DraftKings Makes $195M Offer For PointsBetDeal Seeks To Outbid Fanatics Gaming |
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DraftKings is trying to outbid a rival sports gaming company.
The company announced that it made a $195 million offer for the U.S. operations of PointsBet Sportsbook. The offer comes weeks after Fanatics Betting and Gaming agreed to buy PointsBet for $150 million.
The DraftKings offer is all cash, but the total cost to DraftKings would be around $500 million due to existing PointsBet business relationships.
DraftKings’ proposal represents a 30% premium to PointsBet’s existing agreement.
“While we continue to focus on operating more efficiently and driving substantial organic revenue growth in the United States, we will also look to prudently capitalize on compelling opportunities at attractive valuations, as is the case with PointsBet’s U.S. business,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder. “We believe DraftKings is uniquely positioned to submit this superior proposal due to our scale and corresponding ability to generate meaningful synergies from the acquisition.”
The offer has been widely seen as an attempt by DraftKings to slow the progress of a Fanatics Sportsbook. The deal would include PointsBet’s online casino offerings in the U.S. and retail sportsbook business. However, the deal’s core is PointsBet’s online sports betting business.
“We expect this transaction to increase our Adjusted EBITDA potential in 2025 and beyond and not impact our expectations of achieving positive Adjusted EBITDA in 2024,” said Jason Park, DraftKings’ Chief Financial Officer. “We are excited about the potential synergies available by acquiring PointsBet’s U.S. business, including offering our customers interesting new bet types and accelerating our roadmap of bringing in-house more of our mobile sports betting technology.”
DraftKings said it would complete the proposed transaction using cash from its balance sheet and does not need to raise any additional capital.
DraftKings is a licensed sportsbook in every U.S. state in which PointsBet operates. Any deal would require regulatory approvals.
DraftKings said it will benefit from PointsBet’s product capabilities, such as its unique “points betting” functionality, which will “further our product differentiation and drive increased engagement for existing and new users.” Furthermore, DraftKings said PointsBet will “drive increased margins by eliminating certain external supplier costs.”
Improved customer acquisition, monetization, and marketing efficiencies were also named as potential benefits.
Fanatics CEO Michael Rubin responded to the offer from DraftKings.
“We are skeptical of the DraftKings proposal which seems like a desperate move to slow down Fanatics and PointsBet from completing the deal as the purchase price and other financial commitments will total more than $500 million – so they are using the majority of their projected year-end cash just to try to block us,” Rubin said in a statement.
PointsBet has yet to publicly respond to the situation.
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