Sports apparel giant Fanatics announced Sunday night that it has agreed to acquire the US assets of sports betting company PointsBet for $150 million. PointsBet shareholders are expected to vote on the transaction in a late-June meeting.
The Australia-based PointsBet will retain its other businesses around the world, including its proprietary software platforms. After the sales of the US business is completed, PointsBet expects its Australian and Canadian businesses will be around breakeven.
Though the US sports betting market has grown quickly since the fall of PASPA in 2018 and is extremely attractive with most states now legalizing the pastime, PointsBet has struggled to compete. According to gambling analytics firm Eilers & Krejcik, FanDuel and DraftKings controlled 71% of the market in the 12-month period ending February 2023. Add in BetMGM and Caesars, and the top four companies, none of which are PointsBet, had almost 90% of the US market.
The deal will greatly expand Fanatics’ sports betting reach in the States. Currently, Fanatics has access to Maryland, Massachusetts, Ohio, and Tennessee, highlighted by a sportsbook in the Washington Commanders’ FedExField, the first sportsbook inside an NFL stadium.
When the acquisition is completed, Fanatics will gain a dozen more states, including biggies like New York, Illinois, Pennsylvania, Michigan, and Virginia. It is not cheap to make headway in those markets, but now Fanatics will get to jump in for just $150 million. Clearly there are still hills to climb, but Fanatics doesn’t have to be the top dog to get a good return on its investment.
NBCUniversal has a 4.9% equity stake in PointsBet, which it acquired in 2020, but that will be transferred to Fanatics in the deal. NBC also waived its right to buy close to 67 million shares of PointsBet at AUD$13 (US$8.71) in 2025.
It was highly unlikely that NBC would have exercised that option, though, as PointsBet shares have tanked. The company’s stock price plunged 21% on Monday to AUD$1.455 (US$0.97) per share on Monday on the news. The 52-week high was only AUD$4.010 (US$2.69). The company would have had to make a historic jump in the next couple years for NBC’s option to have been worth it.
Already a major brand in the US sports industry as a whole, Fanatics has been looking to take big steps to grow its sports betting arm, talking with multiple sports betting companies in the past year.
Matt King, CEO of Fanatics Betting, said at the SBC Conference earlier in May that his company is on a “10-year journey.”
“We’re going to move very methodically through that 10-year journey. And by doing that and taking that approach, it allows you to be a bit more considered in your decisions. You can kind of move slower, slightly slower today, in order to move fast later.”
