What Does The Fanatics/PointsBet Deal Mean For Virginia Sports Betting?

After much effort, Fanatics has successfully achieved its objective of entering the sports betting industry by acquiring PointsBet Sportsbook’s U.S. operations.

The implications of this agreement will be significant nationwide, and it is only logical to expect that Virginia sports betting will also be affected.

Details of the PointsBet Sportsbook sale to Fanatics

The acquisition of PointsBet Sportsbook VA by Fanatics appears to be a perfect fit. Fanatics CEO, Michael Rubin, has been actively seeking an opportunity in the sports betting industry, while PointsBet Sportsbook has been diligently searching for a buyer for their US business for several months.

Earlier this week, a joint statement on Twitter revealed the announcement of a recent deal. PointsBet was sold for a substantial amount of $150 million. Although the agreement has not been officially concluded, both parties expressed optimism.

In a joint statement, Fanatics and PointsBet expressed their enthusiasm for the agreement, stating that Fanatics Betting and Gaming will acquire PointsBet’s U.S. business. Although there are still a few steps remaining to finalize the acquisition, both parties are optimistic about the outcome. In the upcoming weeks, Fanatics Betting and Gaming and PointsBet will share additional information and provide timely updates regarding the proposed deal.

CNBC reports that Fanatics is set to acquire sports betting licenses in 15 states through this agreement. By the commencement of the 2024-24 NFL season, Fanatics anticipates having access to these states where PointsBet has an established presence.

How could this impact Virginia sports betting?

It is undeniable that Rubin is approaching his new business venture with immense passion and determination. Fanatics has been diligently positioning themselves to make a significant impact in the sports betting industry.

Rubin expressed his ambition to become the top player in the world in that industry within a decade during an interview with Sports Business Journal. He acknowledged that this goal may appear audacious for a company not currently operating in the field. However, he emphasized the strategic advantages they possess, including being a well-established digital sports brand and having a significant reach to a vast number of fans.

With their passion and ample resources, Fanatics has the potential to emerge as a major contender. This strategic move could serve as a catalyst for the company’s journey towards success.

During the SBC Conference, Matt King, the CEO of Fanatics Betting, emphasized that their path ahead is a decade-long endeavor. He stressed the importance of a methodical approach throughout this journey, enabling them to make thoughtful decisions. By embracing this approach, they can afford to proceed with a slightly slower pace initially, ultimately ensuring swift progress in the future.

More hoops to jump through

In order to ensure the financial legality of the deal, Rubin had to sell his minority stake in the Philadelphia 76ers, an NBA team. The league’s collective bargaining agreement prohibits any NBA Governor from operating or owning a sports betting platform.

Rubin, in a statement shared on Twitter on Wednesday, announced the sale of his stake in the 76ers and explained that as his Fanatics business has expanded, he has encountered increasing challenges in balancing his responsibilities as a part-owner of the team. He highlighted the launch of their trading cards and collectibles business, which involves contracts with numerous athletes worldwide, as well as an upcoming sports betting venture. These new ventures directly conflict with the ownership regulations of sports leagues. Consequently, Rubin regretfully decided to sell his stake in the Sixers and transition from being a part-owner to being a lifelong fan.

The finalization of this deal is contingent upon PointsBet Sportsbook conducting a shareholder vote next month, after which the deal will be officially concluded.

PointsBet Sportsbook, which originates from Australia, will exclusively focus on its operations within the United States as part of this agreement. Their Australian business will remain under their ownership and operation.

NBCUniversal’s equity stake of 4.9 percent, which was acquired in 2020, will be sold off, as reported by CNBC.

PointsBet has mulled over a sale for months

Earlier this year, PointsBet Sportsbook experienced the premature termination of its partnerships with various college athletic departments. The agreements with the University of Colorado and the University of Maryland came to an abrupt end.

The overwhelming pressure from legislators, educators, parents, and various stakeholders reached a tipping point. It led to the introduction of two bills in the state of Maryland aimed at limiting betting platforms and their partnerships with colleges or universities.

In addition to that, a significant portion of the market that PointsBet Sportsbook aimed to attract was instead captured by competing sports betting platforms. As a consequence, PointsBet incurred substantial losses during the latter half of the year. CNBC reports that these losses are estimated to range from $77 million to $82 million for PointsBet.

According to Legal Sports Report, Sam Swanell, the Chief Executive Officer of PointsBet Sportsbook, stated on a conference call discussing the company’s third-quarter performance that although they have a solid balance sheet, they recognize the need for additional capital in the future. Swanell added that they are meticulously evaluating all viable strategic opportunities.

Swanell proceeded by stating, “However, when it comes to deciding which of these opportunities to pursue, we focus on answering a crucial question: what will bring the greatest value to our shareholders?”