Ohio and Fanatics are in a similar situation when it comes to sports betting.
Sure, one is a state looking to usher in an entirely new industry with new regulations and laws. The other is a merchandise company looking to add to its existing success and lay claim to a new space.
But when it comes to venturing into the sports betting world, both are the new kids on the block. Despite the late entry, Fanatics hopes to have fingerprints wherever sports betting is legal via its BetFanatics app. The company has applied for multiple licenses in Pennsylvania, one of the largest sports betting markets in the country.
However, it would behoove the company to focus on states that are launching soon, such as Ohio. With one of the country’s better tax rates in a brand-new market, Fanatics may find its biggest success competing with the big boys in the Buckeye State.
How Fanatics got here
Fanatics has big plans for Ohio sports betting and online casino offerings and filed its trademark for “BetFanatics” last month.
Last week, the company was approved by the Maryland Lottery and Gaming Control Commission for a retail sports betting license. While further approval is required before it can operate in Maryland, the idea of Fanatics breaking ground in the industry is becoming a reality.
Fanatics CEO Michael Rubin sold his reported 10% stake in Harris Blitzer Sports Entertainment for an undisclosed price to focus his full attention on Fanatics as it ventures into a new industry. He referenced as much on his official Twitter account on Wednesday.
“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. 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.”
Additionally, the sale of his Harris Blitzer stake – which includes ownership in the NBA’s Philadelphia 76ers and NHL’s New Jersey Devils – means BetFanatics would be clear to take bets on those teams.
With half the approval needed to go live in Maryland, Fanatics’ foray into the sports betting world is nearly complete. But with no physical sportsbook operating partner announced, there’s still work to be done before the company is a known entity in the space.
Fanatics to partner with Tipico?
While Fanatics appears to be humming along, there’s still one key component missing — an operating partner. Rubin and company certainly have the money and resources to entice potential partners. Recent reports even suggest they may have someone in mind already.
According to a CNBC report last week, Fanatics has been in talks to partner with Tipico. Though its American presence is limited to New Jersey and Colorado, the provider claims top of its class in Germany. It is also the exclusive sports betting partner for USA Today’s owner, Gannett.
That may not matter as much considering how big Fanatics has grown in the United States. Factor in Rubin’s connections in the sports and entertainment industries, and it doesn’t really matter who Fanatics partners with. It just needs to have an operator to work with in order to break into the game.
For what it’s worth, CNBC reports that talks are still ongoing and no deal has been reached.
Why the optimism for Fanatics in Ohio?
As noted, Ohio sports betting will universally launch at the turn of the new year in 2023. For this reason, Fanatics should key in on the Buckeye State with the chance to start in the same position as everyone else.
Ohio sportsbooks are set to launch on Jan. 1, 2023. If Fanatics wants to line up at the starting line with the likes of Caesars, FanDuel and DraftKings, it will need to find a partner and apply with the Ohio Casino Control Commission soon.
FanDuel, DraftKings and Barstool lead the way in Pennsylvania as the only three entities to crack the billion-dollar plateau in lifetime handle. BetRivers and BetMGM, among others, aren’t far behind in the $900 million range. Throw in additional companies such as TwinSpires and PointsBet, and the Pennsylvania competition is fierce.
Fanatics won’t have to deal with that in Ohio. Sure, it’s likely many, if not all, of those same companies, will also expand into the Ohio sports betting market. But Fanatics might not be playing catch-up here.
Additionally, while being the new kid on the block comes with certain disadvantages, it could also play to Fanatics’ favor in some regards.
Interested bettors have likely heard of the FanDuels and the BetMGMs of the gambling world. Fanatics, if done right, can come in as the shiny new toy in a market full of used ones. Simple curiosity can potentially generate new customers.
In addition, the brand will be entering Ohio with a new leader on the marketing team: Jason White, whose executive experience includes stints at Beats by Dre and MTV. According to a press release, White will “lead the strategy and execution across the marketing, advertising and content verticals within FBG as the company prepares for its formal entrance into the rapidly expanding gambling and gaming industry.”
Fanatics the new BetMGM?
Circling back to BetMGM, let’s take a look at its path to prominence in Michigan as a further reason why Fanatics should be optimistic in Ohio.
Before the state launched sports betting and online casinos in January 2021, BetMGM was among the second tier of sports betting operators. Its peers there were BetRivers and PointsBet, far below Draft Kings and FanDuel, which dominated market share across the country.
However, with strong brand recognition in Michigan, along with the cross-selling available from its online casino brand, BetMGM used that opportunity to propel itself into the upper tier of operators.
| Online Brand in Michigan | Lifetime Handle | Revenue | Hold | Taxes |
|---|---|---|---|---|
| FanDuel | $1,777,379,648 | $171,256,275 | 9.6% | $6,986,927 |
| BetMGM | $1,491,457,789 | $143,888,517 | 9.6% | $5,038,280 |
| DraftKings | $1,427,866,387 | $75,462,002 | 5.3% | $1,132,484 |
| Barstool | $741,666,444 | $53,530,439 | 7.2% | $2,835,636 |
| Caesars | $355,818,263 | $17,668,386 | 5.0% | $40,811 |
BetMGM is now up there at the top with DraftKings and FanDuel in Michigan. It’s also a strong No. 1 in the online casino game.
While Ohio’s launch is a little behind Michigan’s, and more ground needs to be made up for Fanatics to catch up in existing markets, Ohio could represent the kind of opportunity that Michigan provided BetMGM.
Fanatics plans ahead of Ohio sports betting launch
Rubin claims BetFanatics may be operating before the end of 2022. This won’t do much for bettors in Ohio, with a sports betting launch date of Jan. 1, 2023. However, building up notoriety in other states should aid in Fanatics’ quest to compete with the big boys.
States without sports betting will surely continue to join the fold in the coming years, providing Fanatics with other future opportunities. But as things stand currently, Ohio gives the company its best chance to hit the ground running in what will become one of the country’s biggest sports betting markets.
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