Fanatics to buy PointsBet's U.S. business for $150 million

Fanatics to buy PointsBet's U.S. business for $150 million



Speaking of another deal, Fanatics has agreed to buy sports betting company PointsBets US business for about $150 million. The company is announcing the news in a joint statement on Sunday night and they're writing quote, well there are still several steps in the process to complete the acquisition. Both parties are confident in the outcome. Fanatics is going to gain access to at least 15 states that PointsBets currently operates in expanding its reach. Shareholders will vote on the deal in late June. Of course Fanatics is a privately held company. Michael Rubin heads up that PointsBet trades in Australia.

Yeah, look I enjoy this deal and especially kind of looking at it. I enjoy this deal. Yes, blanket statement and I'm sticking to it. Taking a look at the DraftKings stock though here today and some of the other gaming companies that already have their own infrastructure, their own play kind of going after the sports betting community that has seen much more of the licensed component come online, much more of the retail and kind of brick-and-mortar sports books. Fanatics for the same right has also done, done so I believe in Maryland is where we saw the first one come online recently this year. And so taking a look at DraftKings stock here separately you're seeing that kind of move lower on this news that's down by about half percent. Penn gaming or Penn entertainment still holding pretty solid right now.

It's just about well flat I guess it could have moved lower. But then Caesars and MGM interesting there and I zero in on those because of what we had already seen from Fanatics starting to get into some of those brick-and-mortar capacities. Now of course a lot of other components go into an MGM resorts or Caesars entertainment and the different parts of their business that they operate outside of just the sports gaming or the sports book. But I think for PointsBet and for Fanatics, Fanatics has been able to not only generate these partnerships with pretty much every major sports league and association for merchandise and official retailing. They've gotten into memorabilia now getting into betting as well. I think it's just the next natural step before for them. And it was January 20th that they officially opened their reload retail location in Maryland.

Yeah this is something that they've been looking at that Michael Rubin's been looking at for a little while here and figuring out how to get into this market. I mean DraftKings and Fanatics really dominate the online sports betting market as it is in the U.S. and there is a lot of competition between them right. That said PointsBet has 95 million customers in the U.S. so that's what Fanatics is gaining through this deal.

It's interesting there was an interesting note out from Bloomberg Intelligence that said the valuation of this PointsBet U.S. sports book at 1.7 times 2022 sales. They say that implies a valuation about half that of DraftKings enterprise value to consensus sales and which in other words is a discount. Yeah. And so what does that imply about how competitive this market is how much value these various operations have.

You know maybe raises some questions going forward but it doesn't seem to be raising enough questions to drive those stocks down in today's trading. So maybe they're not immediate questions maybe they're sort of longer term questions existential questions. The competitive landscape is getting more competitive. Yes.



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