Analysis: Can Fanatics Become A Top-Five Sportsbook Operator?

Written By

Updated on

Fanatics Sportsbook

The Fanatics Sportsbook is drawing ever closer.

The company last week filed to trademark that name and Fanatics Casino, per IP lawyer Josh Gerben. It also stands a decent chance at securing a New York sports betting license.

So plans are in place. But what does the product look like, and can a newcomer compete with the big boys in US sports betting?

What does Fanatics Sportsbook bring to the table?

Fanatics Betting and Gaming is an offshoot of the sports apparel parent company. That relationship means it has a massive database of sports fans and a boatload of cash.

The young company has also built a formidable exec team:

It is worth noting, however, these high-flying execs are still developing their teams at present.

Why is Fanatics Sportsbook a thing?

So why is Fanatics starting from scratch? Why go after sports betting instead of sticking with a core competency of sports apparel that made it a  $13 billion company.

The company did not respond to questions from LSR. However, its application for New York sports betting gives some hints about its thinking.

Per that document:

Fanatics Sportsbook provides advantages that many operators fail to achieve:

Strings to the Fanatics Sportsbook bow

The database is the jewel in the crown. With some 83 million users, it is “largest and most valuable database of sports fans in the US,” per Fanatics.

Revenues from the apparel site can also fund the massive ad spend needed to compete in US sports betting today.

“If they execute they can be a top-five operator instantly in markets where they are live and possibly top three,” said betting industry advisor Sean Hurley. “Eighty-three million users is no joke, and they can keep them in the ecosystem through merchandise and ticketing.

“I know a lot of people think they will struggle but if they control the tech, they can do very well.”

Product first

That tech is of course a question mark. As detailed before at LSR, it appears product ultimately will be king in US sports betting. 

To that end, Fanatics has been linked to just about every sportsbook operator left standing in the US, including PointsBet, Rush Street Interactive (RSI) and Betsson. Regardless of the specifics, King looks like the right choice to hammer out a good deal for Fanatics. 

“All I know is Matt King has a blank check to do what he wants for sports betting,” said one source with knowledge of King at Fanatics. “He’s ex-(investment firm)KKR and known for creative deal-making and M&A . That is precisely what he’s tasked to do here.”

Tech control is key

Mark Israney, a consultant at Propus Partners, said PointsBet theoretically made the most sense as an acquisition target. Fanatics would gain full control over a product already showing good results in the US market.

Fanatics has also been linked with Betsson, but the company has yet to launch a sportsbook in the US.

“To expect them to hit the ground running with a US-ready product is a huge ask,” Israney said.

So product can be solved. But what about the broader idea?

How do you sell bets to a someone who wants a hat?

Not everyone agrees that the Fanatics database is a goldmine of gambling customers.

“It is not a natural cross-sell like Barstool or Fox has,” Israney said. “Those companies are dealing with people already watching sports. It is much easier to integrate betting content there. How does Fanatics market sports betting to its database? You cannot just do above-the-line marketing because there’s so many children in there.”

Fanatics could segment the database and only email people over 21 years old. But suddenly the 83 million number is cut down. As Israney says, how effective is an email about sports betting with people who signed up to buy hats?

Could those cold-call emails even turn off customers and cause them to unsubscribe?

Still waiting for media/sportsbook crossover to blow up

There is also another elephant in the room. Fox and Barstool might be more suited to cross-sell their audience. But that doesn’t mean they are actually converting users into bettors at a massive rate.

Barstool is probably the best-performing of the media/sportsbook crossovers. It rebounded to around a 10% share in PA sports betting in September, after spending most of the summer below that mark.

Given the Barstool database is widely considered perfect for sports betting, does that make 10% share a ceiling for Fanatics?

More to sports betting success than a database

Plenty of other media brands have shown you need more than just an audience to be successful in sports betting.

The other key ingredients?

Fanatics has the right people at the top of the business and deep pockets. Can they deliver the rest?