As Fanatics Betting and Gaming nears the start of its first full football season as an online sportsbook, the company still needs to clear some regulatory hurdles before expanding into several major gaming states.
In one prominent jurisdiction, New York, Fanatics nearly received a coveted mobile sports wagering license two years ago before just missing the final cut. On Thursday, the upstart sportsbook moved closer to making its Empire State debut. Already live with sports betting in four states, Fanatics plans to expand to several others through its proposed acquisition of PointsBet’s U.S. assets.
Fanatics’ entry into the Empire State represented one of the most closely watched topics at Thursday’s New York State Gaming Commission meeting. While a corporate buyout does not require a transfer of licenses, increased scrutiny of a new license holder is necessary, said NYSGC Chairman Brian O’Dwyer at the meeting.
O’Dwyer indicated that Fanatics will undergo a thorough review by the NYSGC as it determines whether the operator will meet a variety of suitability requirements to take over the license. The chairman expects the NYSGC to make a final determination at a commission meeting next month.
When reached by Sports Handle on Thursday, a Fanatics Sportsbook spokesman declined to comment on the timing of the company’s New York launch.
Inroads in key states
Fanatics fended off a challenge from DraftKings in late June when the latter failed to meet a deadline to submit a binding proposal for PointsBet’s U.S. division. Fanatics upped its bid by 50% to $225 million, three days before PointsBet shareholders overwhelmingly approved the proposal at a meeting in Australia.
The parameters of the deal allow Fanatics to take a phased approach to acquiring various PointsBet entities at the state level. By Aug. 31, Fanatics will gain the right to acquire the entities that own and operate PointsBet’s business in at least three states.
Fanatics entered into a definitive agreement to acquire PointsBet’s U.S. subsidiary in mid-May, inking one of the biggest M&A deals in the sports betting space since Caesars Entertainment completed its acquisition of William Hill. New York regulators were notified of an anticipated deal between Fanatics and PointsBet in April, which NYSGC Executive Director Rob Williams said at Thursday’s meeting gave the agency ample time to prepare for the transition.
Known as one of the leading e-commerce sports merchandisers around the world, Fanatics received a $31 billion valuation last December. From a sports betting perspective, the company is in the process of integrating disparate verticals under one umbrella. Fanatics CEO Michael Rubin believes that the company’s database of approximately 95 million customers will give it a competitive advantage when it comes to acquiring new sports bettors. Fanatics has advised the NYSGC that the company has scrubbed its database of all customers under the age of 21 in New York.
From activations by top brands to live stage events, trading card exhibitions, and pop culture guests, to evenings filled with live music, sports betting, and gaming – these will be THE events to check out next year. @IMG @Fanatics https://t.co/q0ZsTPN8vA
— Ed Horne (@EdGHorne) July 13, 2023
Since its retail sports betting debut in Maryland at the start of the year, Fanatics has opened up shop in Tennessee, Ohio, and Massachusetts. While Ohio’s regulator raised concerns about a Fanatics promotion in May, regulatory officials in those states did not provide the NYSGC with any “derogatory information” on the company’s sports betting operations, Williams reported.
According to Williams, the Ohio promotion enabled a customer to match a $29.99 purchase of a baseball hat with a $29.99 bonus for wagering on Fanatics’ sportsbook. Officials from the Ohio Casino Control Commission deemed the promo to be inappropriate, citing its failure to prominently display responsible gambling messaging. Fanatics immediately complied with the OCCC’s request to drop the promotion.
The sports collectible wars are escalating in a major way. On Thursday, Panini America filed an antitrust suit against Fanatics, claiming the Michael Rubin-led giant violated federal law with its dominant entry into the trading card business. – https://t.co/sJYuv9gjeU via @FOS
— Eric Fisher (@AEricFisher) August 3, 2023
Also on Thursday, Panini America filed an antitrust lawsuit against Fanatics, claiming that the merchandiser violated federal law through its positioning in the sports trading card industry. Fanatics described the suit as “baseless.”
Beyond New York, Fanatics Betting and Gaming has pending licensing in 12 states, Williams noted. Colorado has advised the NYSGC that the state has held licensing consideration of Fanatics’ sports betting operations, while Virginia and Kansas are expected to consider their licensing by the end of August.
The New Jersey Division of Gaming Enforcement is also prepared to issue a transactional waiver that will allow Fanatics to accept sports wagers in the Garden State, according to Williams. PointsBet has online sports betting operations in 14 U.S. states.
Other topics at the meeting
The NYSGC also tabled a decision on sanctions against horse racing trainer Linda Rice until the September meeting. While Rice will not face license revocation at the meeting, the commission could still issue a financial penalty.
The NYSGC fined Rice $50,000 and recommended a three-year revocation of her trainer’s license after ruling that she engaged in improper practices over a period of years by “soliciting and receiving access to nonpublic information about race entries” in violation of commission rules. A New York appellate court overturned the commission’s revocation in June, finding that revoking Rice’s license was “disproportionate to the offense.” The court ordered the commission to reassess the sanction with the stipulation that license revocation not be part of the penalty.
As of Friday morning, Rice and Chad Brown led the trainer standings at the Saratoga Race Course summer meet with 15 victories each. The meet is arguably the most prestigious in the nation for thoroughbred racing.
Saratoga jockey and trainer standings after day 16, Thursday, August 3, 2023.
Three winners today for Jose Lezcano and Bill Mott. Chad Brown ties Linda Rice for the lead in the trainers list. pic.twitter.com/Fi7whab32r
— Matt Shifman (@AndyScoggin) August 4, 2023
O’Dwyer also provided an update on the state’s comprehensive bidding process for three downstate commercial casino licenses. A day earlier, MGM Resorts CEO Bill Hornbuckle indicated that the company submitted approximately 85 questions to New York officials related to the Request For Applications process. In total, the NYSGC received about 600 questions, an industry lobbyist told Sports Handle. O’Dwyer is optimistic that the commission will issue detailed responses to the questions before the September meeting, which is not yet scheduled.