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Sports gambling powerhouse DraftKings has made a $195 million, all-cash offer for PointsBet’s U.S. assets, it said on Friday, topping an earlier bid by Fanatics.
Last month Fanatics agreed to purchase the Australian company’s U.S. operations for $150 million in an effort to spice up its presence in sports gambling.
“While we proceed to concentrate on operating more efficiently and driving substantial organic revenue growth in america, we can even look to prudently capitalize on compelling opportunities at attractive valuations, as is the case with PointsBet’s U.S. business,” said DraftKings CEO Jason Robins in an announcement. “We consider DraftKings is uniquely positioned to submit this superior proposal as a consequence of our scale and corresponding ability to generate meaningful synergies from the acquisition.”
DraftKings, which is publicly traded, has a market cap of about $10 billion.
Robins told CNBC, while the deal would not be transformative for DraftKings, it could allow the corporate to grow market share.
“We don’t expect this to have any impact on the trail to profitability,” he added.
PointsBet is the seventh-largest sports betting operator within the U.S., however it’s rapidly been shedding money. The corporate previously forecast a lack of between $77 million and $82 million for the second half of the yr.Â
If the deal moves forward, it could be a serious blow to Fanatics’ sports betting efforts, as the corporate was seeking to expand its reach ahead of the NFL season. The cope with Fanatics would have given the corporate access to at the least 15 states where PointsBet already operates.
Fanatics CEO Michael Rubin told CNBC after the DraftKings announcement that he’s highly skeptical of the deal, which he views as DraftKings attempting to slow Fanatics down.
“It is a move to delay our ability to enter the market,” Rubin said. “I assume they’re more concerned about us than I might have thought.”
There are still some hurdles, though, for DraftKings. First, the deal must be approved by the PointsBet board, which can review the brand new proposal and determine its next steps, in keeping with the corporate.
The corporate said Friday, “subject to the end result of the review being undertaken of the DraftKings Proposal, the Board continues to recommend that Shareholders vote in favour of the FBG (Fanatics Betting and Game) Transaction.”
After which there’s the potential for regulatory challenges: DraftKings and FanDuel dominate the U.S. sports betting market, which could make a deal to grab much more market share contentious.
