Report: Fanatics plotting US sports betting entry with Tipico acquisition

Fanatics is set to jumpstart its US sports betting ambitions with the acquisition of Malta-headquartered operator Tipico, CNBC has claimed.

The US business news broadcaster reported the story late on Thursday evening, citing multiple sources and suggesting private discussions had taken place between the two firms but that both sides were at an “impasse” over a potential sale price.

If realised, the acquisition would see Fanatics gain an instant foothold in both the US and European markets, thanks to its large retail and online portfolio in Germany and Austria and its fledgling US operation, the latter of which began just two years ago.

Tipico, which placed eighth in the most recent EGR Power 50 rankings, claims to have more than a 50% share of the German betting market.

Fanatics has made no secret of its desire to expand into sports betting and leverage its existing sports merchandising partnerships.

However, its overall strategy has been something of a closely guarded secret, with the company only making tentative moves, which included filing for patents and trademarks for online casino and sportsbook IP and making a run for a New York sports betting license in July 2021.

The Fanatics sportsbook is set to run under the name “BetFanatics”, which Fanatics trademarked last month.

Reports earlier this year suggested Fanatics would look to go it alone, with the merchandiser allegedly purchasing sportsbook code and technology from Amelco and developing its own platform.

However, the firm has also been heavily linked with potential M&A, with PointsBet and Rush Street Interactive highlighted as potential targets.

In February, Fanatics CEO Michael Rubin claimed he would not pursue M&A with a US-based sportsbook business due to the recent high volatility of betting stocks over recent months.

“We’ll grow organically and by M&A, but we’re not interested in any M&A in the US,” Rubin claimed in February.

“In the US, the companies are losing so much money, they just aren’t attractive acquisition targets for us yet. Overseas, there’s much better businesses that could be interesting,” he added.

Earlier this week, Rubin disposed of his interest in Harris Blitzer Sports Entertainment, the owners of the Philadelphia 76ers as well as NHL side the New Jersey Devils, with the move coming out of a need not to conflict with ownership rules as Fanatics new sportsbook venture moves forward.

Fanatics, which has lofty ambitions to become the number one sportsbook in the US within 10 years, has just gained a Maryland licence and is currently in the process of applying for a Pennsylvania licence as well.

Started in 2004, Tipico has licenses from the Malta Gaming Authority, the German state of Schleswig Holstein and gained a licence to operate in the wider German market from the Regional Council of Darmstadt in 2020.

It is currently the sportsbook partner of Bundesliga champions Bayern Munich and counts German goalkeeping legend Oliver Kahn among its brand ambassadors. The business was acquired by venture capital firm CVC Partners in 2016.

In 2020, Tipico began a move towards US market entry, with the firm entering the New Jersey in December 2020 and opening its US headquarters in Hoboken.

Tipico has since been on a recruitment drive in the US, hiring developers, engineers and product management staff.

The firm has also launched in Colorado, where it plans to build a technology hub, recruiting more than 400 new employees over the next eight years.

Tipico also has a multi-state market access agreement with Caesars Entertainment and a media partnership with USA Today.

Despite all this, the company’s impact in the US has been limited thus far as the brand has struggled to gain any significant market share.