PointsBet shareholders overwhelmingly back US arm’s $225m sale to Fanatics

PointsBet shareholders have voted overwhelmingly to approve the disposal of the firm’s US division to Fanatics Betting and Gaming (FBG) for $225m.

In an extraordinary general meeting at PointsBet’s Melbourne offices, shareholders voted 98% in favour of the deal, comfortably surpassing the majority threshold required for its approval.

The process now moves to a two-stage completion, with the sports merchandiser paying an initial $175m, and later a further $50m in the second and final stage of the acquisition, yet the total transaction will be $75m above what the company initially intended to pay.  

FBG submitted an initial offer of $150m for PointsBet US on May 15, however DraftKings then threw its hat into the ring with a $195m offer, much to the chagrin of Fanatics CEO Michael Rubin who suggested DraftKings was trying to block Fanatics’ sports betting ambitions.

However, earlier this week PointsBet confirmed that DraftKings hadn’t submitted a binding offer and that FBG had upped its bid $225m in order to push through the deal and fend off any further interest.

Prior to the shareholder vote, PointsBet chairman Brett Paton explained the rationale behind the sale and interest in the company’s in-house technology. “I believe it’s important for shareholders to understand how valuable our PointsBet technology has become. It has been one of the critical features of the interest in our company by numerous groups we have spoken to,” he told shareholders.

“We knew that brand and database were our challenge. We did a significant marketing deal with NBC, one of the biggest sports media companies in the world that we believed would address that challenge. While NBC have some fantastic assets, our brand was starting with no recognition and we couldn’t make as much progress as we had hoped,” he added.

Paton highlighted this as not just a PointsBet struggle, but that of the wider industry in the US as he described FanDuel and DraftKings as a “duopoly” in the US market. That said, he praised PointsBet’s progress to become one of the few challenger brands to gain market share in this environment.

“In the US, PointsBet has generally flexed all of our competitive strengths as a challenger business. In particular, we have used our technology to deliver a leading sports betting product experience. But our ability to get to scale and operate at sustainable scale was challenged,” Paton said.

“We have been competing in a very high-cost operating market with the overlay of capital pressures to continue funding the business through to profitability.”

The PointsBet chair suggested the firm had been impacted by a combination of rising interest rates and market uncertainty, leading to the decision to explore all strategic options for the business, including its potential sale.

Discussing the post-sale environment, Paton suggested the sale of the US division would give PointsBet greater freedom to pursue market-leading positions in Canada and Australia, while also allowing it to retain the technology that had previously propeled its business.

“After Fanatics integrate our US business, we will reorganise to remove the layers of overhead which were necessary to run a much larger company,” Paton said.

“We will simplify many of our core operations, workflows and resources and make Australia the centre of our global technology.

“In both countries, the new PointsBet will grow market share. In Australia, PointsBet has a strong well-recognised brand. In Canada, we are a challenger brand. Both have user-friendly leading technology and both will be well capitalised.”