Fanatics Eyeing January Sports Betting Debut, Not Keen on New York

Posted on: October 12, 2022, 05:44h. 

Last updated on: October 12, 2022, 06:16h.

Fanatics is aiming to have its sports wagering unit up and running by January, with the hopes of being live in a variety of major states by the start of the 2023 football season. But New York won’t be part of that equation.

Fanatics founder and CEO Michael Rubin. He said the company’s sports betting division will debut in January 2023. (Image: CNBC)

In remarks made at the CAA World Congress of Sports in New York Tuesday, Fanatics founder and CEO Michael Rubin said the company will be seeking entry into every significant sports wagering state over the course of 2023, with New York being the exception. Citing the state’s burdensome 51% tax rate on sports wagering — tied with New Hampshire for the highest in the country — Rubin says it’s too hard to be profitable in the fourth-largest state.

We’ll be in every major state other than New York, where you can’t make money,” he said at the conference. “We do like to make money, by the way. It’s this crazy concept in business — where we have revenue, we try to have profits that follow it.”

In late August, Rubin said in a media interview it was possible the company could be accepting wagers in some locations by the end of this year.

Forecasting Fanatics Market Entries

Rubin didn’t expound upon “major states,” but excluding New York, that group likely includes Arizona, Colorado, Illinois, Louisiana, Michigan, Nevada, New Jersey, and Pennsylvania, among others. It’s likely Massachusetts, Ohio, and perhaps Maryland will be joining that fray at some point in 2023.

Regarding Illinois, which is the sports betting mecca of the Midwest as measured by handle, Fanatics would have to shell out a $20 million fee for an online sports betting license. That’s if it doesn’t strike a partnership with a land-based casino in the state. Recently valued at $27 billion in private markets, the sports apparel giant can afford that tab.

Regarding Nevada, how Fanatics enters that state, or if it wants to, remains to be seen. Online-only sportsbooks, namely DraftKings and FanDuel, currently don’t operate in the state. All of the mobile sports wagering apps available to Nevada residents are offered by companies that also run land-based casinos.

Fanatics could solve Nevada entry via acquisition or a simple partnership with a local casino operator. While the company has long been rumored to be a buyer in sports betting consolidation, it’s yet to strike a deal. That prompted speculation that Rubin believes his firm doesn’t need to buy a competitor simply to pave its entry into sports betting.

Fanatics Questions

Fanatics is an increasingly sprawling empire that includes digital assets and trading cards in addition to apparel and betting.

As such, Rubin previously boasted that the company’s massive database could be a cost-efficient avenue for sports wagering customer acquisition. Analysts have reservations about that assertion because DraftKings and FanDuel entered the business with large, established data lists, and still spend big to acquire customers.

For now, Fanatics is a private company. But if it pursues an initial public offering (IPO), which is widely anticipated, Wall Street is likely to heavily scrutinize its sports betting client acquisition costs.

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