Michael Rubin has made sports betting his summer project. The Sixers co-owner and Fanatics executive chairman teamed with Jay-Z and are applying for a gaming license in New York to form the Fanatics Sportsbook, ESPN’s Adam Schefter reported.
Currently, sports betting in New York is only permitted at retail locations. New York legislators approved online sports betting in April 2021. The state is now setting up an application process to determine which sportsbook operators will be permitted to launch their sports betting apps in New York. It’s possible that online sports betting will be available for Super Bowl LVI.
Fanatics lays groundwork for sports betting
Fanatics, a licensed sports merchandising company, hired ex-FanDuel CEO Matt King who left the sports betting behemoth in May.
Rubin “put King in charge of the company’s gambling and gaming venture.” The report also said that prior to the hire, Fanatics had been laying the groundwork for its expansion beyond merchandise and into gaming for several months.
King was with FanDuel for the past four years and helped lead them to one of the top sports betting apps. Since its launch in Pennsylvania in the summer of 2019, FanDuel has held the top spot for handle and revenue with about a 40% market share.
Fanatics also hired former Los Angeles Dodgers executive Tucker Kain in June to help the company “expand beyond merchandise.”
Fanatics bid for sports betting license
On Aug. 9, the New York State Gaming Commission revealed the groups that entered bids for a sports betting license.
“Super Bid 3” includes Kambi which would serve as the platform provider and partner with Fanatics and Barstool Sportsbook which is owned by Pennsylvania-based Penn National Gaming.
In the redacted bidding applications, Jay-Z was listed as vice chairman in which he will “provide strategic and creative directions on the expansion and growth of the Fanatics Sportsbook in New York and across the country.”
Rubin and Fanatics route to $18 billion valuation
Rubin was an entrepreneur even as a child growing up in Lafayette Hill, Pennsylvania. He started at eight-years-old selling vegetable seeds and shoveling snow. At 11, he started a ski-tuning shop in his parents’ basement.
After dropping out of Villanova, Rubin founded Global Sports Incorporated, an apparel and logistics company. In the late nineties, it evolved to GSI Commerce. In 2011, Rubin had sold GSI Commerce to eBay for $2.4 billion. Later, he bought back the consumer business of GSI at a lower price and repurchased Fanatics.
Fanatics continues to acquire licensing rights with major sports leagues and apparel companies. A Fanatics rep estimated that 2020 saw three years’ worth of e-commerce industry growth in a single year.
Rubin still believes it’s early in the game for Fanatics. He told Business Insider he feels like Fanatics is “in the first inning of a baseball game” in its trajectory.
Fanatics has a partnership with the Jay-Z founded Roc Nation and BSE Global which owns the Brooklyn Nets. Also, Rubin launched Reform Alliance, a criminal justice reform organization, with Jay-Z, Meek Mill, Robert Kraft and others.
On Aug. 10, Fanatics announced it secured $325 million to expand into new sectors and is now valued at $18 billion, sources told CNBC. In addition to sports betting, Fanatics plans to expand offerings to include ticketing and NFTs.
Rubin on what’s next for Fanatics
Rubin appeared on CNBC and explained the expansion from a merchandising company to digital sports.
“It’s one integrated business where you can go to Fanatics and really do the things that are most important to you as a digital sports fan whether it is buying merchandise, trading NFTs, placing a sports bet, watching certain media and other products we will develop over time. There is not another company thinking about giving the digital sports fan everything they want in one place. We always want to be the top player in each business we are in.”
On a Fanatics IPO:
“We feel like we are just getting started. The opportunity, the size of the market we are going after, is so big. We are definitely going to be a public company. I think that’s in the near to medium term.”
On whether sportsbook operators like FanDuel and DraftKings have an advantage since they are already live:
“I think we have a huge structural advantage. We have 83 million sports fans. We did forty million transactions this past year. That is ten times the size of the database of a FanDuel or DraftKings. When you think about building any new digital sports business, it’s all about customer acquisition and a structural advantage and that’s what we have at Fanatics.
“When we surveyed our customers we found that over half placed bets in the last year and 82% of our customers actually would like to bet with Fanatics. They want to do more with us and believe in our brand.”
Lead image from Michael Rubin’s Instagram