DKNG - Fanatics wins race for PointsBet's U.S. business over DraftKings

2023-06-28 06:59:07 ET

Fanatics ( FANA ) increased its offer to buy Australian gaming company PointsBet’s ( OTCQX:PBTHF ) U.S. business to $225M late on Tuesday. The new offer was a 50% jump from its prior bid.

"The Board unanimously supports the improved proposal from Fanatics Betting and Gaming, which provides a superior price plus certainty," PointsBet Chairman Brett Paton said in a statement on the new offer.

The Fanatics ( FANA ) move effectively boxed out DraftKings ( NASDAQ: DKNG ). The Boston-based company, which had announced on July 16 an offer to acquire PointsBet’s ( OTCQX:PBTHF ) U.S. business in an all-cash deal priced at $195M, said it is no longer pursuing the acquisition.

The deal will give Fanatics ( FANA ) control of the seventh-largest sports betting operator in the U.S. and instant sports betting exposure to 15 U.S. states.

The Fanatics ( FANA )-PointsBet ( OTCQX:PBTHF ) deal was announced just as more data came in showing that Q2 sports betting trends are strong, despite some anxiety consumers would be pulling back. Notably, U.S. sports betting handle has come in ahead of expectations for April and May for the states that have reported, and Q2 gross gaming revenue estimates have been pushed up to over $2B. Analysts pointed out that profitability has benefited from more surgical spending across the sector on promotions, reduced overall marketing costs, and a shift toward more efficient national advertising. Macquarie analyst Chad Benyon said operators such as Caesars Entertainment ( CZR ), MGM Resorts ( MGM ), Rush Street Interactive ( RSI ), Bally's ( BALY ) and Penn Entertainment ( PENN ) are all seeing better hold rates amid the more rational competitive backdrop.

Shares of DraftKings ( DKNG ) fell 0.95% in premarket trading in the U.S.

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