DraftKings’ Bid for PointsBet an Effort to Block Fanatics’ Entry to Online Casino?

DraftKings sent PointsBet an “unsolicited non-binding indicative proposal” on June 16 about its intent to buy the Australian online gambling operator for $195 million. That’s what PointsBet said in its second paragraph announcing the proposal. However, PointsBet first emphasized that it already has an “agreement to sell its United States online sports betting, iGaming, and retail sportsbook business” to Fanatics Betting and Gaming (FBG).

So today’s announcement from DraftKings (DraftKings 37,78 +2,55%) appears to be an attempt to block FBG’s $150 million deal from being approved by PointsBet shareholders on June 30.

That’s also what Fanatics CEO Michael Rubin said in a statement the company emailed to Bonus today:

We are skeptical of the DraftKings proposal which seems like a desperate move to slow down Fanatics and PointsBet from completing the deal as the purchase price and other financial commitments will total more than $500 million – so they are using the majority of their projected year-end cash just to try to block us.

Rubin’s statement about the cost of the PointsBet acquisition presumably encompasses more than the $150 million cash offer. FBG would likely be assuming PointsBet’s debts, like the $245 million the Australian company still owes NBCUniversal Media for marketing services into 2027.

DraftKings’ announcement counters Rubin’s assertion.

Today, DraftKings CFO Jason Park said:

We expect this transaction to increase our Adjusted EBITDA potential in 2025 and beyond and not impact our expectations of achieving positive Adjusted EBITDA in 2024.

UPDATE: 06/27/2023

It sounds like PointsBet made a decision, but it’s not saying whether it picked DraftKings or Fanatics. Both companies are trying to buy the online gambling operator.

It seemed as though the Australian operator’s decision would wait for a shareholder meeting on June 30, when the Fanatics bid was on the agenda.

However, an announcement today by an official with the Australian stock exchange says PointsBet halted trading today.

Dale Wang, a listings compliance advisor with ASX, said today:

The securities of PointsBet Holdings Limited (‘PBH’) will be placed in trading halt at the request of PBH, pending it releasing an announcement. Unless ASX decides otherwise, the securities will remain in trading halt until the earlier of the commencement of normal trading on Wednesday, 28 June 2023 or when the announcement is released to the market.

UPDATE: 06/20/2023

Yesterday, PointsBet Holdings Limited (PointsBet Holdings Limited 0,32 0,00%) updated investors on the DraftKings bid.

The PointsBet announcement said the company is discussing the offer “in good faith.”

However, PointsBet emphasized that the DraftKings offer is “non-binding,” while the one from FBG is more secure.

The Australian company said yesterday:

The Board continues to recommend that Shareholders vote in favour of the FBG Transaction at the Extraordinary General Meeting scheduled for Friday, 30 June 2023, while it considers the DraftKings Proposal.

DraftKings Is Known for Announcing Big Acquisition Plans

In October 2021, DraftKings announced it planned to buy Entain (Entain PLC 658,80 +0,43%) for $22 billion. Those plans to purchase half of the ownership team for the No. 1 US online casino operator, BetMGM, didn’t happen.

However, DraftKings did succeed at acquiring Golden Nugget Online Gaming (GNOG) for $1.6 billion that year.

Backtracking to 2017, when DraftKings and FanDuel were just daily fantasy sports (DFS) sites, the duo called off a proposed merger. They’d been challenged by the Federal Trade Commission (FTC) because the proposed monopoly “would control more than 90% of the US market for paid daily fantasy sports contests.”

In 2018, Flutter Entertainment (Flutter Entertainment 25,46 -0,04%) began buying up FanDuel stocks. Now, Flutter is the primary owner of the No. 1 US online sportsbook.

DraftKings Acquiring PointsBet Might Block FBG Expansion

DraftKings isn’t stopping FBG from getting started in online gambling and retail sports betting, but it may keep it from expanding quickly.

As it is, FBG’s already made retail sportsbook history. On Jan. 20, Fanatics Sportsbook opened at FedExField. It’s the first legal sportsbook inside an NFL stadium, where the Washington Commanders play football in Maryland, near Washington, DC.

In May, FBG “launched the beta version of its mobile sportsbook in both Tennessee and Ohio.”

Yesterday, PlayMA said:

Fanatics reported $123,108.74 in handle while its beta product was live in Massachusetts for the final week of May.

PlayMA and Bonus are Catena Media brands.

So far, those are only sports betting launches.

FBG has plans to offer US online casino gambling, and acquiring PointsBet would create faster market access. It would also provide established technology and experienced employees.

DraftKings already has all of those things.

So PointsBet could help FBG, and DraftKings buying PointsBet could hurt FBG.

While FBG might eventually find another way to expand, not acquiring PointsBet might hurt in the short term. That’s especially true for a Michigan online casino site because the state’s 15 operators are already in place.

Also, DraftKings’ announcement today about intending to acquire PointsBet comes after Fanatics held an investor day on Tuesday. Jacksonville-based sports apparel retailer Fanatics leaders talked about taking the company public. FBG is one of Fanatics’ companies.

PointsBet Has Wide US Market Access

Here’s PointsBet’s market access.

PointsBet Sportsbook is live in:

  • Colorado
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Louisiana 
  • Maryland
  • Michigan
  • New Jersey
  • New York
  • Ohio
  • Pennsylvania
  • Virginia
  • West Virginia

PointsBet Casino is in fewer states:

  • Michigan
  • New Jersey
  • Pennsylvania
  • West Virginia

Response to New Hampshire, California?

If DraftKings isn’t trying to block FBG, its announcement about planning to buy PointsBet may be about widening its market access.

Last month, New Hampshire lawmakers put the kibosh on adding DraftKings Casino. By not legalizing online casino gambling, the Granite State left DraftKings Sportsbook operating without its companion app.

Californians not legalizing online sports betting was a much more significant blow. The company spent enough marketing and advertising before the November 2022 ballot measures that DraftKings downsized its workforce.

About the Author

Heather Fletcher

Heather Fletcher

Heather Fletcher is Lead Writer at Bonus, concentrating on online casino coverage. She specializes in breaking news, legislative coverage, and gambling marketing strategy overviews. To reach Heather with a news tip, email [email protected].
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