The leader of Fanatics Sportsbook took to CNBC last Thursday to explain why the company’s betting business will succeed.
Matt King was quite bullish on Fanatics profitability compared to other operators:
“We think we’ll reach profitability faster than anybody else in the [betting] industry. They’ll get there first but we started later so when you look at the period of unprofitability it’ll be the shortest in the industry.”
The Fanatics sports betting brand is live in 11 states for the start of NFL betting.
Fanatics acquisition costs ‘phenomenal’
It is no secret that part of the strength behind Fanatics’ story is its merchandise business and the database of customers it already has from that.
That means the business is already acquiring customers “at scale,” something that took industry leaders DraftKings, FanDuel and others time to build as the US betting industry evolved in real time.
“For us, our model is very different,” King said. “We’re actually acquiring users at about 80% less than the competition because we already have a database, we already have a well-known brand. So our unit economics are phenomenal and we’re acquiring already users at scale.
“So from our perspective, really what we’re trying to do is invest more in the rewards program back to users as opposed to spending all of our money up from to acquire them like the competition.”
Fanatics Sportsbook not worried about economy
Given it is an industry dependent on discretionary income, gaming is typically one of the segments hit harder by downturns in the economy. Sports betting, though, does not fit that mold, King said.
“So what we’ve seen historically is there is very little correlation between the economy and how much people bet on sports. Most people aren’t betting that much money and the see a lot of entertainment value in it.
“And so while I don’t call any industry recession-proof, we’re much less correlated to the economy than I think a lot of disposable income categories are.”
King: product will win
King discussed competition, specifically the launch of ESPN Bet from Penn Entertainment and Disney coming in November. Outside pressures have nothing to do with what Fanatics is building right now, he said:
“We’re focused on serving the fans the best we can. We want to create the best fan experience out there. That starts with product, you have to have the best product in the marketplace. As it relates to ESPN, the easy part is getting the deal done, the hard part is actually making it work.
“We’re just focused on, frankly, our playbook, which is build the best product and create the most rewarding sportsbook. And then really kind of build this whole digital sports platform for Fanatics more broadly.”
