If DraftKings was just trying to make potential future rival Fanatics pay more for PointsBet’s U.S. operation, it succeeded.
If DraftKings really was attempting to firm up its stature in the US sports betting market by acquiring the Australian-based company’s American wing, someone had to make a difficult call to CEO Jason Robins on Tuesday night.
Hours after it was announced that Fanatics had improved its offer to buy PointsBet from $150 million to $225 million, dwarfing DraftKings’ offer of $195 million in cash from earlier this month, DraftKings withdrew its bid.
Fanatics had originally reached a deal in principle with PointsBet in May.
Now Fanatics, sitting on a massive database of customer email addresses from its sports apparel business, appears to have a clear path to a bigger presence as a gambling company. PointsBet has market access in 15 states and a technology capability that DraftKings cited as one of the reasons it was pursuing this deal, along with integrating PointsBet’s “pointsbetting” functionality.
Fanatics CEO Michael Rubin and several industry analysts considered the DraftKings overture a blocking maneuver, however.
Said Rubin at the time:
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 — so they are using the majority of their projected year-end cash just to try to block us.”
Fanatics Could Make a National Push With PointsBet Deal
According to the Gaming Today sports betting revenue tracker, PointsBet is the seventh-largest sports betting operator in the U.S.
Eilers & Krejcik Gaming said in a report earlier this year:
The PointsBet product may not be quite on the level of the top-2 but it is consistently third in the market by our proprietary testing. Backed by Fanatics’ resources for product development and marketing—and a massive database to market to—the operator could take significant share in our view.”
The PointsBet board unanimously approved the Fanatics offer on Tuesday and gave DraftKings a deadline to match the Fanatics bid. The deadline passed without a counter. PointsBet shareholders are set to vote later this week.
“The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty,” PointsBet chairman Brett Paton said in a statement.
For perspective, the Fanatics offer is just slightly less than the 26-man payroll of the New York Mets.
In a press release that hit digital wires at 12:46 a.m. ET, DraftKings said:
… the company is no longer pursuing the acquisition of the U.S. business of PointsBet Holdings Ltd. (“PointsBet”). The company thanks PointsBet for their time and access over recent weeks.”