DraftKings Offers $195M for PointsBet US in Attempted Hijack of Fanatics Deal

Article ByDavid Weir

June 19, 2023

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Posted in: US Sports Betting News, US Gambling News

In a dramatic late twist in the sale of PointsBet US, DraftKings has proposed a $195 million bid for the company. That comes after PointsBet’s board accepted a $150 million bid last month from sports apparel giant Fanatics.

The PointsBet shareholders are scheduled to vote on the sale to Fanatics at the end of this month.

However, DraftKings’ new bid will see them in contention to be the new buyer. PointsBet is assessing the proposal, which is 30% higher than Fanatics’ offer.

“Subject to the outcome of the review being undertaken of the DraftKings proposal, the Board continues to recommend that shareholders vote in favor of the (Fanatics) transaction,” said an official statement.

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Blocking Fanatics

Unlike Fanatics, DraftKings already operates in every legal sports betting state that PointsBet does. It also has much bigger market share than the Australian-based operator and Fanatics’ fledgling sportsbook combined.

Fanatics CEO Michael Rubin thinks DraftKings is simply trying to slow down his company’s belated entrance into US sports betting.

“We are skeptical of the DraftKings proposal, which seems like a desperate move to slow down Fanatics and PointsBet from completing a deal,” he said.

“Financial commitments will total more than $500 million — so they are using the majority of their projected year-end cash just to try to block us.”

Fanatics is expected to be a big player in legal sports betting once it launches in more states. It can leverage its huge brand and database of customers from its existing sports apparel business.

Interestingly, the new DraftKings bid is not yet confirmed in any way.

“DraftKings’ Proposal does not constitute a binding offer or commitment on the part of DraftKings to negotiate or execute a definitive agreement, and to this end, there is no guarantee that the DraftKings Proposal will result in a binding definitive agreement,” said a PointsBet US statement.

Some analysts have pointed out that DraftKings has a history with this kind of practice. In 2021, amid heavy rumors that MGM Resorts wanted to buy Entain PLC, DraftKings surprised the industry with a $22 billion bid.

That was more than double the figures that had been floating around at the time. Neither deal went through in the end, with some experts figuring that DraftKings may have just been delaying and blocking a rival’s expansion.

Superior Proposal

DraftKings has been confidently pushing this new proposal. It is much closer to the $250 million PointsBet originally wanted for its US division sale.

DraftKings is also in a position to complete any deal in a quicker time frame than Fanatics. As it is already licensed in all of PointsBet’s state markets, regulatory approval is basically a foregone conclusion and won’t take long.

Fanatics, meanwhile, will need to renegotiate three state licenses should it take over PointsBet as agreed.

“As a licensed entity in all of the jurisdictions in which you operate the US Business, we believe that we are uniquely positioned to obtain the requisite regulatory approvals on a more expedient time frame than under your Existing Agreement with Fanatics,” said DraftKings CEO Jason Robins in a letter to PointsBet leadership.

“We believe DraftKings is uniquely positioned to submit this superior proposal due to our scale and corresponding ability to generate meaningful synergies from the acquisition.”

PointsBet has given DraftKings until June 27 to submit an official offer as it looks into the details of the proposal.

Eight of 10 of PointsBet’s top shareholders (representing about 48% of the company) voted to accept Fanatics’ offer earlier in the month. However, a binding vote with all shareholders’ approval isn’t scheduled until June 30.