Fanatics Buys PointsBet – Plans to Parlay Merchandise Sales & Sportsbook Hit a Snag

The sports betting industry is one of the fastest growing markets in the U.S., and now with so many major operators angling to claim their piece of the pie, Fanatics Sportsbook is next up to the plate after acquiring PointsBet for $150 million earlier this week – with intentions of launching its sportsbook in at least 12 states prior to the 2023 NFL season kicking off.

The biggest hurdle is, DraftKings and FanDuel dominate the marketspace. Those two companies alone currently represent 74.5% of the total money wagered in New York, the largest betting market in the country – while PointsBet has managed to capture just 1.6% of the state’s betting handle.

So, how does Fanatics intend to make waves in the industry? The company’s strategy became far more apparent this week with a chess move that could potentially add a brand new wrinkle to the equation when it comes to customer acquisition in the sports betting market.

On Thursday, Fanatics began to grant customers access to its beta app in two states, Ohio and Tennessee – and as a promotional offer, Fanatics has agreed to match the dollar amount of the items consumers purchase with bonus bets (up to $500).

“We’ve done a tremendous amount of consumer work against this concept and it tested very well,” said Jason White, chief marketing officer of Fanatics Gaming and Betting. “We have a different acquisition model than the other guys, which allows us to reinvest in loyalty and reward our customers.”

However, Ohio regulators that met later in the day on Thursday said that they were “aware of the promotion” and are “working to get it removed,” according to a spokesperson for the Ohio Casino Control Commission (OCCC) Sports Handle reported.

The OCCC spokesperson said that they couldn’t elaborate further on the specifics of the issue at the time, but there’s a possibility of more details surfacing in the coming days.

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Similar attempts at cross-branding have been made in years past. Back in 2021, Caesars offered a promotion in which they offered consumers $150 in NBA store credit after signing up and placing $100 worth of free bets through the app – and Caesars enjoyed loads of success with that type of offer.

White defended Fanatics’ new promotional offer, “You’re seeing our business unroll in this order on purpose, because this is the hypothesis of our business model,” he told the Action  Network. “We are starting with a closed beta with our Fanatics customers. We’ve now engaged them with cross-sell, and we are building a base business based on what we think our market advantage is.”

In the defense of concerns about marketing to underage consumers and individuals with gambling problems, he said, “We take it very seriously and have all the steps in place once a consumer would try to become a customer,” White said. “We have all the tracking of responsible gaming, all the levers of age-gating. This is all about serving an offer to someone who may be a merchandise shopper.”

White’s position on the matter is that “It’s no different from a child seeing a billboard on the street or when they are watching a game,” he told the Action Network

In addition, Fanatics is also allowing customers to use FanCash rewards to place wagers on sporting events. Essentially, Fanatics customers receive 3% back in FanCash after every purchase, and as a part of the new promotion, they are launching a system that gives users 1% back in FanCash for every dollar wagered on straight bets, 3% for parlays, and 5% for same game parlays.

The FanCash aspect of the promotion is quite similar to methods used by other major players in the industry, so for now, that part isn’t ruffling any feathers among state regulators.

In the sportsbook business, it’s very difficult for new operators to break into the space and compete with the titans that currently make up the landscape. However, Fanatics is bringing a potential game-changer to the table by rewarding customers that purchase products on their sister site with bonus bets. 

“We treat everyone who has been in this market with tremendous respect, White said, “But we don’t see ourselves as the last one to enter. Instead, we see ourselves as the first one to become part of the new landscape. We are playing with different tools.”

Will the concept of crossing the two brands, along with the enormous amount of capital already invested, catapult Fanatics to the top of the sports betting industry? Only time will tell, but for the time being, let’s see how things shake out in their latest scuffle with state regulators.