Fanatics Call It Quits On NFT Market

Written By Nicholaus Garcia on January 5, 2023
No more NFTs for Fanatics as company sheds majority stake in firm

As the demand for non-fungible tokens (NFT) declines, Fanatics announced it had sold its 60% stake in Candy Digital. The sports apparel company, which is slowly gearing up to enter the US online sports betting market, sold its NFT stake to Galaxy Digital for an undisclosed amount.

Fanatics exiting the NFT space

In an email to employees, Fanatics founder Michael Rubin wrote:

“Divesting our ownership stake at this time allowed us to ensure investors were able to recoup most of their investment via cash or additional shares in Fanatics — a favorable outcome for investors, especially in an imploding NFT market that has seen precipitous drops in both transaction volumes and prices for standalone NFTs.”

Around the time the market for digital collectibles was soaring, Candy Digital burst onto the scene. In 2021, the company was valued at $1.5 billion after a $500 million Series A funding round.

However, by 2022 the appetite for NFTs had essentially dried up and the company laid off 100 employees.

It is possible the NFT market could rebound. However, Rubin believes collectors still prefer a physical product rather than a digital asset. “Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business,” Rubin said.

“Aside from physical collectibles (trading cards) driving 99% of the business, we believe digital products will have more value and utility when connected to physical collectibles to create the best experience for collectors.”

Fanatics has big plans to enter US online sports betting market

In 2021, Fanatics announced its $500 million acquisition of Topps Sports & Entertainment, further diversifying the company’s portfolio. It will be interesting to see how other online sports betting operators, like DraftKings, handle the declining NFT market.

DraftKings Marketplace launched in 2021, partnering with Autograph, an NFT platform cofounded by Tampa Bay Buccaneers quarterback Tom Brady.

Regardless, the sale of Candy Digital will in no way impact the company’s plans to enter the sports betting space. Fanatics is currently in the process of securing a license to enter the Massachusetts sports betting market.

Photo by PlayUSA
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Nicholaus Garcia

Nick Garcia is a senior reporter for PlayUSA. Garcia provides analysis and in-depth coverage of the gambling industry with a key focus on online casinos, sports betting and financial markets. Garcia has been covering the US gambling market since 2017. He attended Texas Tech University as an undergrad and received a Master of Arts in Journalism from Columbia College Chicago.

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