Pointsbet Agrees to Sell U.S. Operations to Fanatics for $150 Million

Pointsbet and Fanatics have announced in a joint statement that the Australian online gaming provider has agreed to sell its U.S. operations for $150 million. The transaction was confirmed after weeks of speculation about its recent moves. Pointsbet recently hired the investment bank Moelis & Company to explore selling its U.S. and Canadian online gaming business.

Fanatics was valued at $31 billion at the end of 2022 and has been aggressively trying to move further into the online gaming market. It’s rumored the company had an interest in purchasing several online gaming providers in the past year, including Tipico, Rush Street Interactive (BetRivers), Churchill Downs, and WynnBet.

Pointsbet shareholders are scheduled to vote on the deal in June, which includes only the U.S. portion of its business. However, the transaction will also require regulatory approval before being finalized. The company will keep the Canadian sports betting division, as its Australian operations have also been the subject of a possible takeover.

U.S. Market Has Been Difficult

Pointsbet acknowledged its problems competing in the U.S. online sports betting and casino market. DraftKings and FanDuel have shared over 70% of the regulated online sports betting market in the past year. Pointsbet ranks seventh out of over 60 licensed online providers in the country.

The company isn’t expecting positive cash flow anytime soon and doesn’t have sufficient funds to bring its U.S. operations to profitability. Pointsbet managing director Sam Swanell said that despite Pointsbet’s success in building its U.S. gaming platform, the cost to compete against established operators led the company to explore its options.

Pointsbet offers legal online sports betting in 14 states and operates online casinos in Michigan, New Jersey, Pennsylvania, and West Virginia.

Fanatics Banking on Large Customer Base

Fanatics has a database of 95 million customers gained from online sales of sports apparel and memorabilia. The company hopes it will help secure market share in the competitive U.S. online sports betting and casino market. Fanatics Betting and Gaming will soon offer sports betting in Tennessee and Ohio and owns a land-based sportsbook in Maryland.

There has also been recent speculation that Fanatics is currently holding discussions with BetParx to strike a deal for a possible takeover. BetParx is owned by Greenwood Gaming & Entertainment, which operates several Pennsylvania casinos and owns Playtech, a leading internet gaming software provider.

Fanatics Set to Change Online Betting

A BetParx deal would significantly speed Fanatics’ expansion into online betting. The company has already secured contracts to open a Fanatics Sportsbook at the home of the NFL’s Washington Commanders, FedEx Field, in North Englewood. In addition to online sports betting in Ohio and Tennessee, Maryland and Massachusetts will launch online operations in mid-June.

Fanatics could change the online betting landscape and threaten profitability for many well-established players in the young industry. In addition, its entry into the lucrative market could force competitors to increase promotional spending to retain and acquire customers, lowering their bottom lines.

While Fanatics hasn’t announced any plans for an IPO in a 2023 IPO, many experts in the industry believe it’s the next step for the company. Fanatics founder Michael Rubin says the plan is to triple the company’s growth to over $100 billion in the next decade. Speculation is that Fanatics is talking with its investment banking firm about soon going public, with many estimates that a 2023 IPO would be one of the largest of the year.

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