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Fanatics to Pay $150 Million to Take Over PointsBet’s Sports Betting Business in the US

The US Supreme Court’s 2018 decision to strike down a federal ban on sports betting triggered significant changes in the gambling world. The move encouraged a massive number of online gambling operators to target the US in an effort to expand their presence, and PointsBet was one of the operators that also did so.

Unfortunately, five years later things have changed for the ASX-listed company, which announced that it reached an agreement to sell its US operations to the global sports apparel and collectibles giant Fanatics in a deal estimated at $150 million after admitting it was no longer competitive with the larger operators in the sector.

Fanatics officially entered the sports betting market earlier this year. It rolled out its first retail sports betting service in the state of Maryland in January, and two months later, in March, launched a beta version of its mobile sportsbook service in the states of Tennessee and Ohio.

PointsBet, on the other hand, is currently the seventh-biggest online sportsbook operator. Reportedly, the company is valued at approximately $31 billion. Now, the newly-announced takeover deal with Pointsbet is expected to provide Fanatics with access to at least 15 US states, including New Jersey, New York, Pennsylvania, Michigan, and Illinois. After completing the transaction of its US assets, PointsBet will keep its business operations in Australia and Canada.

PointsBet Unable to Gain Enough US Sports Betting Market Share

As previously reported by CasinoGamesPro, PointsBet had one of the smallest shares in the US sports betting market. The operator tried to make a difference by offering a unique product but did not have enough financial capabilities to keep up with its largest competitors, including DraftKings, FanDuel, betMGM, etc. Apart from that, it became famous for its poor customer service and its foul practice of limiting customers as soon as it generated a winning on its sportsbook.

PointsBet has claimed to be the seventh-largest sports betting operator in the US, out of more than 60 companies that are currently offering their services there. If it was hard for the seventh-biggest one to survive, it is hard to even imagine how the smaller companies manage in the conditions of such strong competition, with market analysts projecting that many of them are set to face the same fate in the longer term, as a massive wave of consolidation is expected.

At the time it announced the sale, PointsBet shared what makes the US market so difficult, saying there were various risks and significant capital requirements to operate in the sports betting and online gambling market in the US. Apart from that, such a strategy reflected the structurally high cost of operation in an environment that is currently regulated differently in the individual states, and it was hard for the operator to meet the requirements to pay so-called partner fees in most US states and face the strong rivalry from well-established companies.

The large marketing spread that was needed to capture market share in order to boost profitability. PointsBet, however, has been unable to compete with the massive number of ads released by some of the largest players in the sector, including FanDuel, DraftKings, and BetMGM. Fanatics, however, is unlikely to have the same problem as the ASX-listed company thanks to its vast customer database.

Fanatics Expected to Expand US Presence Even Further

The acquisition of the US arm of PointsBet means that Fanatics would get a larger market share for cheap, and what is even better – the company would likely be able to set up a shop network in some states, too. Of courts, the deal would not make Fanatics one of the three largest sportsbooks overnight, but the small takeover deal is definitely expected to help the company get there sooner or later.

According to analysts, Fanatics will be able to monetize from the transaction quickly thanks to the fact that it has more data on sports fans than any other company because of its sports apparel and collectibles business.

Market experts have described the acquisition of PointsBet US assets as a smart move at a great price. As a whole, Fanatics has been following a really smart purchase strategy that provides it with an advantage over other companies in the sector and could help it establish a strong presence in the US sports betting sector, especially considering the fact that it already has a sportsbook presence in some states across the country.

 Author: Harrison Young

Harrison Young is an experienced writer, who started his career almost 8 years ago. Prior to joining our team at CasinoGamesPro, he worked as an editor for a small magazine.