The Fanatics Betting and Gaming (FBG) team won in its competition against DraftKings to buy the US holdings of Australian online gambling operator PointsBet. On June 30, PointsBet shareholders voted to accept FBG’s $225 million bid. The deal more than triples FBG’s US market access and adds the Big Three online casino states, as well as the No. 1 sportsbook revenue-generating state of New York.
Meanwhile, what’s topping most headlines is FBG had to up its prior $150 million offer for PointsBet on Tuesday by $75 million. That happened because DraftKings (DraftKings 41,47 -0,43%) threw in a $195 million proposal made public on June 16.
While accepting FBG’s deal on Tuesday, PBH halted trading on the Australian stock exchange.
On Wednesday, a PBH (PointsBet Holdings Limited 0,59 -2,70%) announcement made it clear that FBG was the more serious candidate and recommended shareholders approve that acquisition agreement today.
PointsBet Chairman Brett Paton said on Wednesday:
The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty. Fanatics Betting and Gaming conducted their diligence process and negotiations in a highly professional manner at all times. The offer to “front end” the additional consideration is an element, which we regarded as a welcome and significant benefit to our shareholders.
They did so today, 14 hours ahead of EST. Voting totaled 98.24% of shares in favor of the FBG bid.
Voting ended a little before noon today without a live tally. PBH published the results on its site a couple of hours later.
UPDATE: 06/30/2023
At 12:06 a.m. today, a Fanatics spokesperson told Bonus:
We are thrilled that the shareholders of PointsBet Holdings Inc. voted to approve our acquisition of the US businesses of PointsBet. 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.
US Business Is ‘Selling at a Loss’
Before their vote, Paton explained the sale of the US business to shareholders during today’s meeting.
He said:
Continuing to operate the US business would require significant capital. … We couldn’t make as much progress as we’d hoped.
Initially, PointsBet was excited about the US online casino and sports betting market and made significant investments. For example, PointsBet still owes $245 million to NBCUniversal Media for marketing services into 2027.
Paton added that “we doubt anyone expected” DraftKings and FanDuel to become a US “duopoly.” Both had the advantage of pre-existing daily fantasy sports (DFS) customer databases and brand recognition.
FBG is entering the US gambling market with a similar database of Fanatics sports merchandise customers and a “strong brand,” Paton said. It’s entirely possible its online gamblers will be wearing Fanatics apparel while betting.
Meanwhile, DraftKings issued a two-sentence press release on Wednesday, saying it was “no longer pursuing the acquisition.”
FBG didn’t immediately return a request for comment from Bonus today.
However, Fanatics emailed this statement by CEO Michael Rubin to Bonus on June 16:
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.
What Fanatics Betting and Gaming Gained
FBG expansion may have been an expectation, not a hope, from the Jacksonville-based sports apparel retailer. FBG is one of three businesses under the Fanatics brand, and the parent company held its second investor day on June 13. That, despite Fanatics not yet being a public company.
However, CNBC and others report that Fanatics is working toward an IPO. CNBC erroneously reported the PointsBet acquisition as a done deal in that article.
Now that shareholders have approved it, Paton said FBG is gaining 15 market access points.
He emphasized the prize is New York, which is the No. 1 sportsbook revenue-generating state. Additionally, PointsBet’s slice of the pie is more significant.
Paton said:
We were one of only nine companies to be granted a license in the critical New York market.
Also, acquiring PointsBet more than triples FBG’s market access, with the benefit of the top revenue-generating US online casino states.
Bonus reported online casino gross gaming revenue (GGR) in May for those states:
- Michigan, $150.6 million
- New Jersey, $161.4 million
- Pennsylvania, $170.4 million
FBG will also have market access in West Virginia, which saw $11.6 million in GGR in May.
Similar to New York, FBG acquiring PointsBet gives it one of 15 license opportunities in Michigan. There, online casino, poker, and sports betting are legal.
Most of FBG’s Expansion Will Be in Sports Betting
FBG’s sports betting products are in:
- Massachusetts
- Maryland
- Ohio
- Tennessee
So a couple of those Fanatics Sportsbook states – Maryland and Ohio – overlap with PointsBet Sportsbook.
Coincidentally, PointsBet surprised online gambling industry watchdogs by pulling its Massachusetts application in February.
FBG now adds access to these states where PointsBet already offers online sports betting:
- Colorado
- Illinois
- Indiana
- Iowa
- Kansas
- Louisiana
- Michigan
- New Jersey
- New York
- Pennsylvania
- Virginia
- West Virginia
What PointsBet Hopes Happens Now
Paton hopes the FBG deal will help PointsBet’s Australian and Canadian markets. Plus, PointsBet will retain ownership of its tech, he said.
Answering questions after Paton’s statement, PointsBet officials said the legal iGaming market for private operators would probably expand beyond Ontario, with Alberta coming next.
Meanwhile, they emphasized that PointsBet is a top operator in Australia, where former NBA star Shaquille O’Neal is its brand ambassador. Shaq also fills that role in the US for WynnBet.
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