PointsBet Pushes Pause on Fanatics Deal to Engage with DraftKings

The sports betting industry was rocked last week when DraftKings submitted a $195 million proposal to acquire PointsBet’s US sportsbook business. PointsBet, based out of Australia, had previously agreed to sell that business to Fanatics for $150 million in May. While Fanatics initially brushed off the DraftKings offer, PointsBet announced Monday that they would engage in talks with DraftKings.

Fanatics has not commented regarding Pointsbet’s sudden change in course, but CEO Michael Rubin stated last week that he did believe the DraftKings deal was as good as it seemed.

“We are skeptical of the DraftKings proposal, which seems like a desperate move to slow down Fanatics and PointsBet from completing the deal as the purchase price and other financial commitments will total more than $500 million,” Rubin was quoted as saying, “ So they [DraftKings] are using the majority of their projected year-end cash just to try to block us.”

What This Means for Fanatics

Fanatics has consistently denied that the DraftKings deal is serious, but it would be a significant blow to their future in the US Market. Fanatics has been slowly rolling out their new sportsbooks and relying on the PointsBet deal to access 14 US states. Without that, Fanatics will be responsible for getting their own licenses for each state. That process can be time-consuming and expensive, and some states are no longer accepting license applications for online sportsbooks. 

Now Fanatics will have one of two options. They can either wait to see if the DraftKings deal is legitimate, or they can prepare to engage in a bidding war. Both options come with massive risks, as losing this deal would be a significant setback for the rollout of their new sportsbook. 

Why DraftKings Submitted a Proposal

DraftKings has continued to insist that this is not an attempt to defend against the Fanatics deal but instead is geared towards helping grow their own business. DraftKings’ co-founder Jason Robins believes that PointsBet's valuation is higher than believed, and their US business could help furth establish DraftKings as the premier online sportsbook. While the details of how PointsBet would fit into their future plans, it seems clear that DraftKings believes they are worth the hefty price tag.