PointsBet US Agrees to $150M Sale to Fanatics

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After many months of rumors and speculation, Australia-based sportsbook operator PointsBet has found a buyer for its US operations.

Sportsbook and sports merchandise company Fanatics Betting and Gaming was the winning bidder. It offered a headline cash consideration of $150 million. The bid was accepted with a binding agreement that the sale will go through after expected shareholder and regulatory approvals, PointsBet said in a press release on Sunday.

$150 million is significantly less than the $250 million PointsBet leadership was apparently looking for when we first reported on the potential sale last month.

Well-Capitalized Operators

PointsBet US has struggled to get a foothold in the American market since launching in 2021. Faced with dominating competition in FanDuel, DraftKings, and BetMGM, the operation lost $180 million over the 2021/2022 financial year. Things have since improved, but not enough for its parent company to keep it as a going concern.

“Despite the strategic success building a valuable asset in the US, the costs of operating in a state-by-state environment, together with the requirement to build significant scale to compete against well- capitalized operators, led us to explore a number of options,” said PointsBet CEO and Managing Director Sam Swanell in the statement.

“The sale of the US Business to Fanatics Betting and Gaming delivers the most attractive risk-adjusted value outcome for shareholders, compared to the risks and benefits of other options, including the status quo.”

Despite sitting on a $300 million cash pile and holding 14 US state licenses, PointsBet US’s finances were looking shaky.

“PointsBet’s current corporate cash balance is insufficient to fund the US Business through to profitability, and as such, should the Proposed Transaction not proceed, the Company would need to raise additional capital in the near term,” said the statement.

Fanatics may look to use PointsBet’s 14 licenses to achieve its long-stated goal of offering wagers in 12-plus states by the end of 2023.

“Fanatics Betting and Gaming has recognized our strategy, technology and team as a platform for their own expansion in the online sports betting and iGaming market,” Swanell said.

“Given Fanatics significant presence in the US sports market, we consider them to be a natural acquirer of our US Business.”

Options Terminated

PointsBet is scheduled to call an “extraordinary” shareholder meeting “as soon as possible” to finalize the sale vote.

Some of those shareholders will include representatives from NBC Universal, who hold a 4.9% stake in PointsBet US.

With this sale, “NBCUniversal has also released PointsBet Holdings Limited from its guaranteed obligations under its Media Services Agreement from final Completion. These options have been terminated today,” said the statement.

This deal should bring to an end long-term speculation on PointsBet US’s future. But the wider parent company could still be up for sale. However, as a global operator, PointsBet would be a little bit more expensive than its US division.

The entire PointsBet operation was valued at some $30 billion last year. That leaves only a few giant corporations in the sector that could afford to buy, which is potentially why it has been rumored to be on the market for so long.

Interestingly, Fanatics wasn’t among the more heavily tipped buyers for PointsBet US. Bally’s Corporation, Penn Entertainment, and the Australian company Betr had all expressed interest. Penn owns a 7% stake in PointsBet’s Australian division.

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