PointsBet's New York and Wyoming Operations Acquired by Fanatics
LISTEN TO THIS ARTICLE:Fanatics Betting and Gaming (FBG) has made further progress toward fully owning PointsBet US by successfully acquiring its operations in New York and Wyoming.
PointsBet New York LLC has now been transferred to FBG, following the fulfillment of specific conditions, such as approval from the New York State Gaming Commission. Ownership of PointsBet Wyoming LLC has also been moved to the FBG division, a part of the larger sports retail company Fanatics.
The transfer of additional U.S. state operations to FBG is expected to take place as state-by-state approvals are secured. PointsBet has stated that completion in these markets is on schedule. This follows PointsBet securing approval to acquire PointsBet US operations in eight other states last month, including New Jersey, Pennsylvania, Colorado, Iowa, Kansas, Maryland, Virginia, and West Virginia.
PointsBet will maintain its operations in states like Illinois, Indiana, Louisiana, Michigan, and Ohio until Fanatics finalizes acquisitions in those individual states.
FBG Deals with Competitive Bids
Earlier this year, the FBG unit of Fanatics agreed to purchase PointsBet's US operations for a total sum of $22 million. The deal had been confirmed and approved by PointsBet shareholders. However, the acquisition process had its own set of challenges. Initially, an agreement was reached for a $150 million acquisition in May.
However, DraftKings complicated matters by making a higher bid of $195 million in June. This led PointsBet to consider what they described as a “superior” proposal. Consequently, FBG responded by revising their offer to the final $225 million, at which point DraftKings withdrew its bid.
Why PointsBet Is Selling
According to Brett Paton, the chairman of PointsBet, the decision to sell is mainly driven by financial constraints. While PointsBet has been strategically successful in the U.S., competing with large brands has prevented the company from being cash flow positive. Paton mentioned that sustaining U.S. operations would necessitate substantial capital and additional fundraising. "
However, PointsBet is not entirely exiting North America. The company will continue its operations in Canada and Australia and will retain its proprietary sports wagering and igaming platform, which is active in both markets. Paton stated that the sale provides the best value for shareholders when considering the risks and benefits of other available options.
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