What Does The PointsBet/Fanatics Deal Mean for New York Sports Betting?

Fanatics will purchase PointsBet Holdings Limited for $150 million, the companies announced on Sunday. The sale will remove PointsBet from the New York market, where it has fallen well behind market leaders.

The sale must be approved next month at the PointsBet shareholders meeting. The board of directors has urged approval of the sale in a letter attached to the announced deal.

PointsBet was one of the first six companies to receive a NY sports betting license. But the parent company, which is located in Australia, seems to be waving a white flag on its U.S. interests.

PointsBet lags behind NY sports betting competitors

FanDuel and DraftKings accounted for 74% of the total March sports betting handle. PointsBet has sagged in recent months, falling from $48.0 million in total handle last December to $28.9 million in March, and $20.6 million in April.

So far in 2023, PointsBet NY has accepted about 5% of the amount of wagers that have been placed with FanDuel. The PointsBet year-to-date handle figure is $137.1 million, which pales in comparison to FanDuel’s $2.67 billion.

PointsBet reported $184.2 million in total handle in the first four months of 2022, meaning its seen a 34% drop from last year.

According to data supplied by the New York State Gaming Commission, PointsBet has recorded just $16.6 million in net revenue since it launched in New York more than two years ago. Operators are required to pay a one-time license fee of $25 million, and they pay at a tax rate of 51% on revenue generated. The New York sports betting market has swelled into the largest in the nation, but it’s also the most expensive for sportsbooks.

What the sale means for PointsBet customers

Once the sale to Fanatics is approved, as will most likely happen in June, customers will start to see the Fanatics brand appear. However, it’s unclear whether or not the online sports betting system will see a change in the user experience

When other mergers and acquisitions have taken place in the industry, consumers typically saw a seamless transition that did not interrupt their customer accounts.

It should be expected that Fanatics would communicate any changes that may take place regarding its New York business with the changeover. Regulations are in place in New York to ensure that such a sale would not hinder transactions or withdrawals of funds form an account, for example.

Fanatics has been preparing for an entrance into the U.S. sports betting market for some time. In 2021, the company poached FanDuel CEO Matt King to head up its gaming division. Earlier this month, at SBC North America, King explained that Fanatics wants to innovate and vastly improve the user experience in the sports betting app space.

It’s also anticipated that Fanatics Sportsbook will debut in Massachusetts this month. Fanatics has been approved for a sports betting operators license in Massachusetts, Maryland, Ohio, and Tennessee. PointsBet currently operates in Illinois, Michigan, Pennsylvania, and Virginia, as well as New York.

Are more mergers and acquisitions coming?

The exit of PointsBet signals a consolidation of the American sports betting market. It’s inevitable that the industry will see mergers and acquisitions, as well as outright failures. Eventually, as in all verticals, competition whittles down a packed field of companies trying to get market share.

If PointsBet as we know it completely disappears, the loss of its unique “points” betting system would be disappointing to some bettors who like the ability to win more on their wagers.

Fanatics is a prominent brand in North America with a large customer base for its retail sports apparel and collectibles divisions. It could enter the online sportsbook industry and immediately disrupt it. Based on comments from King at SBC earlier this month, that’s what the company hopes to accomplish.

“We’re not necessarily in the pursuit of market share. … Our priority is get it right, not get it fastest.”

The Fanatics Gaming leader indicated that it’s also a better time to be entering the market.

“Market access is 40-50% cheaper than it was 3-5 years ago,” King said.

With the acquisition of PointsBet in the U.S., Fanatics is sending a message that its ready to innovate and compete in New York and elsewhere.

About the Author

Dan Holmes

Dan Holmes is a writer for NY Sports Day. He has also written three books about sports. He previously worked for the National Baseball Hall of Fame and Major League Baseball. He enjoys writing, running, and lemon bars. He lives near Lake Michigan with his daughters and usually has an orange cream soda nearby.

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