Fanatics Betting and Gaming has entered into a binding agreement to acquire PointsBet‘s U.S. assets for about $150 million, capping a hectic 72-hour period for both companies after speculation of an impending deal reached a fever pitch last week.
The deal, confirmed on Sunday’s fifth anniversary of the U.S. Supreme Court’s PASPA decision, is arguably the most notable one in the U.S. sports betting space since Caesars Entertainment completed its acquisition of William Hill in April 2021. At last week’s SBC Summit North America, speculation mounted of a looming M&A deal involving two major sports betting companies. The speculation intensified after PointsBet CEO Johnny Aitken abruptly canceled an appearance at the prominent gambling conference.
On Friday, Sports Handle reported that the two sides had entered advanced negotiations on a potential combination. At the time, there was some ambiguity on whether the deal focused on PointsBet’s U.S. assets or the entire company. Fanatics’ purchase price for PointsBet’s U.S. business is slightly lower than the amount anticipated by several sources who spoke to Sports Handle on the condition of anonymity.
A joint statement from Fanatics Betting & Gaming and PointsBet: pic.twitter.com/4sNAWzUmp5
— PointsBet Communications (@PB_Comms) May 15, 2023
Under the deal, Australian-based PointsBet will retain trading businesses in both Canada and Australia, the company said in a statement. PointsBet will also retain access to its proprietary sports wagering, racing, and iGaming platform, as well as a royalty-free license to utilize the company’s Banach Technology assets outside the U.S. PointsBet’s commercial commitments to NBCUniversal will be transferred in full to Fanatics, according to the statement.
Although several steps remain before the acquisition will be finalized, Fanatics and PointsBet are both confident in the outcome, the companies indicated Sunday in their joint statement.
Ahead of the announcement, the Australian Stock Exchange temporarily halted trading of PointsBet on Monday morning (Sunday night in North America). PointsBet closed on Friday at A$1.85 a share.
More details on the acquisition
In many respects, market access appears to be a primary driver of the deal. PointsBet operates in 14 states, most notably New York, Illinois, New Jersey, Michigan, and Pennsylvania. Fanatics narrowly missed out on receiving an online sports betting license in the Empire State when the New York State Gaming Commission awarded nine licenses in 2021.
According to a stock and equity sale agreement released by PointsBet, the first part of the transaction is expected to be completed on or about Aug. 31. The second part of the deal will sunset in February 2024, with a potential extension until next May. Upon initial completion of the deal, Fanatics will acquire the entities that own and operate PointsBet’s business in at least three states, according to the agreement. From there, Fanatics will acquire PointsBet’s entities in three additional states on a rolling basis.
Currently providing online sports betting on a limited basis in just Tennessee and Ohio, Fanatics plans to expand to Massachusetts and Maryland by mid-to-late June, Fanatics Betting and Gaming CEO Matt King said last week. Fanatics CEO Michael Rubin has ambitions to become the largest sportsbook in the nation over the next 10 years.
“If you know enough about Fanatics, you don’t underestimate Michael Rubin,” King told reporters last week.
If completed, the acquisition will provide Fanatics with market access in more than a dozen states and PointsBet's proprietary in-house tech platform.
— Sports Handle (@sports_handle) May 12, 2023
Fanatics has a database of approximately 95 million customers through its merchandising, NFTs, and online gaming divisions. FanCash, Fanatics’ new loyalty program, will enable bettors to receive site credits for every wager they place.
“In 25 years of my career, it is singularly the most liked customer introduction we’ve ever done,” King told Sports Handle.
On Tuesday, the Massachusetts Gaming Commission has a vote scheduled on approval of Fanatics Betting and Gaming certificate of operation. The MGC announced in February that PointsBet had withdrawn its own sports betting license application.
PointsBet’s shareholders will vote on the proposed transaction at a meeting expected to be held in late June, the company said. PointsBet’s funding requirement for the U.S. business will be capped at approximately U.S. $21 million from the conclusion of the shareholder meeting to final completion of the proposed transaction, the company added.
Moelis & Company LLC and Flagstaff Partners acted as financial advisers to PointsBet.