Fanatics Sportsbook thought it had a path to enter the PA online sports betting market. That plan is now in flux after DraftKings offered $45 million more than Fanatics for PointsBet’s US operations.
PointsBet is taking the DraftKings offer into consideration. If PointsBet accepts DraftKings’ proposal, it’ll slow Fanatics’ entry into the PA market.
Other paths for Fanatics to enter Pennsylvania sports betting market
Though Fanatics still had steps to complete with the Pennsylvania Gaming Control Board (PGCB), it had a clear entrance as a new sportsbook and online casino in Pennsylvania. DraftKings’ offer to PointsBet now makes Fanatics’ opening into the market potentially more difficult. Fanatics CEO, Michael Rubin, said:
“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 understands that PointsBet accepting DraftKings’ deal would indeed “block” Fanatics and set its operations back, especially in Pennsylvania.
PGCB Director of Communications, Doug Harbach, explained to PlayPennyslvania Fanatics’ next steps if DraftKings buys PointsBet:
“Fanatics would need to be licensed independently so they can be the operator for a casino certificate holder or they could purchase another licensed operator.”
If PointsBet accepts Fanatics’ original deal, it would likely come to the PA market within 2023. If PointsBet goes with DraftKings, there is no telling when Fanatics comes to Pennsylvania.
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PA online sports betting licenses available
As Harbach suggested, it leaves Fanatics with two options to enter Pennsylvania.
There are still licenses available among PA casinos for sports betting companies to partner with. According to the PGCB, those casinos include:
- Lady Luck Nemacolin
- Parx Shippensburg
- Live! Casino Pittsburgh
Harbach noted the other way of entry is for Fanatics to purchase another licensed operator. Earlier this year, Fanatics had been in talks to acquire betPARX Sportsbook for a faster debut into the market. Though no deal occurred, Fanatics has the option to revisit discussions, either with betPARX or another existing operator.
Fanatics could also decide to re-up its offer to PointsBet in an attempt to outbid DraftKings.
The EKG Line, a newsletter prepared by Eilers & Krejcik Gaming, a gaming industry research firm, predicts Fanatics comes back with an offer of around $185 million, which it believes PointsBet accepts.
How DraftKings’ deal with PointsBet hurts Fanatics
Should PointsBet opt for DraftKings, it not only delays Fanatics’ operations, but it could also set back its product.
Dustin Gouker, Catena Media consultant and author of the Closing Line newsletter, mentioned that Fanatics’ product would be greatly affected if its deal doesn’t close. He said of Fanatics’ current product:
“It certainly doesn’t look like a world-beater. PointsBet would clearly accelerate the Fanatics product if the deal closes.”
Gouker also noted how Fanatics benefits from PointsBet’s database of active users, which gives Fanatics a launching pad.
Latest surrounding DraftKings and Fanatics bidding war
DraftKings, out of nowhere, submitted a proposal to PointsBet, offering $195 million compared to Fanatics’ $150 million last week.
In a statement released earlier this week, PointsBet acknowledged that DraftKings’ proposal is being considered as a “superior offer,” but not a guarantee it will result in an agreement.
According to the release, PointsBet stated Fanatics is still in play for the acquisition:
“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.”
Should PointsBet take the larger offer, DraftKings CEO Jason Robins and company are making Fanatics’ initial foothold in the gaming industry a lot tougher to establish.