Fanatics won the battle with DraftKings to buy PointsBet’s U.S. assets for $225 million. Check back in about 5 years to see if it won the war. 

The original offer by Fanatics was $150 million, but that was blown apart on June 16 when DraftKings Sportsbook spoiled the party with its own offer of $195 million. 

Fanatics publicly brushed off DraftKings’ offer but moved quickly behind the scenes to up the ante. In the end, it was an offer that the PointsBet Board of Directors couldn’t refuse. 

The offer of $225 million was devoid of any clutter or confusion and close the deal once and for all, a source close to the situation told Bookies.com. 

The final price for PointsBet marked a 50% premium over the original deal, which had Fanatics grabbing the betting concern’s U.S. assets for $150 million. That includes the assumption of PointsBet’s remaining liability to NBC Sports. 

Getting PointsBet for $150 million would have been a steal. 

$225 Million Price Tag Still A Bargain

This was a bargain. 

The company’s shareholders are set to approve the deal Friday in Australia (Thursday night in the U.S.). DraftKings had a deadline of 6 p.m. on Tuesday in Australia to submit a binding offer for PointsBet Sportsbook. 

Said offer never materialized. The acquisition of PointsBet provides a significant boost for Fanatics.

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While the company has no shortage of cash, it lacked, until now, a viable betting infrastructure and betting customers. 

It now has the necessary metaphorical airports, seaports, highways, and power grid for a national launch and, eventually, a seat at the table with the Big Guys. 

This deal is the manifestation of Fanatics’ philosophy to make its initial step into the sports betting space through M&A. 

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What To Expect After Fanatics-PointsBet Merger

Once the PointsBet shareholders approve the deal, it will then be scrutinized by regulators in all the states in which PointsBet operates. Fanatics will add 14 jurisdictions to its lineup if the acquisition meets regulatory approval. 

They are:

• Colorado
• Illinois
• Indiana
• Iowa
• Kansas
• Louisiana
• Maryland
• Michigan
• New Jersey
• New York
• Ohio
• Pennsylvania
• Virginia
• West Virginia

Fanatics became the eighth mobile operator approved in Massachusetts. It is also operating beta testing and taking wagers in Tennessee, Ohio, and Maryland.

PointsBet and Fanatics will continue operating their sportsbooks as separate entities for the time being. 

Eventually, a source told Bookies.com, Fanatics plans to migrate the PointsBet brand and platform into its own while keeping a significant portion of PointsBets’ proprietary technology. 

PointsBet Entry In U.S. Market Doomed From Start

The PointsBet Board of Directors deemed the Fanatics offer “superior in terms of both pricing and certainty of being able to complete on a timely basis.”

“The improved proposal delivers PointsBet shareholders a 50% or US$75 million increase to the acquisition price originally agreed with Fanatics Betting and Gaming. Following the receipt of a non-binding indicative offer for our US Business from DraftKings on 16 June 2023, the PointsBet team entered negotiations with both parties,” PointsBet Chairman Brett Paton said in a release.

While PointsBet ended up with a nifty premium over the initial Fanatics offer, the deal completes what was probably the worst incursion into North America since the War of 1812. 

While the Redcoats got wiped out in New Orleans, the beginning of the end for PointsBet was manifested in its deal with former Saints quarterback Drew Brees. 

A botched campaign featuring Brees being struck by a bolt of lightning on a video shoot in South America turned out to be both an embarrassment for PointsBet and a blow to its credibility. 

Of course, it turned out, Brees was not struck by lightning. But PointsBet got zapped. 

A stunt like that in 2023 would likely have triggered multiple investigations by state regulatory boards now that much more strict advertising and marketing rules are in play.

Multiple industry insiders spoke to Bookies.com about this deal and what went wrong for PointsBet in the U.S. 

The universal conclusion: PointsBet entered the United States with no real game plan beyond spending lots of money on advertising and celebrity endorsers. The company entered into a partnership with NBC Sports. That proved both costly and futile. 

“It’s not personal, Sonny. It’s strictly business.” 

A personal grudge between DraftKings CEO Jason Robins and Fanatics boss Michael Rubin over a failed partnership in 2021 was cited by the New York Post as the driving force behind the DraftKings offers. If that was the case, score one for Team Robins, since he pushed Team Rubin into putting another $75 million into the deal. 

While there’s no doubt animosity exists between these two major players, sources on both sides played down the personal rivalry in the decision-making process here. 

As Michael Corleone said: “It’s not personal, Sonny. It’s strictly business.” DraftKings was unable, or unwilling, to make the necessary financial commitment to close the deal. 

The deal for PointsBet takes Fanatics from 0 to 60 in the amount of time it takes to electronically sign the necessary documents and clear each state’s regulatory hurdles. 

For now, your bets with PointsBet will stay with PointsBet. 

With a non-stop source of revenue through its sales of apparel and collectibles, Fanatics will be able to fund its sports betting business for as long as it takes to profitability.

Longest Timeframe Wins

As we’ve seen since PASPA’s rejection opened the door to legal sports betting, the players throughout the industry with the longest horizons will win. In the case of Fanatics, having a valuation of $31 billion doesn’t hurt, either. 

Fanatics’ user interface is less than ideal, which is usually the case in the beta testing phase. The high-end system created and used by PointsBet, its small but mature betting customer base, and its fixed presence in the largest regulated markets in the United States made the company a tempting target. 

For DraftKings, buying PointsBet would have meant a guaranteed boost in market share in 2023. Only one more state, Kentucky, is expected to launch this year. 

It also presented a chance to knee-cap Fanatics, which has the deepest pockets of any potential disruptor in the betting space. That isn’t going to happen. Fanatics has the foothold it needed. Let the Games begin.

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