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Fanatics acquires PointsBet’s US operations, marking its official foray into sports betting

Fanatics signed an agreement to buy the US business of the Australian sportsbook PointsBet Sunday night in an acquisition said to be worth $150 million, multiple sources told the Action Network.
The world’s largest sportswear and collectibles company FanDuel CEO Matt King nearly three years ago, but only recently entered the sports betting market by opening a Fanatics Sportsbook at FedEx Field, home of the Washington Commanders.
The company began testing its app in Tennessee and Ohio at the beginning of the month.

PointsBet said shareholders are expected to receive between 71[ads1] and 73 cents per share for the acquisition. PointsBet shares traded at a high of $12.69 per share in February 2021 – 17 times what they were selling for.

Shareholders receive less than they would have on PointsBet’s lowest trading day in its history – 97 cents per share on March 15, 2020, when the world was about to shut down due to the pandemic.

Key to the deal will be immediate market access. Fanatics applied to get a book in New York and lost.

Getting the PointsBet skin enables them to get started in the biggest market, which had no licenses available. It’s one of the most important acquisitions for Fanatics in this deal, despite New York’s less-than-friendly tax policies toward sportsbooks.

New York takes 51% of all profits from sportsbooks in the state. Compare that to 10% in New Jersey or Colorado. It has resulted in reduced promotional activity in the state despite its No. 1 ranking in handle and wealth.

Crucial, Michigan had not previously been associated with Fanatics, but now – through PointsBet – they are in. Michigan is one of four states, including New Jersey and Pennsylvania, that allow iGaming marketplaces – such as table games, slots, etc. – that have significantly higher margins than sports betting.

For example, while there are many professional sports players, there are far, far fewer professional baccarat or slot players.

Fanatics boasts an email list of 95 million people, which executives believe will accelerate their brand as the company tries to come from behind and catch up with market storms DraftKings and FanDuel.

Although Fanatics — last said to be worth $31 billion — and its betting division have been in stealth mode, the division now has north of 200 employees and has completed a deal with a software company to manage line-making and player account management.

The book even has a promotional system set up, sources said. Users will receive 1% back for every dollar wagered on straight bets, 3% on parlays and 5% on parlays within the same game. That “Fan Cash” can then be used to buy gear at Fanatics.

The system is similar to those used at DraftKings and Caesars – although in these books you can exchange credit for cash.

PointsBet made a big splash in the US, entering the important markets with relative speed. But Pointbetting didn’t catch on because of its high risk profile, and the book was often criticized for its low limits and railroading of successful gamblers.

“Despite the strategic success of building a valuable asset in the US, the cost of operating in a state-by-state environment, along with the requirement to build significant scale to compete against well-capitalized operators, led us to explore a variety of options,” said PointsBet CEO and CEO Sam Swanell, in a statement.

PointsBet signed a deal with NBC that guaranteed it would spend $90 million a year on the network.

The deal, which gave NBC a stake in the business, was recently renegotiated down to $58 million a year in ad buys. It also signed Drew Brees, who was an analyst at NBC, for added synergy, but Brees was let go after just one year.

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