January 29, 2024
As super fans are preparing for the Super Bowl, Fanatics is prepping for its own big event — an expected IPO. The privately traded company has grown from a merchandise supplier, adding trading cards, gambling, live events, and more.
It has become a comprehensive sports company that is also poised to benefit from the popularity of online sports gambling. From its founding in 2011, Michael Rubin has made innovative changes, acquiring Florida-based Fanatics, and merging it with GSI Commerce, a company he has owned since 2002.
Between the two companies, Rubin held the e-commerce rights to all North American teams within the GSI network and an impressive number of college and professional teams within the Fanatics collective. Rubin envisioned that Fanatics would transform the licensed sports merchandise purchaser experience for fans all over the world and quickly rose to become the direct-to-consumer provider for an industry that had not yet adapted to consumer-driven purchasing.
Crucial to its success was building its manufacturing capabilities and cultivating an e-commerce partner network that would include colleges, teams and North American leagues.
Fanatics has built a business model focused on the needs sports enthusiasts. Following the U.S. Supreme Court decision to lift the federal ban on sports betting in 2018, Fanatics announced its plans grow beyond selling sports merchandise to create a global digital sports interface.
Fanatics Collectibles and Fanatics Betting & Gaming were launched in 2021 and successfully created its first retail sports book in Maryland in August 2023. The company’s sports book has gained in popularity by making sign ups and betting easy and providing live streaming. It is currently available in nine states. Though Fanatics is currently privately traded, it has plans for going public eventually, according to comments by CFO Glenn Schiffman late last year. At the time, he said that while it has no near-term plans to go public, an IPO is part of its objectives over the next 12 to 24 months.
Fanatics has competition, especially for its betting and gaming division. Retail shareholders interested in tapping into sports betting already have a few options. Individual investors looking for a broad introduction to the world of sports betting and online gaming stocks, without having to select individual stocks, have Roundhill Sports Betting & iGaming ETF (Tii:BETZ) to consider.
Casino operators are already deeply involved in online gambling. Caesars (Tii:CZR) added its own online sports book market in 2022. Caesars along with MGM Resorts International (Tii:MGM), one of the largest casino operators in the U.S. and Macau, and joint owner of BetMGM with Entain, is also offering an online gaming sports book. Companies like MGM and Caesars have developed apps to support their online gaming services.
FanDuel, owned by Flutter Entertainment (Tii:FLTR),is a sports betting and gaming company with operations in the U.K., Ireland, Australia, and the United States. FanDuel is currently one of the most popular online sports betting sites in the U.S. At the end of 2021, Flutter estimated FanDuel's share of online sports betting had grown to roughly 40%, though it has shrunk slightly since. DraftKings (Tii:DKNG) is a digital sports entertainment and gaming company that operates solely online. DraftKings currently works in 19 states, and operates an online casino that is available in five states. It is the official sports betting partner of the NFL, NHL, PGA Tour, NBA, and UFC, and acts as the authorized gaming operator of MLB. It also operates a marketplace of digital collectibles, including curated non-fungible tokens (NFTs).
Competition between FanDuel and DraftKings is tight. In August of 2023, DraftKings narrowly overtook FanDuel, nabbing 31% of overall gross gaming revenue compared to FanDuel’s 30%. FanDuel had been the clear American market leader for several years, but as online gambling continues to grow, the market is likely to continue to be competitive and fluid.
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