DraftKings withdraws from race for PointsBet

DraftKings stirred sports gambling spirits last week when the company announced that it will be joining the race for the outstanding PointsBet assets in the United States and North America, going up against Fanatics, a rival company that is hoping to make a big splash in the regional market as well.

Fanatics was the first company to actually table an offer and pursue a buyout of the company for a sum total of $150m, which was originally floated by PointsBet itself. After a few weeks of quiet, it seemed like no other bidders would be joining the race after all.

That is until DraftKings pitched a 30% premium offer on Fanatics' bid and said it would pay $195m to acquire the assets from the company. This move stirred a flurry of speculation – was DraftKings truly interested in acquiring PointsBet or was it trying to up the price that Fanatics would end up paying?

The latter seems to now be the case, as Fanatics has agreed to pony up $225m to secure the assets, substantially increasing its own bid and outspending DraftKings in the process. Commenting on previous events PointsBet said that DraftKings had indeed made an offer but insisted that the bidder had avoided a binding agreement and the company recommended its shareholders, and the board, to vote in favor of a sale to Fanatics instead.

Now that Fanatics seems to have emerged victorious the company will gain an important technical and operational capacity through PointsBet, including entries in New York, Pennsylvania, Michigan, and New Jersey where PointsBet has licenses.

DraftKings’ bid to sort of shake Fanatics' confidence has not really achieved much, but it did not seek to directly subvert Fanatics’ prospects either. Fanatics’ sports and gaming division has been well-funded to weather the entry costs of an already saturated market, so the company’s war chest was never an issue.

Meanwhile, Fanatics has a massive database of consumers it can advertise to, although this has not always been well received by regulators. In the meantime, there surely is one big winner in all of this – it’s neither Fanatics nor DraftKings.

PointsBet got a tidy premium on its sale and it could not have hoped for a better development. In the meantime, Fanatics’ betting division is still just a minnow, but it’s already making some big waves – enough for the established giants to notice and do something about it.

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