Forget a free drink at a casino — how about a free hat at an online sportsbook?
Fanatics Inc. is targeting the launch of its long-planned online sports betting operation in early 2023, according to its chief executive officer, which would add wagering to the company's usual business of selling merchandise in person and over the internet.
“I think in the betting business, we're going to start launching multiple states in January,” Fanatics CEO Michael Rubin said on Tuesday in New York at the CAA World Congress of Sports. “We’ll be in every major state, other than New York, where you can't make money, by next football season. And we do like to make money by the way. It’s this crazy concept in business. When we have revenue we try to have profits that follow it.”
"In the betting business, we're going to start launching multiple states in January."
— Sports Business Journal (@SBJ) October 11, 2022
CEO @michaelrubin announced that @Fanatics' betting business will be in every major state other than New York by next football season. #SBJWCOS pic.twitter.com/7TCexeFzFQ
Rubin’s remarks about New York stand in stark contrast to the sports-merchandise company’s previous plans, which included making a bid to offer online betting in the Empire State. Fanatics joined forces with technology provider Kambi and Barstool Sportsbook-owner PENN Entertainment Inc. to apply for licenses to offer mobile sports wagering in New York. Still, the group was ultimately not selected by regulators there.
However, the operators that were selected by New York regulators have begun to bristle about the state’s relatively high tax rate of 51% of mobile sports betting revenue. That rate, combined with an absence of promo-related deductions to receipts, has translated into a huge tax haul for the state but compressed profit margins for bookmakers.
Fanatics, though, is one of the companies behind Proposition 27, which would bring online sports betting to California if it passes muster with voters next month. The company is also aiming to provide online sports betting in Ohio in partnership with the Columbus Blue Jackets.
Bag with swag?
The entry of Fanatics into the legal sports betting fray would add a unique name to the mix and perhaps open up a new front in the battle for players, which could include the possibility of more and more physical swag to go with their digital bets.
Fanatics could cross-sell merchandise to customers on their sportsbook, and vice versa. Perhaps even free t-shirts for signing up could take the place of free bets, the cost of which traditional operators have been trying to whittle down as investors fret over profitability.
“The average cost to acquire a customer in online sports betting today is $500 on a good day,” Rubin said at a conference earlier this year, according to CNBC. “I’d much rather look at the different places that I could acquire customers and cross-sell them into online sports betting than go out and spend $500-plus and have a multiyear payback in a highly promotional environment.”
