Fanatics came to the table a bit late, but they put forward a winning $225 million bid for PointsBet’s U.S. assets, which was recently approved by over 99% of the shareholders. The regulators in the states in which PointsBet is operating must give their stamp of approval, and the sale is expected to consummate early next year.
Shareholders Overwhelmingly Approve Fanatics Bid
Fanatics has some heavy hitters behind it, including the NFL, Jay Z, and Softbank to name a notable few, and increased its offer by 50% to become the primary buyer for the eager-to-exit seller from Australia.
Fanatics’ $225 million offer to purchase PointsBet’s U.S. assets and become an immediate player in the 14 states in which it operates was approved by 99.16% of the PointsBet shareholders. The deal does not include any other PointsBet assets including those in Australia and Ontario, Canada.
PointsBet Chairman Brett Paton noted that his company has set a strong foothold in the U.S. market despite twin leviathans dominating in markets throughout the nation – FanDuel and DraftKings.
New Markets to Explore and Exploit
The PointsBet chairman also believes that Fanatics is well-suited to exploiting the 14 new states in which they will be operating, as they are uniquely poised to grow the existing customer base through millions of their own merchandise consumers.
“Fanatics identified in PointsBet many of the attributes needed to be successful in entering the online market,” Paton said. “In turn, Fanatics have a strong brand and an extensive sports customer base with a fanatical interest in sports.”
“We doubt anyone expected FanDuel and DraftKings to become effectively a sports betting duopoly. It points to the huge incumbency benefits these companies have in the US market.
“However, we are one of the only international operators to have gained a worthwhile market share. There are over 60 online sports betting operators in the market. Only seven brands, including PointsBet, have a market share of more than 1%, with the remaining 53 companies competing for the rest.”
Fanatics released a statement after its bid was approved saying:
“We are thrilled that the shareholders of PointsBet Holdings Inc. voted to approve our acquisition of the U.S. businesses of PointsBet. We moved decisively to close the deal and we look forward to working with our friends at PointsBet Holdings Inc. to finalize the remaining acquisition details.
“This is a pivotal moment for Fanatics Betting and Gaming that will accelerate our growth in the legal online sports betting, advance deposit wagering, and iGaming markets in the United States. Pending regulatory approvals in the various states in which PointsBet operates, we will have more details to share in the coming weeks on how the acquisition of PointsBet US businesses will bring to life our unique vision for Fanatics Betting and Gaming.”
Calling it Quits
As previously stated, PointsBet has a North American online sports betting presence in 14 states and Ontario, Canada but the writing was on the wall that the Australian-based gaming giant was not long for this new frontier when it withdrew its application in Massachusetts before the state launched online sports betting earlier this year.
The company initially stated that its rationale for withdrawing from the Baystate market was so that the company could “emphasize our continued focus on our 14 live states of the US (plus Ontario) and how we can best optimize those markets which provide an immense [total addressable market] for us to go after.”
And while that may have been true at the time, the powers that be have decided that focusing on their base of operations closer to home is preferable to operating in a market in which they had little experience. PointsBet continually lagged behind several of the major players like FanDuel and DraftKings, without gaining sufficient traction to maintain its interest in developing its market share in North America.
Ultimately, the company was losing money in the U.S. market which the PointsBet chairman acknowledged when he articulated the reasons for selling the assets, “The short answer is that despite having some strategic success, the costs of competing against the largest companies of their type in the world meant the business would not be cash flow-positive in the near term. Continuing to operate the US business would require significant capital and further capital raises.
“… our ability to get to scale and operate at sustainable scale was challenged. We have been competing in a very high-cost operating market with the overlay of capital pressures to continue funding the business through to profitability.”
