PointsBet Agrees to Fanatics Sale for $225 Million, Beating DraftKings To The Punch
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99% of PointsBet shareholders voted to sell its U.S. business to Fanatics for $225 million late Thursday night, marking the end of a lengthy saga that sees the largest sports and collectibles licensee in the world come closer to becoming a sports betting giant.
The purchase will allow Fanatics, a $31 billion behemoth entering the betting game five years after PASPA, to acquire much-coveted sports betting licenses in New York, New Jersey, Pennsylvania and Michigan.
Fanatics had previously agreed to a roughly $150 million deal to acquire PointsBet’s American arm, but they upped the ante after DraftKings made a $195 million, non-binding 11th-hour bid.
On Tuesday, DraftKings missed the deadline to finalize its offer, while Fanatics pushed their offer up by $75 million.
"We are thrilled that the shareholders of PointsBet Holdings Inc. voted to approve our acquisition of the U.S. businesses of PointsBet," said a Fanatics spokesperson in a statement. "We moved decisively to close the deal and we look forward to working with our friends at PointsBet Holdings Inc. to finalize the remaining acquisition details. 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. Pending regulatory approvals in the various states in which PointsBet operates, we will have more details to share in the coming weeks on how the acquisition of PointsBet US businesses will bring to life our unique vision for Fanatics Betting and Gaming."
Research analysts across gaming expect Fanatics to immediately compete with the two leading industry titans — DraftKings and FanDuel — once the company’s sportsbook is expected to launch ahead of the 2023 NFL season.
“Backed by Fanatics’ resources for product development and marketing — and a massive database to market to — the operator could take significant share in our view,” Eilers and Krejcik wrote in a recent report.
Fanatics has launched its beta product in Massachusetts, Maryland, Tennessee and Ohio. It has been a long time coming. This week marks the three year anniversary of Fanatics hiring FanDuel CEO Matt King to head up its betting business. Since then, the company has continued to beef up its sports betting operation, hiring people across its trading, risk management and promotional departments.
DraftKings’ now-failed bid initially beat Fanatics' but needed finalizing from both sides. PointsBet and DraftKings negotiated terms of the deal after the non-binding offer, but ultimately, time ran out to settle the deal.
DraftKings’ now-dead offer wouldn’t have generated much in the way of profits, even in the long run. Nearly every state that PointsBet operates in, DraftKings does as well — so this wasn’t a play for market share. And DraftKings already has robust departments in risk management, trading and otherwise — so this wasn’t about poaching PointsBet talent.
Simply put, DraftKings attempted to block a competitor with deep pockets from entering its territory by blocking in from licenses in key states. And it failed mightily in doing so.