Fanatics to Buy PointsBet’s U.S. Arm for $150M, to Boost Betting Push

Fanatics has reached an agreement to purchase PointsBet’s U.S. business for $150 million cash, a deal that will accelerate the company’s own push into U.S. sports betting.

The move comes just a few weeks after Fanatics formally launched its new online sportsbook in Tennessee and Ohio. The PointsBet deal will give Michael Rubin’s company additional technology and trading capabilities, as well as valuable market access in a handful of new states.

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The deal, which does not include PointsBet’s Canada business, will be voted on at a PointsBet shareholder meeting in late June, the company said Sunday in a press release. Fanatics will pay the $100 million when the deal is completed, with another $50 million due in Febuary 2024. PointsBet said it intends to distribute the net sale proceeds to its shareholders, along with a “majority” of its cash reserves, payments that the board estimates will be approximately $0.71-$0.73 ($1.07-$1.1 AUS).

“While there are still several steps in the process to complete the acquisition, both parties are confident in the outcome,” Fanatics and PointsBet said in a joint statement. “Fanatics Betting and Gaming and PointsBet will provide further details of the proposed deal and timely updates in the coming weeks.”

Fanatics Betting and Gaming has been one of the most anticipated sportsbook debuts in the five years since the U.S. Supreme Court struck down the federal ban on sports wagering. It’s also a potential risk by Rubin, whose e-commerce empire has grown dramatically in recent years. Fanatics raised money at a $6.2 billion valuation in August 2020 and at a $31 billion valuation last December, a dramatic increase that coincided with the company expanding into new areas like betting, trading cards and collectibles.

Despite its late start, Fanatics believes its sportsbook has two major advantages: its database of 95 million sports fans that can generate marketing leads, and its ability to tap into the rest of the Fanatics platform. The company plans to offer betting rewards that can be redeemed for jerseys, hats or trading cards, and could eventually package its betting options alongside all the other things it sells.

Headquartered in Australia, PointsBet launched in the U.S. in 2019 and was one of the more aggressive sportsbooks in its first few years, including a $500 million deal with NBC Sports and a pioneering partnership with the University of Colorado. Its business has flagged recently in the face of mounting competition and rising customer acquisition costs. The NBC deal was amended in February; the Colorado deal was terminated in March.

Last month, PointsBet CEO Sam Swanell said in an earnings call the company was talking to “multiple parties” about acquiring its North American business, which had recently cut 12% of its workforce. The company was also previously in talks to sell its Australian business to News Corp.-backed NTD Limited, the owner of Australia’s Betr brand, but those talks ended without a deal being reached. PointsBet stock (ASX: PBH) is down about 22% over the last 12 months, and closed trading Thursday with a market cap of about $395 million (AUS $589 million).

Last June, finance giant Susquehanna purchased 12.76% of PointsBet, making it the gambling operator’s largest shareholder. The company's net win (sports betting and iGaming) in the U.S. was $33.1 million (AUS $49.8 million) for its most recent quarter, more than double its total for the same quarter last year ($16.3 million). PointsBet’s U.S. market share was 3.7%, as of last September.

Sports Handle first reported on the talks last week.

(This story was updated with additional details throughout the first five paragraphs.)

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