As Fanatics moves closer to its highly anticipated sports betting launch, CEO Michael Rubin is divesting his stake in the parent company of several professional sports franchises.
On Wednesday, Rubin announced that he is selling his stake in Harris Blitzer Sports & Entertainment (HBSE), the parent company of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils. The announcement is the latest move by Fanatics to ramp up efforts on sports betting, as the e-commerce giant takes further steps to begin accepting online sports wagers. Rubin, under league rules, is prohibited from maintaining ownership in a team while running a gambling operation.
Thank you, @sixers fans ❤️ pic.twitter.com/46YX0Zoahm
— Michael Rubin (@michaelrubin) June 22, 2022
“As our Fanatics business has grown, so too have the obstacles I have to navigate to ensure our new businesses don’t conflict with my responsibilities as part-owner of the Sixers,” Rubin said in a statement. “With the launch of our trading cards and collectibles business earlier this year — which will have individual contracts with thousands of athletes globally — and a soon-to-launch sports betting operation, these new businesses will directly conflict with the ownership rules of sports leagues. Given these realities, I will sadly be selling my stake in the Sixers and shifting from part-owner back to life-long fan.”
Last August, Fanatics secured a $325 million round of funding from a group of investors headlined by rapper Jay-Z and Roc Nation. Rapper Rick Ross indicated Wednesday on Instagram that he’s interested in purchasing Rubin’s stake in the Sixers.
As of last month, Fanatics listed at least 40 sports betting job openings on LinkedIn. On Wednesday, Fanatics added another with a posting for a head baseball trader.
Looming conflicts of interest
In deciphering Rubin’s statement, it is clear that Fanatics’ sports betting division is not the lone impetus driving the sale. In recent years, Rubin has maintained close relationships with James Harden and Joel Embiid, the Sixers’ two most prominent players. The planned divestiture, under NBA rules, frees Rubin to pursue business relationships with players such as Harden. Consider Wednesday’s report from Adrian Wojnarowski on the run-up to the Sixers’ trade for Harden in February.
Prior to the Sixers-Brooklyn Nets trade involving guard James Harden in February, Rubin drew the scrutiny of NBA rivals because of his close relationship with Harden. Rubin can now enter outside financial partnerships with players that were disallowed because he was a part-owner of the teams, an avenue that could prove beneficial to the Sixers as they work to re-sign Harden.
—ESPN NBA Insider Adrian Wojnarowski
But Fanatics’ expanding sports betting division may have played an even more integral role in the decision. Such conflicts of interests have limited other sportsbook operators from offering lines on certain teams in the past. Houston Rockets owner Tilman Fertitta is also the owner of Golden Nugget Online Gaming, which recently completed a merger with DraftKings. In 2019, New Jersey Gov. Phil Murphy signed a bill into law that allowed the Golden Nugget to accept wagers on most NBA games, with the exception of ones involving the Rockets.
More recently, Princess Cruise Lines launched an initiative that allows passengers to wager on sports through Ocean Sportsbook once excursions enter international waters. Princess is owned by Carnival Corp., the world’s largest cruise operator. Miami Heat owner Micky Arison, the former CEO of Carnival, still serves as the chairman of the cruise line. Princess passengers are not allowed to bet on contests involving the Heat.
Last week, BetMGM announced a partnership with Carnival whereby cruise passengers will be able to wager on the app outside U.S. waters. The online betting venture on Princess cruises will be transferred to BetMGM, Sports Handle has learned. BetMGM has yet to confirm if Carnival customers will be able to wager on the Heat.
When will Fanatics go live with sports betting?
In March, Fanatics raised $1.5 billion in a funding round that valued the company at $27 billion. Last month, Fanatics completed a key step in the formal launch of an online sportsbook when the company filed a trademark for its sports betting brand with the U.S. Patent and Trademark Office. Speaking to Sports Handle in May, Fanatics Chief Commercial Officer Ari Borod noted that the company’s goal is to become a “global digital platform for sports.”
Borod, however, did not indicate whether the company intends to go live with its online sports betting platform by the start of the NFL season.
The planned divestiture also raises the possibility that HBSE could add Fanatics as a sports betting partner if the company gains licensure in New Jersey and Pennsylvania. At present, the Devils maintain sports betting partnerships with Caesars Sportsbook, Betway, PlayUp, and Unibet. Much like the Devils, the Sixers have partnerships with several sportsbook operators, including: BetMGM, DraftKings, and FOX Bet.
“Given Michael’s tremendous success growing Fanatics into a global platform across every major sport, his decision doesn’t come as a surprise,” said Josh Harris, HBSE founder and managing general partner, in a statement. “Michael will always be a member of our HBSE and Sixers family, continue to be a presence courtside, and a key partner in our collective commitment to be a force for good in Philadelphia.”