Fanatics known for sports gear and collectible cards, is now betting big on sports gambling with plans to make it a key part of the company’s expansion. CEO Michael Rubin said he thinks betting operations will make up to 40% of Fanatics’ earnings in the next five years.
Fanatics Eyes Profit by 2027 as Sportsbook Expansion Gains Momentum
The company jumped into the sportsbook game in 2023 after buying PointsBet’s US assets, a step Rubin called a launchpad to make money in the long run. Even with the big $1.5 billion price tag, Fanatics expects to lose money at first, about $300 million this year and $150 million next year, before turning a profit by 2027, noted Rubin in an interview with CNBC. Rubin also pointed out that this plan looks good compared to competitors like DraftKings and FanDuel, which he said spent way more to grow big.
Fanatics lags behind the market leaders, who each control about 35% of the US market. Still, the company has grown, increasing its share from 0% two years ago to around 8% today. Its betting handle in August hit $565.8 million, more than twice its previous best, pushing Fanatics to second place in New York, state regulators report.
Growth remains a key focus. The company agreed with Boyd Gaming to start online betting in Missouri and to open Fanatics-branded sportsbooks at Boyd’s casinos in Kansas City and St. Charles. Missouri, which will be the 24th US location for Fanatics’ betting division, highlights its nationwide goals.
Rubin Says Rewards and Player-Friendly Policies Give Fanatics an Edge
Rubin underscored that the company’s network of products, memorabilia, and betting gives it distinct edges. People who place bets receive “FanCash” on every bet, whether they win or lose, which they can use to buy gear, tickets, or make more bets. This connection, he pointed out, not only cuts down on the cost to get new customers but also keeps users involved across several parts of the business. Fanatics plans to give out about $1 billion in FanCash next year.
The company has also embraced policies that favor players, like giving money back on bets when athletes leave games because of injuries. While these steps can be expensive, Rubin remembered one case that cost $1 million; he claimed that being fair creates long-term loyalty.
Market experts say that as the US market continues to merge, Fanatics’ strategy might help it eat into DraftKings and FanDuel’s market lead. With its $31 billion value and expected $8.1 billion in sales from gear and trading cards in 2024, Fanatics is betting that its plan to branch out will make gambling its next big money-maker.
If Rubin’s estimates prove right, by 2027, sports betting could make up almost half of Fanatics’ profits, a big change for a business that, until now, was mainly known for selling sports shirts and collectibles.