New York regulatory meetings lift lid on Fanatics takeover of PointsBet
Challenger faces September regulatory deadline for potential transfer of license but regulator suggests “seamless operational transition” could occur
Officials from the New York State Gaming Commission (NYSGC) have shed light on the process to transfer PointsBet’s New York sports betting license to its new owners Fanatics Betting and Gaming (FBG).
FBG acquired the US division of PointsBet in June for $225m and has been on a process of integrating the firm’s technology into the business, while also arranging the transfer of PointsBet’s existing US licenses into Fanatics ownership.
In its last set of financial results, PointsBet suggested the regulatory approvals for the transaction, which includes the license transfer were “tracking as planned”, with FBG seeking approvals to take over sportsbook, igaming and advanced deposit wagering licenses.
PointsBet has market access to 14 US states, including New York, where the operator was awarded a license by the NYSGC in November 2021 following an extensive review process.
Fanatics is currently live for sportsbook in Ohio, Massachusetts, Maryland, and Tennessee but has ambitious plans to expand its footprint into as many as 15 US states by the new NFL season, ambitions which will be boosted by the absorption of PointsBet US.
In a meeting taking place on August 3, members of the NYSGC confirmed the operator would be required to become the new outright owner of the PointsBet license.
The Empire State regulator confirmed it had received no “derogatory information” from regulators in Maryland, Tennessee, and Massachusetts but acknowledged a prior promotion removal by Fanatics in Ohio as the only item of relevance to be highlighted in its discussions.
NYSGC chair Brian O’Dwyer confirmed FBG license applications pending licensure in 12 other US jurisdictions, with Iowa and Colorado close to licensing, and Virginia and Kansas set to do so by the end of August.
In what could be a major boost for the operator, O’Dwyer also confirmed dialogue with the New Jersey Division of Gaming Enforcement on the Fanatics/PointsBet sale, revealing that the Garden State regulator was planning to issue a transactional waiver to Fanatics, allowing it to operate in the state.
The NYSGC chair also revealed Fanatics plans to continue utilizing PointsBet’s existing technology stack used in New York, consisting of firewalled servers housed at the Resorts World Catskills casino, confirming plans for Fanatics to use standard 256 encryption on all sportsbook communications.
In addition, existing PointsBet infrastructure, inclusive of internal controls, house rules, back-end reporting, know your customer processes, and its responsible gaming plan will be maintained.
“Fanatics will also maintain the use of PointsBet’s mobile application. They will however utilize an outside entity to triage their customer service complaints, which is a different approach than what was taken by PointsBet.
“Fanatics has advised they plan to holistically evaluate PointsBet’s operations and will seek incremental or prospective changes as they determined prudent and appropriate,” O’Dwyer added.
The NYSGC chair continued: “Fanatics believes that one of their competitive advantages is their utilization of their sports merchandise customer database, and that they can increase customer outreach to potential patrons for this use of other subsidiaries, which will be essential to their success.
“In that regard, they advised that they have scrubbed their databases of all customers who are under the age of 21 and tested the combined Fanatics and PointsBet databases.
“This test was authorized in the first 10 jurisdictions that have accepted licensing documentation from Fanatics and has been successful across all states.
“This test, coupled with a retention of several key staff members from PointsBet, should ultimately ensure a seamless operational transition when the sale is consummated,” O’Dwyer added.
Fanatics outright ownership would require a full staff review and eventual approval from the NYSGC before it could be confirmed, with a potential review likely to conclude in September.
Officials from the NYSGC confirmed Fanatics’ intention to launch in the Empire State in time for the new NFL season, which begins on September 7.
Fanatics has previously attempted to enter the New York sports betting market, submitting a tender proposal for a sportsbook license in 2021 in partnership with Roc Nation co-founder and US rap legend Jay-Z.
However, the operator was ultimately denied a license by the NYSGC despite the star-studded nature of its bid.