The Fanatics recent acquisition of PointsBet’s U.S. assets for $150 million will likely allow the merchandise and apparel company to enter the New York online sports betting market, but the license transaction will not be rubber stamped by state officials.
New York State Gaming Commission Chairman Brian O’Dwyer revealed at yesterday’s commission meeting that there will be no simple transfer of PointsBet’s New York online sports betting license to Fanatics.
Fanatics will have to become the new outright owner of the license, which O’Dwyer said requires complete staff review and commission approval before becoming final.
Fanatics Sportsbook in NY by NFL Season?
O’Dwyer said Fanatics has a stated goal of taking control of PointsBet’s New York online sports betting license by the upcoming NFL season.
“Published reports indicate they have a goal of the start of the upcoming NFL season for Fanatics to assume control of the PointsBet entity, with PointsBet anticipating a shareholder vote on the deal in late June,” O’Dwyer said.
Because Fanatics is new to the market and new to sports betting, O’Dwyer recommended consideration of the transaction at the commissioner level when the ownership transfer is complete.
The commission staff has started working with Fanatics representatives to provide licensing documents and pre-ownership requirements prior to license consideration. A background investigation of the company is also necessary.
Fanatics Failed to Gain NY Access in 2021
New York has always been a target for Fanatics, even if CEO Michael Rubin did say this past October that Fanatics would be live in several major states by the 2023-2024 football season, “other than New York where you can’t make money.”
"In the betting business, we're going to start launching multiple states in January."
CEO @michaelrubin announced that @Fanatics' betting business will be in every major state other than New York by next football season. #SBJWCOS pic.twitter.com/7TCexeFzFQ
— Sports Business Journal (@SBJ) October 11, 2022
Despite his comments, Rubin and Fanatics did apply for one of the original nine New York online sports betting licenses offered in 2021.
Fanatics partnered with Kambi and then Penn National Gaming (now PENN Entertainment) in a bid package, with Kambi serving as a platform provider and the other two companies serving as platform operators.
Jay-Z was listed as the Vice Chairman of Fanatics Sportsbook in the group’s bid for a license, providing strategic and creative direction on the expansion and growth of the Fanatics Sportsbook in New York and across the country.
The bid package was not selected as a finalist by the New York State Gaming Commission.
Details of Fanatics Acquisition
According to the acquisition details shared by PointsBet, Fanatics will begin acquiring PointsBet assets for three states by August 2023.It’s unknown what state assets will first be turned over to Fanatics in August, but the operator will likely want New York access as quickly as possible to be ready for the upcoming football season.
PointsBet will hand over access to three more states on a rolling basis until all U.S. entities are acquired by Fanatics Betting and Gaming by May 2024 at the latest.
Fanatics Betting and Gaming is currently operational in Ohio and Tennessee, just completing beta testing earlier this month, and has plans to be live in Massachusetts and Maryland by mid-June.
While New York market access is definitely a plus, it’s likely not the primary reason for the sale, explained Chris Grove, Co-founding Partner of Acies Investments.
“New York access for Fanatics certainly wasn’t the primary reason to buy PointsBet, but it’s a nice add-on. Tax rates in the state may come down over time. Even operating at a slight loss in the state is probably good for the business overall,” he told ESNY.
New York currently holds the highest online sports betting tax rate at 51%.
