A major legal sports betting operator reportedly explored a merger with a rival, but the two entities are now competing for a promising acquisition.
DraftKings held negotiations in 2021 with Fanatics regarding a 50-50 merger that would have valued each company at roughly $24 billion, according to the New York Post. News of the now-dissolved merger comes after Fanatics agreed to purchase PointsBet’s U.S. business for $150 million last month.
DraftKings responded to Fanatics’ potential deal with a $195 million offer of its own to purchase the U.S. operations of PointsBet. The dueling bids add fuel to an already contentious relationship between the two owners of online betting sites and retail sportsbooks.
DraftKings’ PointsBet bid is “centered around the significant synergies and financial rationale, along with the interesting product and technology capabilities we would acquire through the proposed transaction,” a spokesman told the New York Post. “To suggest that there is an ulterior motive that is personal and not business related is irresponsible and not grounded in reality.”
Despite being in deep talks regarding a merger, Fanatics — owned by billionaire Michael Rubin — backed out of the transaction toward the end of the negotiation process. Since then, DraftKings has seen its shares fall from a high of $73 per share in 2021 to $25 as of Monday.
As of June, DraftKings is valued at $11.62 billion from a previous high of $31.8 billion in 2020.
Under consideration
DraftKings’ more lucrative offer for PointsBet’s U.S. assets is being considered by the Australia-based company. Directors at PointsBet are actively considering DraftKings’ offer and expect to draft a formal proposal regarding a potential transaction. The group anticipates entering into talks with DraftKings and will ask shareholders to vote on the issue on June 30.
Boston-based DraftKings is the second-largest sportsbook in America in terms of market share, while PointsBet is ranked seventh. PointsBet has been awarded online licenses in 14 states including Colorado, Pennsylvania, and New York — the largest online betting market in the U.S.
PointsBet reported a betting handle of $2.2 billion in H1 2023, up from $1.6 billion in H1 2022.
Fanatics, which launched wagering operations in January 2023, failed to obtain an online sports betting license in New York after submitting a joint bid with Penn National Gaming and Kambi.
As of June, Fanatics is only live in four states: Maryland, Massachusetts, Ohio, and Tennessee.
