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Fanatics, the renowned sports merchandise company, recently made headlines with its acquisition of PointsBet’s U.S. business for a staggering $150 million. This move not only solidified Fanatics’ position in the gambling industry but also served as a potential indication of more significant developments on the horizon.
CEO Michael Rubin had previously expressed his ambition to launch sports betting operations in every legal state, except New York. However, with the acquisition of PointsBet, Fanatics now gains access to the New York market, as well as 14 other states. Moreover, the inclusion of PointsBet’s iGaming business in Michigan presents a valuable addition to Fanatics’ portfolio.
One of the key advantages of this deal for Fanatics lies in the significant savings it will realize in upfront licensing fees. By leveraging PointsBet’s existing footprint, Fanatics can avoid substantial expenses associated with establishing a new presence in each state. Matt King, Fanatics’ CEO of Betting and Gaming, emphasized that this strategic move would save them tens of millions of dollars.
King further highlighted that the cost of entering new markets has decreased by 40% to 50% compared to previous years. This decline in market entry costs reflects the evolving landscape of the gambling industry, making it a more appealing and accessible market for companies like Fanatics.
Another major deal in the sector recently caught attention—the $1.2 billion acquisition of NeoGames by Aristocrat. This significant transaction, announced around the same time as the Fanatics-PointsBet deal, saw Aristocrat acquire NeoGames at a premium price of $29.50 per share, marking a 130% increase over NeoGames’ closing price on Friday.
Aristocrat, a prominent player in the slot machine market, is now signaling its intent to compete in the online lottery, casino, and sports betting sectors through this acquisition. Industry analysts, such as David Katz from Jeffries, believe that the digital gaming group, including NeoGames, is currently undervalued by the U.S. market. However, he does not anticipate an immediate surge in valuations.
The recent flurry of high-profile acquisitions has led to speculation about the next potential takeover targets in the industry. SportRadar, a global sports data provider, and Gambling.com, an affiliate business that delivers media content to drive new players to gaming operators, are among the companies generating interest. Additionally, Rush Street Interactive, which has recently been the subject of acquisition rumors, is focusing on strengthening its position as an iGaming operator first, followed by its sports betting offerings.
At the SBC Summit, a renowned sports gambling conference, RSI CEO Richard Schwartz was asked about the possibility of entertaining offers. He acknowledged the company’s obligation to its shareholders and its commitment to maximizing returns. This openness to evaluating opportunities suggests that Rush Street Interactive could be receptive to potential acquisitions.
Fanatics’ CEO, Matt King, echoes the sentiment that further consolidation is likely to occur in the gambling industry. He believes that the lack of new capital flowing into the sector will make companies with unsustainable business models ripe for acquisition. However, King also suggests that price expectations have begun to align with reality, indicating that astronomical price tags for gaming acquisitions may become a thing of the past.
As the gambling industry continues to evolve and attract attention, mergers and acquisitions are becoming more prevalent. Companies like Fanatics and Aristocrat are positioning themselves strategically, expanding their portfolios and capitalizing on the changing landscape. The potential acquisition targets of SportRadar, Gambling.com, and Rush Street Interactive, among others, reflect the industry’s hunger for growth and diversification. With more deals likely on the horizon, the future of the gambling industry promises to be dynamic and exciting.