For Fanatics To Justify PointsBet Price, It Will Need To Invest In Ohio

It took a bit longer than expected, and the cost swelled by 50% along the way, but Fanatics has finally nailed down its acquisition of PointsBet.

The move offers an on-ramp for Fanatics Sportsbook to hit the Ohio sports betting market at considerable speed once it officially launches.

By upping its bid from $150 million to $225 million this week, Fanatics successfully thwarted an attempt by DraftKings to swoop in and snatch PointsBet. The move gives Fanatics market access in 15 states — a crucial foothold for a company with grand aspirations in the U.S.

While PointsBet’s Ohio market share is minuscule compared to the big books like DraftKings and FanDuel, such an investment shows how serious Fanatics is about competing for market share here. And with projections suggesting that Ohio could push for top-three status as a U.S. market sooner than later, this will likely not be Fanatics’ latest big move in Ohio.

Fanatics gains Ohio foothold with PointsBet acquisition

Fanatics is already technically up and running in Ohio, having launched in May to a select group of customers off its retail database.

The company has taken things slow, however, soft-launching in Ohio and Tennessee and choosing not to make the sports betting app available to all users from the start.

In April, Fanatics reported $431,708 in handle and $124,037 in revenue, the book’s first month operating in Ohio. The betting volume ranked last in the state — unsurprising for a debut — but Fanatics made more money than six Ohio sportsbooks.

PointsBet in April took just over $3.2 million in bets and brought in $423,974 in revenue, good for just 0.64% market share. Still, PointsBet ranks ninth in YTD handle in Ohio, with $21.6 million in bets and nearly $300,000 in revenue. PointsBet was an early market entrant and has punched above its weight in promotions and advertising in the state.

Fanatics didn’t spend $225 million just for a bump in Ohio, of course. The company acquires technology that PointsBet has accumulated in recent years and skips the line in several states when it comes to licensing.

So, what’s next for Fanatics in Ohio? Probably a hefty follow-up investment considering the long-term potential of the state.

Ohio is a heavyweight battleground for sportsbooks

With 18 sportsbooks up and running, Ohio has already proven to be a top destination for the biggest U.S. sportsbooks.

In its first four months, Ohio saw over $3 billion in betting volume. Without considering the massive promotional spending the books will have to cover themselves, the market provided $450,000 in revenue.

PlayOhio projects that Ohio could see upwards of $10 billion in handle in 2023, placing the state neck-and-neck with New Jersey for No. 3 in the U.S. Ohio should pass New Jersey and compete with Illinois within a couple of years.

Fanatics could eye the big books in Ohio

Fanatics has only launched in Maryland so far, and the only numbers available account for a “controlled demonstration” where Fanatics users bet on the platform under the supervision of regulators for a single day.

But Fanatics will have a similar jumping-off point there, with PointsBet grabbing a 0.1% market share in Maryland and taking just under $300,000 in May bets.

In both Ohio and Maryland, PointsBet is surrounded by mid-tier books like Barstool, BetRivers and Betfred. In order to rise from the pack, Fanatics will need to approach Ohio the same way bet365 Sportsbook has — by heavily investing in promotional spending early.

Fanatics has huge name recognition, but the company will also need to nail the transition of PointsBet users onto the Fanatics platform. As we’ve seen with bet365 Sportsbook, promotional spending can push a sportsbook up the rankings in handle — then it’s up to the book to retain the business.

Bet365 in April ranked fourth in Ohio in handle behind only FanDuel Sportsbook, DraftKings OH and BetMGM Sportsbook and just ahead of Caesars Ohio and Barstool Sportsbook.

It would not be surprising to see Fanatics use its deep pockets to join bet365 as an up-and-coming sportsbook aiming to compete for top-five status in Ohio.

Fanatics Ohio launch timeline, PointsBet transition

The PointsBet board unanimously approved Fanatics’ updated bid this week. Finalizing the deal will take months, with two payments scheduled for this summer ($175 million) and early 2024 ($50 million).

Fanatics has had a number of irons in the fire across the U.S., but this deal sets the company on a clear path to joining the biggest U.S. markets.

For now, PointsBet users can continue to operate as normal. At some point, PointsBet users will be merged onto the Fanatics platform. Both sportsbooks may continue to operate while Fanatics implements any new tech into the Fanatics app before the merge.

While Fanatics continues to be somewhat of an enigma in Ohio, the PointsBet acquisition shows that big things have been happening behind the scenes.

There is much work to do before the new-and-improved Fanatics Sportsbook hits the Ohio market in full force, but it’s safe to assume even bigger moves are on the horizon.