The skirmish between Fanatics and DraftKings over Australia-based PointsBet won’t go down as one of the greatest battles of all time, but it was certainly an interesting one.
Yesterday, PointsBet announced via a press release its board unanimously approved the sale of its US operations to Fanatics for $225 million, a $75 million increase over Fanatics’ previous bid and $30 million more than DraftKings’ final offer.
PointsBet Brett Paton said Fanatics handled itself well during negotiations and offered an unbeatable price”
“The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty. Fanatics Betting and Gaming conducted their diligence process and negotiations in a highly professional manner at all times…Our US team will have a strong future as part of the Fanatics Betting and Gaming group.”
The sale needs to get shareholder and regulatory approval before it is complete.
Understanding the Fanatics and DraftKings battle for PointsBet
In the grand scheme of US sports betting, PointsBet is a small player. It has nowhere near the market share of leading companies like FanDuel, DraftKings, Caesars, and BetMGM.
At best, acquiring the company would allow DraftKings or Fanatics to eliminate a small chunk of competition in the following states where PointsBet operates:
- New Jersey
- New York
- West Virginia
While PointsBet’s presence in those states is small, some of those states are prized markets. Illinois, Michigan, New Jersey, New York, Ohio, and Pennsylvania are all in the top 10 for the most monthly handle (total dollar amount of bets).
Grabbing even the smallest market share in those states would help DraftKings get an edge against its arch-nemesis, FanDuel.
For Fanatics, however, PointsBet presents different advantages. As a sports betting brand, Fanatics is new. It operates in just four states: Maryland, Massachusetts, Tennessee, and Ohio.
Acquiring PointsBet allows it to scale more quickly, presumably in the 12 states where Fanatics does not already participate. The dozen new markets will help Fanatics boost its brand recognition, which will, presumably, make it easier for them to acquire new customers.
Additionally, Fanatics’ one-upping of DraftKings lands a symbolic blow for the newcomer. It shows that small operators aren’t willing to be pushed around by the market leaders.
How Fanatics won the bidding war
On May 15, Fanatics offered to buy PointsBet for $150 million. On June 16, DraftKings put in a bid of $195 million. Ten days later, Fanatics submitted a bid of $225 million. PointsBet gave DraftKings until 6 p.m. Melbourne time) the following day to counter.
And, according to PointsBet’s statement about the sale, DraftKings failed to submit a new offer.
“DraftKings was unable to finalize a binding offer by the nominated time and date and accordingly the Board has determined that the [Fanatics $225 million offer] is superior in terms of both pricing and certainty of being able to complete on a timely basis,” the company said.