As Fanatics works to expand into sports betting, DraftKings looks to slow their roll with PointsBet bid
The recent bid by DraftKings to purchase PointsBet comes only weeks after the Fanatics made an offer of $150 million. DraftKings upped the ante by offering a proposed $195 million. At first glance ,you would question the interest of DraftKings because of their position in the market. They are in the top two clearly along with FanDuel presently. PointsBet is ranked 7th in the market.
The deal clearly makes fiscal sense to Fanatics because it allows them to enter the market quickly and be able to accept wagers in time for the NFL this fall. Fanatics would save on technical support and app development. Fanatics would also have an identifiable brand that currently operates in lucrative markets like Pennsylvania and New Jersey.
So, without knowing what CEO Jason Robins has in mind and whether DraftKings will meet the June 30th deadline to formally submit their offer we must play the waiting game. Fanatics CEO Michael Rubin indicated to CNBC that “It’s clearly a move to delay our ability to enter the market.”
I will give you an insider’s look at what this move looks like by analyzing both companies, Fanatics and DraftKings, from a sports betting perspective.
Strength- DraftKings is a clear winner here because of name recognition and brand awareness. The public is more likely to bet with DraftKings than with Fanatics.
Weakness- Fanatics is just entering the market after 5 years of sports betting in the United States. They will have an uphill climb to get to the top 4 in market share. BetMGM and Caesars are competitors that will fight Fanatics for customer acquisition.
Opportunities- Fanatics has designs on being the sports book of the future. The Fanatics team is being developed with the brightest minds not only from the world of gaming and sports betting but include top marketing and SEO leaders from tech companies. CEO Matt King has a vision that will expand sports betting opportunities in the areas of in-game betting and single-game parlays.
Threats- Fanatics is clearly a diversion for the current sports betting operators due to their success in the retail and apparel industry. Fanatics will have to learn the dos and don’ts to insure they market to an audience that fits the age group associated with sports betting in every jurisdiction they are licensed in.
My analysis concludes that Fanatics will be a force in sports betting. They will be cannibalistic ,taking some market share from competitors and eventually grow the market as more jurisdictions open. DraftKings will remain in the top two for the foreseeable future. DraftKings share price is $24.78. Keep your eyes on Fanatics for the future and the possibility of an IPO.