The much-anticipated debut of Fanatics as an online sportsbook operator may be a precursor to long-term gambling success for the merchandising and apparel giant.
But the company’s impending acquisition of PointsBet’s US holdings will open the door to the much more lucrative market of online casinos.
While there are still regulatory and financial steps to complete before Fanatics launches in New Jersey, it’s worth considering what the rookie gambling operator may bring to the table — especially if Fanatics gets into NJ online casinos.
Follow the online leader(s)
Fanatics could follow in the footsteps of FanDuel and DraftKings and enter the internet gambling market via online sportsbooks. The country’s two largest online sportsbooks are an increasing threat to online casino operators in the six states that permit online slots and table games.
The revenue potential of internet casino compared to online sports gambling cannot be overstated. In the states where both are available, online casinos outperform digital sports betting by more than two to one.
States such as NJ and Pennsylvania offer Fanatics an opportunity to immediately (assuming regulatory approval) take over PointsBet’s online gambling products. Fanatics can also take over PointsBet’s online casino and online sportsbook in Michigan and West Virginia.
That could be a major advantage for Fanatics in terms of market entry.
Those four states make up the top tier of the legal online casino industry. Three of the four (excluding WV) can also count themselves among the country’s top eight legal sports betting markets.
New York, Illinois and Ohio are big online sports betting markets where internet casinos are not yet legal but could be future markets.
Patience pays off for Fanatics
Fanatics only recently entered the legal gambling business. In 2022, Fanatics opened a retail sportsbook in Maryland. The company has been testing its online sportsbook app in several states this year, including Ohio, Tennessee and Massachusetts.
The $150 million price tag for PointsBet’s domestic operations almost seems like a bargain for Fanatics, whose patience could pay off big in the long run, especially considering the value of PointsBet’s online casino operations.
New Jersey is the US’s most mature online casino market, having first legalized internet gambling websites in 2013. Through the first four months of 2023, the Garden State has generated more than $620 million in NJ online casino revenue compared to just under $293 million from retail and online NJ sports betting combined.
The scenario is similar in PA, where online casino revenue ($671.5 million) is outpacing sports betting ($238.5 million) through April of this year.
Neither state breaks out online casino (or online sportsbook) revenue data by individual operators, so it’s unclear how much market share PointsBet has in NJ or PA. It can safely be assumed that PointsBet would not be unloading its US assets if they performed well.
PointsBet online casino partners with Bally’s Atlantic City to operate in NJ.
More questions than answers on Fanatics NJ online gambling offerings
Forecasting how Fanatics would fare as a legal online casino is nearly impossible. Their online sportsbook app is in its early phases. The company is still ironing out details in terms of marketing, cross-platform promotions and regulatory compliance, all of which have already come up in the weeks since the PointsBet announcement.
Like FanDuel and DraftKings, Fanatics has brand recognition and loyalty among sports fans. Fanatics claims to have nearly 95 million sports fans in its database.
Most industry experts predict Fanatics will leverage its gambling products with its merchandising, apparel and recently acquired trading card businesses. How that will work with online sportsbook or online casino remains to be seen.
It is also unclear if Fanatics Betting & Gaming will use PointsBet’s existing online gambling technology. In New Jersey, for example, PointsBet utilizes Evolution’s live dealer program for table games.
For slots, the app features well-known slot titles from NetEnt, Scientific Games, IGT, Light & Wonder and others.
The anticipation is that the Fanatics-PointsBet partnership will change the sports betting landscape. By combining Fanatics’ established connection to sports fans and their preferences with PointsBet’s betting experience, the deal may deliver a unique and unparalleled gambling platform via Fanatics Online Casino in NJ.
Fanatics expects to complete its acquisition of PointsBet by the end of the year.