Market competition in the still-developing U.S. sports betting market has heightened dramatically as DraftKings has made a surprise bid for the American assets of PointsBet.
The Massachusetts-based DraftKings has submitted a $195 million, all-cash, and unsolicited bid for PointsBet’s U.S. operations, seeking to supplant the $150 million deal Fanatics made for that company a month ago.
DraftKings — looking to outflank the oncoming market threat from well-capitalized Fanatics — argues that not only is it offering to pay a 30% premium, but that its bid offers a shorter path for regulatory approvals, greater market synergies, and simpler deal terms.
“We strongly believe that a successful transaction on the basis of our indicative offer represents a truly compelling opportunity for all parties involved and would be in the best interests of PointsBet,” wrote DraftKings chairman and CEO Jason Robins in a letter to PointsBet.
Fanatics, however, blasted the offer as a “desperate” attempt by DrafKings to scuttle the prior deal.
“We are skeptical of the DraftKings proposal which seems like a desperate move to slow down Fanatics and PointsBet from completing a deal,” said Michael Rubin, Fanatics’ CEO, in a statement. “They are using the majority of their projected year-end cash just to try to block us.”
PointsBet said in a note to investors that the DraftKings offer will be considered, but that for now, “subject to the outcome of the review being undertaken of the DraftKings proposal, the board continues to recommend that shareholders vote in favor of the [Fanatics] transaction” at a meeting set for June 30.
The DraftKings move arrives as the entire U.S. sports betting market continues to grow and mature.