New York regulators are reviewing a major acquisition proposed by two operators of sports betting sites — only one of which has a license to take action in the Empire State.
Fanatics Betting and Gaming, the legal sports betting arm of merchandise giant Fanatics, recently revealed it is proposing to buy the U.S. assets of PointsBet Holdings Ltd. for $150 million.
The deal is big for a few reasons, including the licenses PointsBet has obtained in the U.S. to date, such as a costly one for New York sports betting.
Fanatics bid for a New York license but lost out to others, including PointsBet. Fanatics has since opened a retail sportsbook in Maryland and is testing out its mobile sportsbook in Ohio and Tennessee.
New York State Gaming Commission Executive Director Robert Williams said Monday that there will be no transfer of a license in the state if the Fanatics-PointsBet deal closes. Rather, Fanatics wants to become the new owner of the PointsBet-related entity that holds the New York license.
“The transaction itself requires staff review, and Fanatics will begin the process of the background investigation of it, its related entities, and persons who are designated as qualifiers,” Williams said. “Published reports indicate that they have a goal of the start of the upcoming NFL season for Fanatics to assume control of the PointsBet entity, with PointsBet anticipating a shareholder vote on the deal in late June.”
Revisiting the rules
Williams added that he is recommending consideration of the transaction at the commissioner level, given that Fanatics is new to the state’s gaming market and the scope of the deal.
The gaming commission also voted Monday to re-propose new advertising rules for legal sports betting in the state.
Commissioners in February approved the proposal of new rules for marketing sports betting. However, one proposal would have essentially banned third-party marketing affiliates (such as Covers) from being paid based on the volume of bettors or wagering. A similar rule around marketing compensation was proposed in Massachusetts before it was revised to allow affiliates to be compensated for their work.
After hearing from the affiliate industry, which warned the proposed rule would block them from being paid, the New York State Gaming Commission is revising its proposal as well. Instead of a blanket ban on third-party marketing agreements, the regulator wants it to follow New York law, which bans sharing the direct proceeds of gambling activity but permits a set amount to be paid to marketers.
“New York’s casino-gaming statute generally prohibits agreements in which the payment of any direct or indirect interest, percentage or share of any money or property gambled at a gaming facility, any money or property derived from gaming activity, or any revenues, profits or earnings of a gaming facility,” a memo to the gaming commission explained. “Fixed-sum compensation is permitted.”
Full disclosure
Furthermore, the gaming commission is now proposing that all affiliate marketers must disclose their ties to sportsbook operators in some fashion on their sites.
NYSGC Chair Brian O'Dwyer said the most recently proposed rules would allow for third-party marketing. He added that he will watch closely over the next six months to see the effects of that marketing.
“If I find that within the next six months to a year that there have been significant problems with the type of advertising that's coming down, I will come back to the staff and to my fellow commissioners and ask that we revisit that rule and prohibit third-party advertising,” O'Dwyer said during Monday’s meeting.
