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Fanatics founder and CEO Michael Rubin in his office in downtown New York, December 7, 2022.
Washington Post | Getty Images
Fanatics’ stunning $150 million acquisition of PointsBet’s US business wasn’t the only deal in gambling in recent days – and it could be a sign of more to come.
On Sunday, Fanatics announced that they had agreed to buy the US assets of PointsBet, a long-rumored partnership. Fanatics CEO Michael Rubin previously pledged to launch sports betting operations in every state where the law is legal, with the exception of New York.
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Purchasing PointsBet gives fanatics access to markets in New York, along with about 14 other states, and most importantly iGaming, or online casino games, businesses in Michigan.
For the diehards, the deal really pays off when it comes to upfront license fees you’ll need to pay in new states.
“We’re really able to save tens of millions of dollars in upfront licensing fees by leveraging the PointsBets impact versus continuing to create a new footprint,” Matt King, Fanatics CEO of Betting and Gaming, said Monday.
King also said the cost of entering new markets has fallen by 40% to 50% compared to what it was about three to five years ago.
Now compare that to another huge deal in the sector: the $1.2 billion acquisition of new games by aristocrat. The deal, announced Sunday, was for $29.50 a share, representing a 130% premium to NeoGames’ closing price on Friday.
Aristocrat is a global leader in attention-grabbing slot machines. By purchasing NeoGames, it announces its intention to compete in online lotteries, casino, and sports betting.
As Jefferies game analyst David Katz wrote in a note Sunday night, “(NeoGames) and the digital game group in general, are undervalued by the US market at current levels.” However, he does not expect higher ratings in the near future.
Equally important, according to Katz, the recent deals raise the question, “Who’s next?”
As hype about mergers and acquisitions dominates gaming conferences, speculation has fallen on SportRadar, a global sports data provider, as a potential takeover target, as well as Gambling.com, a subsidiary that provides media content to steer new depositors toward gaming workers.
Rush Street Interactiveanother frequent target of takeover speculation in recent times, has been flexing its muscles as iGaming operator first, and sports betting house second.
At the SBC Summit, one of the top sports gambling conferences, CNBC asked RSI CEO Richard Schwartz last week if he does entertainment.
“We have a commitment to our shareholders and to getting the best possible return. And so we are always open to evaluating opportunities,” he said, before highlighting why the RSI is so attractive.
The King of Fanatics agrees that more fusion is likely on the way.
“There is really no new capital type that falls into this category,” he said. “Anyone without a sustainable business model is going to be a takeover.”
But don’t expect a sharp price hike when it comes to gaming acquisitions, King said.
“I certainly think people’s price expectations are starting to reflect reality,” he added.
— CNBC’s Jessica Golden contributed to this report.
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