Fanatics Inc. is expanding its fledgling sports gambling business by acquiring the U.S. operations of an Australian gaming company.
PointsBet Holdings Ltd., which is publicly traded in Australia, announced May 15 it agreed to sell its U.S. business to Fanatics Betting and Gaming for $150 million.
The deal comes three weeks after Fanatics launched its first gambling app in Tennessee and Ohio, according to a Wall Street Journal story posted on the Fanatics website.
Fanatics, founded with a single retail store in the Orange Park Mall in 1995, has turned into a sports merchandising giant valued at more than $30 billion.
The company has been working on entering the sports gambling business for at least a year and has been rumored to be seeking potential acquisition targets.
PointsBet began operations in Australia in February 2017 and entered the U.S. market in May 2018, according to its website.
In a news release, PointsBet Managing Director and Group CEO Sam Swanell said the high costs of operating in the U.S., where gambling is regulated on a state-by-state basis, led the company to explore options for the business.
“The sale of the U.S. business to Fanatics Betting and Gaming delivers the most attractive risk-adjusted value outcome for shareholders compared to the risks and benefits of other options including the status quo,” Swanell said.
“Fanatics Betting and Gaming has recognized our strategy, technology and team, as a platform for their own expansion in the online sports betting and iGaming market,” he said.
“Given Fanatics significant presence in the U.S. sports market, we consider them to be a natural acquirer of our U.S. business”
Fanatics, after opening a second store in The Avenues mall in 1997, began selling sports merchandise online at a time when e-commerce was beginning.
Founders Mitchell and Alan Trager sold the business in 2011 to a Philadelphia company run by current Fanatics CEO Michael Rubin, and Rubin began an expansion of the company beyond its initial sports merchandising business.
The company maintains its commerce headquarters in Jacksonville.