Fanatics Betting and Gaming (FBG) has edged closer to taking full control of PointsBet US after completing the acquisition of its operations in New York and Wyoming.
PointsBet New York LLC has been transferred to FBG. This follows the satisfaction of certain conditions in the state including approval from the New York State Gaming Commission.
Meanwhile, ownership of PointsBet Wyoming LLC has also transferred to the FBG division of sports retail giant Fanatics.
Transfer of additional US state operations to FBG will take place as approvals are obtained in each state. PointsBet says subsequent completion in this market is tracking as planned.
The double completion come after PointsBet last month also secured approval for acquiring PointsBet US in eight other states. These comprise New Jersey, Pennsylvania, Colorado, Iowa, Kansas, Maryland, Virginia and West Virginia.
PointsBet will continue to operate in Illinois, Indiana, Louisiana, Michigan and Ohio until FBG closes on selected states individually.
Fanatics sees off competition to finalise PointsBet US acquisition
The FBG arm of Fanatics struck a deal to acquire the US operations of Fanatics earlier this year. The purchase price of $225.0m (£186.3m/€214.9m) was agreed in June 2023 and PointsBet shareholders approved the deal shortly thereafter.
However, it was not all plain sailing for FBG during the process. The Fanatics division initially reached an agreement to purchase the PointsBet US business for $150.0m in May.
The deal looked to be progressing as planned until DraftKings in June submitted a higher proposal worth $195.0m. PointsBet at the time said it would engage with DraftKings over what it said could be a “superior” proposal.
This ultimately forced FBG’s hand and it returned with the improved $225.0m offer. Upon confirmation of the higher FBG offer, DraftKings announced it would no longer pursue a deal to acquire PointsBet US.
PointsBet highlights cost of competition in US
As to why PointsBet is selling the US business, chairman Brett Paton said much of this comes down to cost. Paton said that while PointsBet has experienced strategic success in the US, the costs of competing against major brands meant the business would not be cash flow positive in the near term.
“Continuing to operate the US business would require significant capital and further capital raises,” Paton said in June. “This transaction addresses that uncertainty.
“We have been competing in a very high-cost operating market with the overlay of capital pressures to continue funding the business through to profitability.”
PointsBet will, however, continue to have some presence in North America. The operator will retain both its Canadian and Australian businesses.
In addition, PointsBet will keep ownership of its proprietary sports wagering and igaming platform. This is currently used in both the Australian and North American markets.
“To summarise, the board believes that the proposed sale of the US business delivers the most attractive risk-adjusted value outcome for shareholders, compared to the risks and benefits of PointsBet pursuing other potential options including the status quo,” Paton said.
Fanatics’ growth plans
Speaking after closing in the initial eight states last month, FBG chief executive Matt King said the deal accelerated its own growth plans.
King said the agreement supported FBG’s 10-year plan that focuses on the customer and not market share.
“We are going to acquire customers efficiently, allowing us to return savings to customers by investing in the customer experience at Fanatics Sportsbook and PointsBet, a Fanatics Experience,” King said.
