SEACAUCUS, N.J. – Fanatics Betting & Gaming CEO Matt King says his second-wave entry will not necessarily be competing with established giants FanDuel and DraftKings early on. King was the CEO of FanDuel from 2017 to 2021.
“We’re not necessarily in the pursuit of market share,” King said at the SBC Summit North America on Wednesday.
Still, King’s boss, Michael Rubin, has claimed that Fanatics Sportsbook “can be the No. 1 player in the world in that business in 10 years.”
With a focus on building a great product and activating the Fanatics’ ecosystem, King, who helped build FanDuel into a dominant force as a top executive, agrees.
Why Fanatics can be top sportsbook
Asked by LSR about Rubin’s proclamation, King mentioned the goal of Fanatics being a one-stop shop for sports fans, featuring collectibles, merchandise, NFTs, sports betting, tickets and live game streams.
“We believe that long-term, even today, we have an advantageous customer-acquisition model,” King said.
“ … And ultimately we think that the best product and the best rewards program will win. And we think that when we deliver those two things combined, with our acquisition model, we can be No. 1 in 10 years.
“If you know one thing about Fanatics, don’t underestimate Michael Rubin.”
Fanatics takes different approach
With 95 million customers worldwide, Fanatics is focusing its efforts around cross-sell to retail, with a personalized sports betting experience and reward credits in the form of “FanCash.”
“In my 25-year career, it is singularly the most-liked consumer introduction we’ve ever done,” Rubin said.
Fanatics customers-only launch
Fanatics’ summer strategy revolves around releasing its product only to existing customers in its retail database.
It is sending invitation-only emails to existing customers in Ohio and Tennessee as it gradually expands its base.
Fanatics plans to be live in Ohio, Tennessee, Massachusetts and Maryland by mid-June.
King dismisses launch pullback
“I sat down with Michael and said look, we’re going to be in all of these states that we have access,” King said. “What really matters is getting the product right. … It’s more valuable for us to spend our time on that than worrying about being in Wyoming, and I love Wyoming.”
“ … What we care about is reaching the most fans cost-effectively. The reality, as you and I both know, there are like eight states that matter, because you have the ones with iGaming, and that’s the bulk of the market.”
What could be top eight states?
An LSR running tally shows the top-eight states in terms of all-time sports betting handle:
- New Jersey (has online casino gaming)
- Nevada (no online casino gaming)
- New York (online casino bill did not pass this year)
- Pennsylvania (has online casino gaming)
- Illinois (unlikely online casino bill will pass this year)
- Indiana (online casino bill did not pass this year)
- Colorado (no online casino gaming)
- Michigan (has online casino gaming)
Asked the likelihood that Fanatics would be in those top eight markets (albeit not specifically the states mentioned above) by Dec. 31, 2023, King replied, “Incredibly high.”
King said market access is 40-50% cheaper now than it was 3-5 years ago.
Database from retail at the heart
King said the database of 95 million translates to about what Pew Research said in Sept. 2022: about 15-20% of US adults say they have personally bet money on sports in some way in the last 12 months.
“What I think we can do is grow the population,” King said, adding that a “significant number” of beta-testing users that signed up had never bet on sports before.
Responsible gambling concerns
How many of those customers will be interested in sports betting, though? And how many might not be the right target group for other reasons?
“We adopt kind of the most stringent opt-outs we can, right?” King said. “It’ll look a lot like the big media companies do when they market their broad databases. You do it responsibly, you give people easy ways to opt out, and you use all the information you can to make sure you’re targeting the right people.”
No college deals for Fanatics
King added that Fanatics has no intentions of creating any college sports betting partnerships.
That appears a prudent decision given the Alabama and Iowa sports betting scandals.
“We’re not going to do sportsbook deals with colleges,” he said.
King comments on Amelco deal
In April, Fanatics announced a deal with Amelco for its open source software program.
“Amelco gave us the framework for a working sportsbook,” King said. “But our engineers have taken that core source code, and soup to nuts, changed it to be what we need it to be, to the point where it’s hardly recognizable.”
King said the initial feedback on the beta testing “has been really, really good. And some of the stats around cross-sell come with a world that is, it’s a journey that’s going to get a lot better.”
Asked what needs to get better, King said, “We don’t have all the sports yet. We don’t have tennis in the app yet. The stuff we’re getting feedback on is largely things we were expecting.”
Is there a path to profitability?
Fanatics, which is planning to invest $1 billion in its sports betting arm, is in it for the long-haul.
“Our most significant investment is going to be product and engineering,” King said. “And then there will be a fair amount of investment back into the ecosystem. We’ll spend money on customers, but we’ll spend it through rewards as opposed to big, splashy ad campaigns.”
Could it happen by 2025 or 2026?
Rubin believes the betting arm of the business can be profitable by 2025 or 2026, according to the Wall Street Journal. King says that is an attainable goal, while adding that he sees Fanatics eventually adding international business “sooner rather than later.”
“Fanatics has never been ‘spend a shit-ton of money and then grow, grow, grow,’” he said. The goal is building a sustainable business, King added.
“Our priority is get it right, not get it fastest,” King said. “This is a 10-year journey.”