Fanatics, the massive sports apparel manufacturer and retailer, has been aiming to expand into the sports betting space for the last few years, but its bid is being challenged by one of the space’s biggest competitors.
Fanatics agreed to acquire the US operations of PointsBet in May for $150 million, but DraftKings (DKNG) has reportedly swooped in and made an all-cash bid of $195 million.
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DraftKings’ CEO Jason Robins said in a statement that he believes DraftKings is in a good position to make the bigger bid because of “our scale and corresponding ability to generate meaningful synergies from the acquisition.”
“While we continue to focus on operating more efficiently and driving substantial organic revenue growth in the United States, we will also look to prudently capitalize on compelling opportunities at attractive valuations, as is the case with PointsBet’s U.S. business,” Robins said.
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Fanatics billionaire owner Michael Rubin told CNBC that he believes DraftKings pulled the move to “delay” Fanatics’ entry into the market.
“I guess they are more concerned about us than I would have thought,” Rubin said.
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DraftKings, currently second in sports betting market share behind FanDuel, may have reason to be concerned about Fanatics. There’s a lot of buzz surrounding Fanatics’ ability to enter the space given its strong capital. The company’s $700 million raise in December gave it a valuation of $31 billion.
The acquisition of PointsBet would’ve given Fanatics market access to at least 15 states. Should they be blocked by DraftKings, the company would need to find another acquisition in order to make the same type of immediate headway in the sports betting space upon launch.
