Fanatics’ long-term vision for its new sports betting and gaming operation is simple.
“We want to create the best sportsbook for fans everywhere,” Matt King, CEO of Fanatics’ Sportsbook, told PlayNY. “The same as every other Fanatics’ business. It’s about creating amazing fan experiences, and that’s what we’re going to do in sports betting.”
The $18 billion online retail giant, which has recently taken over the sports trading card industry, made headlines when it applied for a sports betting license in New York. Fanatics’ CEO is Michael Rubin, also co-owner of the Philadelphia 76ers. And Brooklyn native Jay-Z is slated to serve as vice chairman and sit on the board of directors of Fanatics’ Betting and Gaming.
The company’s headquarters will be in The Big Apple.
“It’s where I built FanDuel,” King, FanDuel’s former CEO, said. “I love the New York marketplace. I love the talent in New York, I love the energy in New York. And given that our partners are in New York, and given how close we are to the leagues, it just makes sense to be in New York. There’s no other place where we should be.”
There’s also no other place where Fanatics wants to launch its first sportsbook. “It would be ready to be launched on the day New York goes live,” King said.
The hope is that legalized online sports betting is up and running in New York by Super Bowl LVI on Feb. 13, 2022. But it remains to be seen whether Fanatics will secure a coveted license from the NY State Gaming Commission.
Why Fanatics Is a Compelling Player In Sports Betting
When the NYSGC released the redacted sports betting applications in mid-August, Jay-Z’s name and title stood out from the rest.
His role, according to the redacted report, will be to “provide strategic and creative direction on the expansion and growth of the Fanatics’ Sportsbook in New York and across the country.”
The hip-hop mogul, who founded New York-based RocNation and served as a minority owner of the Brooklyn Nets, has a history in sports betting, and once held gaming licenses in both New Jersey and Nevada.
Industry sources have described Jay-Z as incredibly excited about the possibility of New York. “It’s important to him, and this is something he’s very passionate about,” one source said.
Jay-Z and Rubin have a close relationship, with both serving as part of the REFORM Alliance, which aims to transform the criminal justice system. Jay-Z also invested in Fanatics during the company’s latest round of funding.
And most significantly, Jay-Z is the only Black investor to appear on a license. According to census.gov’s most recent data, New York is 17.6% Black or African American (based on an April 2020 state population of 20.2 million).
“It’s a diverse group,” King said. “We’ve assembled a team that truly represents New York in a very authentic way, and I think has the capabilities to significantly expand the market and generate a lot more revenue for the state of New York if we’re in the marketplace.”
Fanatics also controls a database of 83 million sports fans, giving it a real chance to grow quickly. It will lower marketing costs, the most significant expenditure for operators in the past. It will also make the potential 50% (or greater) tax rate more manageable. “I think that we have a very compelling application,” King said.
Fanatics is part of a bid with Kambi and Penn National Gaming/Barstool Sportsbook. The star-studded Brooklyn Nets are supporting the bid.
“The Nets have been a longtime partner of both Fanatics and myself (at FanDuel) for a long time, and they’re one of the most iconic sports brands in New York,” King said. “We were super excited to have them as a supporter in the bid.”
Fanatics Faces Stiff Competition To Secure NY Betting License
The NYSGC recently decided to proceed with application evaluations without oral presentations. The commission has until before Dec. 6 to select applications considered for licenses.
Industry experts believe the favorites to secure bids are the FanDuel, DraftKings, BetMGM and Bally’s Super Bid (supported by the Yankees, Bills and Sabres) and the Caesars, Resorts World, WynnBET, PointsBet and BetRivers super bid.
But despite not being as established as those other names yet, Fanatics has amped up its efforts to acquire a sportsbook operator, and has reportedly been in talks with Rush Street Interactive and Betsson. A source confirmed to PlayNY that Fanatics also had previous talks with DraftKings, which didn’t amount to anything. Fanatics declined to comment on potential mergers and acquisitions.
Given Rubin’s ambitions in other industries, a partner with a casino company could make sense in the future.
The question ultimately is whether a New York license will accompany Fanatics’ New York headquarters. There’s certainly a compelling case to be made, given all the local ties in The Big Apple and the chance to improve diversity in the industry. Will Jay-Z get shut out of his home state?
“Michael could’ve gotten licenses elsewhere,” a source said. “This is their launch spot. This is where they want to be first.”
It’s now in the hands of the NYSGC.
“I had a phenomenal experience helping build FanDuel from $120 million in revenue to almost $2 billion,” King said. “But for me, I’m an entrepreneur, so what I got really excited about was building something new.
“Fanatics has one of the best brands in sports, as well as the biggest database in sports. And it gives me a really unique opportunity to build the next generation of sportsbooks.”
Dustin Gouker contributed to this report.