DraftKings Tries to Buy PointsBet Away From Fanatics

Fanatics has been trying to branch out beyond sports merchandise and penetrate the rapidly expanding U.S. sports betting industry. Meanwhile, PointsBet, an Australian bookmaker known for its unique PointsBetting system, has successfully tapped into the U.S. market and is now available in more than a dozen states.

Earlier this year, Fanatics entered talks with PointsBet, offering to buy the company’s U.S. assets for $150 million. The deal was all but done and only required the final nod from PointsBet’s shareholders to close. However, DraftKings entered the picture moments before settlement and outbid Fanatics by 30%. 

In the most recent development, Fanatics raised the original bid to $225 million pending a shareholder vote.

Original Fanatics & PointsBet Deal

Fanatics agreed to buy the U.S. arm of PointsBet for $150 million back in early May with a simple aim—expansion. 

Fanatics Betting & Gaming launched a retail sportsbook in Maryland in January and tested the waters with the beta version of its mobile sportsbook in Ohio and Tennessee. Nevertheless, by acquiring PointsBet, Fanatics would gain access to more than a dozen of its other state licenses, including big markets like New York, Pennsylvania, and Michigan. In addition, it would absorb PointsBet’s proprietary technology.

For PointsBet, selling its U.S. operations made the most sense since competing with sites like FanDuel and DraftKings was proving too costly. Meanwhile, Fanatics Betting & Gaming has a powerful parent company that could compensate for any potential shortfalls of the gambling branch in the long run.

DraftKings Swoops in Last Minute

As everyone awaited the deal’s completion, DraftKings moved abruptly and laid out a non-binding $195 million offer to purchase PointsBet’s U.S. business.

Several factors could be at play here. It came to light that two years ago, DraftKings and Fanatics were trying to merge. The deal ultimately fell through as Fanatics walked away. The situation could have tarnished the relationship between the two, and now DraftKings simply saw an opportunity for petty revenge.

Of course, DK offering to buy PointsBet could purely be a business strategy, as maintaining a strong position with a 25% market share would be easier if they could hinder the emergence of a new powerful competitor. 

It wouldn’t be the first time DK acquired a competitor either. In 2021, the company acquired Golden Nugget.

Will Fanatics Gain Traction?

Ultimately, Fanatics had to raise its original bid to $225 million, which earned it the full approval of PointsBet’s executive committee.

It seems that Fanatics has paved the way to a successful nationwide launch. Aside from gaining PointsBet’s licenses and technology, Fanatics already has a loyal customer base from its merchandise business that will naturally transition to sports betting. Still, it’s going to be an uphill battle, as FanDuel and DraftKings hold over two-thirds of the market.

Of course, it’s not just FD and DK that Fanatics must contend with. Other sportsbooks are also very competitive in states where Fanatics plans to operate, including the likes of BetMGM, Caesars, BetRivers, and many others.

As a result, Fanatics must differentiate itself from its competition. For example, Caesars manages to attract new customers through an industry-leading welcome bonus of $1,250 and a robust loyalty program, while BetMGM tries boasting above-average live betting odds.

It will be interesting to see how Fanatics positions itself in the competitive online sports betting environment and what its unique selling point will be.