Fanatics Betting and Gaming is buying the U.S. operations of Australian sportsbook PointsBet for $150 million in a move that will help the sports apparel and memorabilia giant gain market share in the American sports betting and online casino markets.
The companies said Sunday night that PointsBet shareholders will vote on the sale in late June. It still faces numerous regulatory approvals.
The sale comes as New York-based Fanatics is launching sports betting and online casino operations, hoping to draw on its database of 95 million customers, who have bought everything from jerseys to trading cards to autographed memorabilia from the online retailer.
Fanatics currently operates sports betting for its existing customers in Tennessee and Ohio and has a retail sportsbook in Maryland. PointsBet would add about 14 states to its reach, once state regulatory approvals are obtained.
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“Fanatics and PointsBet are excited to enter into an agreement for Fanatics Betting and Gaming to acquire PointsBet’s U.S. business,” the companies said in a joint statement. “While there are still several steps in the process to complete the acquisition, both parties are confident in the outcome.”
PointsBet differentiated itself from competitors through a novel betting option in which the closer a person’s prediction was to the actual result the more they could win. The reverse held true for losses, as well.
It was not immediately clear whether Fanatics would retain that option once the sale is finalized.
PointsBet acknowledged the difficulties competing in the U.S. sports betting market, which is dominated by FanDuel and DraftKings. Those two companies have more than 70% of the legal sports betting market over the past 12 months.
“Despite the strategic success building a valuable asset in the U.S., the costs of operating in a state-by-state environment, together with the requirement to build significant scale to compete against well-capitalized operators, led us to explore a number of options,” said Sam Swanell, PointsBet’s managing director.
PointsBet said it is currently the seventh largest U.S. sports betting company out of more than 60 online licensees. But is acknowledged it was not likely to be cash-flow positive in the near future, and its current cash is insufficient to fund its U.S. business to the point of profitability.
PointsBet will retain its Australian and Canadian businesses. Proceeds of the sale will be distributed to shareholders.
While the cost of acquiring and retaining new customers is a major expense for most sports books, Fanatics can reach its 95 million registered customers at no significant cost, CEO Matt King said at a sports betting conference last week in New Jersey.
He also said the company is not concerned about instant profitability, although its long-term goal is to build and sustain a profitable business.
“From day one, I’ve told the team this is a 10-year journey,” he said.
Fanatics hopes to launch in its new states in time for the NFL season in September.