“Jason’s Revenge” is the most recent attraction in sports betting — not in a horror flick, but in a high-profile merger battle.
DraftKings CEO Jason Robins — currently pitted against Michael Rubin, the billionaire boss of Fanatics to purchase the PointsBet sports betting business — has made his rival bid two years after DraftKings and Fanatics secretly held merger talks, two sources near the situation said.
DraftKings in early 2021 was in deep talks with Fanatics in what would have been a 50-50 merger with each company valued at about $24 billion, sources said, revealing high-stakes negotiations which have not been previously reported.
But Rubin, whose net value is pegged by Forbes at $11.4 billion, walked away near the top of the method, the sources said.
In response, Robins — who has since seen DraftKings shares plunge by greater than half, leaving his entire company valued at just $11.5 billion — has held a grudge ever since, the sources said.
“Jason was stopped and now he’s returning the favor,” a sports betting executive said of the hard-charging DraftKings boss.
In a written statement, a DraftKings spokesman said the corporate’s PointsBet bid is “centered around the numerous synergies and financial rationale, together with the interesting product and technology capabilities we might acquire through the proposed transaction.
“To suggest that there may be an ulterior motive that’s personal and never business related is irresponsible and never grounded in point of fact,” the spokesman added.
Reps for Fanatics declined to comment.
DraftKings on June 16 made a surprise, last-second bid to purchase PointsBet’s US business for $195 million, topping Fanatics’ $150 million deal reached a month earlier by 30% and throwing into doubt its ambition to develop into the third major player within the sports betting space.
“It’s a move to delay our ability to enter the market,” Rubin said earlier this month when asked in a CNBC interview in regards to the rival offer. “I suppose they’re more concerned about us than I might have thought.”
FanDuel presently has the largest US sports betting market share at roughly 45%, and DraftKings is second at 29%, with nobody else being close, in keeping with Eilers & Krejcik Gaming,
PointsBet has one in every of nine licenses to book on-line Recent York bets.
Recent York has no plans to issue more licenses.
“DraftKings already has scale,” the sports betting source said, adding that DraftKings is principally seeking to block Fanatics from getting PointBet’s useful Recent York sports betting license.
“If you wish to be a player you have got to be here,” the sports betting executive said. “It’s the most important state. California, Florida and Texas are usually not offering sports betting.”
If Rubin can tap into the sports betting market, he can cross-market the service to his tens of thousands and thousands of consumers that buy its officially licensed sports team gear.
DraftKings, meanwhile, can be taking a risk by acquiring PointsBet’s US operations.
PointsBet said its intent is to ask DraftKings for a “hell or high water” merger agreement, meaning DraftKings can be forced to purchase PointsBet’s US operations even when it cannot get regulatory clearance.
Getting Federal Trade Commission approval looks dangerous because regulators may not want one in every of the 2 sports betting giants cutting off a promising competitor, sources said.
The PointsBet shareholder vote on the Fanatics offer is June 30 so Robins may have to make a decision soon whether to make the leap.
DraftKings lost $390 million within the three months ended March 30 and had $1.1 billion in money, in keeping with its public financials.
The corporate can afford a $195 million loss on PointsBet if it hits its projections to be profitable next yr but it surely would depart less room for error, sources said. Privately held Fanatics in December was valued at $31 billion after a latest fund-raising round.
