Fanatics is primed to take its shot at the sports betting industry.
That was the takeaway from Wednesday’s news that CEO Michael Rubin is selling his stake in the parent company that owns the Philadelphia 76ers and New Jersey Devils.
“It means we’re getting ready,” was how one Fanatics source put it.
Rubin sells stake in NBA, NHL franchises
Rubin cited an obvious conflict of interest with his business ventures, and both the NBA and NHL.
“As our Fanatics business has grown, so too have the obstacles I have to navigate to ensure our new businesses don’t conflict with my responsibilities as part-owner of the Sixers,” Rubin wrote in a statement announcing the decision.
“With the launch of our trading cards and collectibles business earlier this year — which will have individual contracts with thousands of athletes globally — and a soon-to-launch sports betting operator, these new businesses will directly conflict with the ownership rules of sports leagues.”
Or, as Howard Glaser, global head of government for Light & Wonder, put it via tweet: “The digital gaming tail wagging the sports business dog. Very telling as at the gaming/sports line blurs …”
Fanatics gearing up for sports betting launch
BetFanatics has recently been ramping up its hiring efforts as it seeks to bulk up a staff led by former FanDuel CEO Matt King and former FanDuel VP Ari Borod.
“We want to create the best sportsbook for fans everywhere,” King told PlayNY in Sept. 2021.
At that point, Fanatics was still hoping to join the New York sports betting landscape before any other state. But the entity failed to secure a license in the Empire State as part of a joint bid with Penn National/Barstool Sports. The Brooklyn Nets had been supportive of that bid.
Fanatics — along with FanDuel and DraftKings — continued via lobbying efforts hoping to reduce New York’s 51% tax rate on online sports betting through operator expansion. But those lobbying efforts proved unsuccessful during this year’s NYS legislative session.
Policymakers plan to revisit the state’s tax rate later this year, so those lobbying efforts could very reasonably resume. And Fanatics likely wouldn’t want to enter NY without a tax reduction after not getting in the first time around.
Where does a Fanatics sportsbook fit in?
Either way, the NY market has become pretty well-established. FanDuel leads the way in market share and revenue share, followed by DraftKings. In fact, FanDuel, DraftKings, Caesars and BetMGM make up over 90% of the market share and the revenue share combined. The other four live sportsbooks trailing well behind.
Bally Bet NY is the only approved online sportsbook in the state which hasn’t launched, though that should take place at some point this summer.
Fanatics is valued at $27 billion, an emerging titan in the sports apparel industry. It believes it can make waves in the online sports betting space due to its massive customer database. All while perhaps creating a one-stop, all-encompassing app for the sports fan.
“Right now, the market is a huge long-term opportunity, but the market’s not making as much sense in the near term,” Rubin said in March at the Sloan Sports Analytics Conference. “I do believe we will be the No. 1 player in the business in a decade and I believe we’ll do it through smart and aggressive organic growth and structural advantages we have at Fanatics.”
Fanatics still has to jump through several hurdles, and isn’t yet licensed in any state. The company acquired a copy of platform source code from B2B supplier Amelco, per Legal Sports Report.
But Rubin cutting ties with his sports team ownership shows he’s ready to be all-in for the next phase.