Fanatics “absolutely” going public in future amid plan to become global leader in online gambling
Michael Rubin has said Fanatics will “absolutely” go public and is aiming to become the number one business globally for online sports betting and iGaming.
In conversation with the Wall Street Journal’s Jason Gay at the WSJ Tech Live conference this week, the Fanatics CEO shed some light on the firm’s ambitions in the gambling sector, having recently announced its intention to launch sports betting in select US states in January 2023.
“And you could say that’s crazy, and who is this guy to say that? But you know, we weren’t in the merchandise business 10 years ago, and now we’re the number one company by far and away, and we weren’t in the collectibles business two years ago and now we’re number one.”
Indeed, Rubin hopes Fanatics will be able to lean on its success in those sectors to deliver a profitable online gambling division, in what he described as a “currently broken” US sports betting industry.
He believes the race between operators for market share has led to unsustainable business practices and the creation of an industry which falls well short of its potential when it comes to generating profit.
“If you look outside of the US, all these online sports betting and iGaming companies, they make a lot of money,” he said.
“And if you look offline in the US, they make a lot of money. But if you look at the online companies, they’re haemorrhaging cash. Why? Because the private equity firms and VC firms gave them free money between 2018 and 2021 and said ‘hey, take our money and just spend it,’ and they didn’t actually say to do it logically.”
With its 80+ million strong customer database of dedicated sports fans, Fanatics is hoping to gain a leg-up in the US online sports betting sector, although the likes of FanDuel and DraftKings already had hefty DFS databases to choose from.
As a result, Fanatics could commit less cash to advertising and marketing expenses when compared to other US operators, where in some instances, enormous customer acquisition costs have left the prospect of profits a very distant possibility.Fanatics CEO Michael Rubin: “If you look at the online companies, they’re haemorrhaging cash. Why? Because the private equity firms and VCs gave them free money between 2018 and 2021 and said ‘hey, take our money and just spend it,’ and they didn’t actually say to do it logically.”
Regardless of its future costs related to the launch of its online gambling operations, Fanatics will likely have the opportunity to unlock a great deal of capital through an initial public offering (IPO) at some point in the coming years.
“We’re absolutely going to go public in the mid-term,” Rubin said, but added that: “We’re in no rush. We have a company that’s pretty big, we make real money, we have a tonne of cash on a balance sheet, we generate real cash every year.
“So we’re in no rush to go public. At the same time, our company’s owned 50% by institutional investors, and they deserve a path to liquidity, so we’re going to get that for them.
“We also have employees that own 10% of the business and we want to get them liquidity, so we’ll definitely become a public company over time. It’s just a question of what’s the right time for us and we’ll do it in the right market as we continue to make progress on our journey.”
Fanatics’ sports betting operations are expected to commence in January 2023, with the goal to go live in 15 to 20 US states by the beginning of the 2023 NFL season, around September next year.
Rubin said earlier this month that the firm “will be in every major state other than New York, where you can’t make money.”
