DraftKings Or Fanatics: Whoever Buys PointsBet Puts NY Sports Betting Regulators On Hot Seat

Written By David Danzis on June 22, 2023
empty chair in spotlight

Fanatics has some competition in the quest to acquire the US business of PointsBet.

But even before DraftKings decided to outbid Fanatics for the right to buy PointsBet, the deal was going to be a test case for New York gambling regulators.

The limited number of gaming licenses in the country’s largest legal sports gambling market means every move made by officials in Schenectady was going to be under a microscope.

Because whatever direction PointsBet chooses to go, it will create notable ripples throughout the NY sports betting landscape.

Fanatics faces competition with DraftKings bidding on PointsBet

Fanatics is a new operator in the market and one that the New York State Gaming Commission already passed over once before. The NYSGC declared it would not be a simple license transfer.

The commission’s declaration left many unanswered questions, which, despite PlayNY’s attempts, were answered with the typical clarity of government bureaucracy.

But now another contender has entered the ring and things could get really interesting.

What will happen to PointsBet’s NY sports betting license?

DraftKings Sportsbook NY already holds one of the state’s nine available sports wagering licenses.

If DK were to successfully buy PointsBet, what would happen to the latter’s gaming license? Can another operator, say Fanatics, apply for that license? Or does it now belong to DK? And what can they legally (and ethically) do with it?

Is there any scenario where the PointsBet Sportsbook NY brand lives on in New York following a sale because of the licensing issue? How will NY gaming regulators respond to blatant market manipulation by an existing operator?

So many questions.

Will PointsBet choose Fanatics or DraftKings?

At this point in time, Australian-based PointsBet really only has one legit offer: $150 million from Fanatics. Boston-based DraftKings says it is willing to pay $195 million but has yet to submit a binding offer.

According to reports, PointsBet’s board is being advised to accept the lower offer until something more concrete is presented.

Industry analysts have been forecasting a wave of mergers and acquisitions during this “second phase” of legal sports betting in the US. The first phase separated the winners from the losers, which led many to conclude the market was ripe for consolidation.

FanDuel and DraftKings effortlessly emerged as the clear leaders in the online sports betting space. It’s not even close.

This begs the question: Why does DraftKings want to buy PointsBet?

Why would DraftKings want to purchase PointsBet?

More than any other jurisdiction, NY regulators must answer this question if that arrangement moves forward.

The acquisition does not give DraftKings any additional market access. In the states where both already operate, PointsBet is performing so poorly that DK would not gain much (if any) market share. And it would be hard to believe that PointsBet has a customer database that offers real value to DraftKings.

Reports suggest DK is interested in PointsBet’s technology, which makes some sense. The PointsBet app is, arguably, the most intuitive and user-friendly of any of the existing sportsbooks. It also has some of the industry’s fastest payouts.

But there’s no question that PointsBet’s US assets are worth considerably more to Fanatics than to DK.

So, as NY regulators (and others) grapple with how to navigate this triangle, we’ll be waiting to see if any of the questions get answered.

Photo by PlayNY
David Danzis Avatar
Written by
David Danzis

David Danzis is a writer for PlayNY. A New Jersey native and honors graduate of Rutgers University, he served as a newspaper reporter for the New Jersey Herald and Press of Atlantic City, earning statewide awards for his coverage of politics, government, education, sports and business. Today, he contributes to New York's growing legal gambling landscape, including online sports betting and potential legalization of NY online casinos. David lives in Mays Landing with his wife and two children. When not on the beach, a golf course, or snowboarding, David enjoys watching his beloved New York sports teams — Yankees, Jets, Rangers and Knicks.

View all posts by David Danzis
Privacy Policy