," White said. "But we don't see ourselves as the last one to enter. Instead, we see ourselves as the first one to become part of the new landscape. We are playing with different tools."

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