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

Written By T.J. McBride on May 17, 2023
Fanatics Buys PointsBet, Heads To Virginia Sports Betting

Fanatics has finally accomplished its goal to break into sports betting with the purchase of PointsBet Sportsbook’s U.S. business.

This deal will have some serious ramifications across the country. Logically, it stands to reason that impact will extend to Virginia sports betting, too.

Details of the PointsBet Sportsbook sale to Fanatics

This sale of PointsBet Sportsbook VA to Fanatics seems like an ideal match. Fanatics Chief Executive Officer Michael Rubin has been chasing an opening in the sports betting landscape. PointsBet Sportsbook, meanwhile, has had many months of looking for a buyer for their business in the United States.

A deal was announced earlier this week through a joint statement on Twitter. PointsBet sold for $150 million, and while the agreement is not finalized yet, both sides were optimistic.

“Fanatics and PointsBet are excited to enter into an agreement for Fanatics Betting and Gaming to acquire PointsBet’s U.S. business,” the companies said in a joint statement. “While there are still several steps in the process to complete the acquisition, both parties are confident in the outcome. Fanatics Betting and Gaming and PointsBet will provide further details of the proposed deal and timely updates in the coming weeks.”

According to CNBC, Fanatics could gain access to sports betting licenses in 15 different states with this deal. Fanatics expects to have access to these states where PointsBet has been in operation by the start of the 2023-24 NFL season.

How could this impact Virginia sports betting?

There is no denying that Rubin is set to attack this new business of his with extreme passion and intention. Fanatics has been working to get themselves in position to make an impact on the sports betting world.

“We can be the No. 1 player in the world in that business in 10 years,” Rubin told Sports Business Journal earlier this year. “That does seem ambitious for someone who’s not in the business today, but our strategic advantages are that we are one of the best-known digital sports brands and we touch so many fans.”

Fanatics has the passion and the resources to become one of the big players. This move could give the company a vehicle to get them there.

“This is a 10-year journey,” Matt King, the CEO of Fanatics Betting, said at the SBC Conference earlier this month. “We’re going to move very methodically through that 10-year journey. And by doing that and taking that approach, it allows you to be a bit more considered in your decisions. You can kind of move slower, slightly slower today, in order to move fast later.”

More hoops to jump through

For Rubin to make this deal financially legal, he sold his minority stake in the NBA’s Philadelphia 76ers. No National Basketball Association Governor is allowed to operate or own a sports betting platform, according to the league’s collective bargaining agreement.

“As our Fanatics business has grown, so too have the obstacles I have to navigate to ensure our new businesses don’t conflict with my responsibilities as part-owner of the Sixers,” Rubin said in a statement posted on Twitter Wednesday announcing the sale of his 76ers stake. “With the launch of our trading cards and collectibles business earlier this year — which will have individual contracts with thousands of athletes globally — and a soon-to-launch sports betting operation, these new businesses will directly conflict with the ownership rules of sports leagues. Given these realities, I will sadly be selling my stake in the Sixers and shifting from part-owner back to life-long fan.”

To complete this deal, PointsBet Sportsbook is expected to hold a vote among shareholders next month. Once that vote is done, the deal should be completed officially.

PointsBet Sportsbook is based in Australia, and this deal will only include business in the United States. PointsBet Sportsbook will retain their Australian business.

According to CNBC, NBCUniversal will be bought out of their equity stake of 4.9 percent. The company purchased that stake back in 2020.

PointsBet has mulled over a sale for months

PointsBet Sportsbook saw partnerships with multiple college athletic departments come to early ends. Agreements with the University of Colorado and the University of Maryland were terminated earlier this year.

Pressure from legislators, educators, parents and others became too much to overcome. Two pieces of legislation were even filed in the state of Maryland, in order to restrict betting platforms and their deals with colleges or universities.

Beyond that, much of the business that PointsBet Sportsbook was looking to capture instead went to other sports betting platforms. That resulted in massive losses for the second half of the year. According to CNBC, PointsBet is looking at those losses totaling between $77 million and $82 million.

“We’ve got a strong balance sheet but we acknowledge that at some point we’re going to need more capital,” PointsBet Sportsbook’s Chief Executive Officer Sam Swanell said on a conference call about the company’s third quarter, according to Legal Sports Report. “So we continue to assess all of these, sort of, credible strategic opportunities really carefully.”

Swanell went on to say, “but ultimately, in determining which of these opportunities will be pursued, we answer one key question, which is what will be most value accretive for shareholders.”

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