Fanatics started out selling sports merchandise. Jerseys, hats, trading cards – that kind of thing. Jay-Z backed it, and it became a big business. Later at some point, the people running it decided they wanted to be in the betting business, too. Getting there wasn’t as easy as the apparel business. It took a few years and a few attempts that did not work out before one finally did.
The betPARX talks
One of the best ways to grow a totally new business is through acquisitions. Fanatics team knew this well, so one of the top names that came up on their list of acquisitions was betPARX Casino. Reports in early 2023 mention that Fanatics was looking at buying the operator. This made sense because betPARX has a solid presence in the casino market and has an active book in Pennsylvania, New Jersey, Michigan, Ohio, and a few other states.
The fit looked reasonable as betPARX was licensed and running in states Fanatics wanted to be in. But it wasn’t meant to be. Nothing happened. Talks went quiet. betPARX kept doing its own thing, and Fanatics went back to looking.
Various other names kept coming up and then disappearing from the conversation. Some people in the industry started to see Fanatics as a company that circled deals without closing them. That reputation did not last much longer.
PointsBet changed that
In May 2023, Fanatics struck a deal to buy the U.S. operations of PointsBet for $150 million. PointsBet was an Australian company that had been running a sportsbook in the U.S. since 2019.
Not a big name for sure, but it had active licenses in over a dozen states. That was the thing Fanatics needed. Going state by state on its own to get those approvals would have taken years. Buying a company that already had them cut straight to the front.
The price came out to $225 million in total by the time everything closed in early 2024. More than 200 PointsBet employees came over as part of the deal. That saved the hassle of hiring costs and other overheads that come with it. Fanatics Sportsbook went live across around 20 states. Fanatics Casino opened separately in Michigan, Pennsylvania, and West Virginia.
Jay-Z’s role
Jay-Z invested in Fanatics around 2021 through Roc Nation, which is his entertainment company. When Fanatics put in for a New York sports betting license, the Roc Nation name went into the application.
Jay-Z’s involvement in the game gave Fanatics something to point to in a market where brand association really matters. The Fanatics roster has always leaned into sports and entertainment names. At the time of the PointsBet deal, the company was valued at around $31 billion, with an IPO talked about but not confirmed.
Jay-Z has kept adding to his gambling interests since then. There is a casino project connected to Caesars being proposed for Manhattan that he is involved with. His involvement with Fanatics was not a one-off – it fits a broader pattern of putting money into businesses tied to sports, entertainment, and now gaming.
A crowded market
The total sports betting market runs into the tens of billions in annual bets and is increasing at a constant pace. Some big names that we know about today got there early and spent big to hold their ground. Fanatics came in later, without the years of customer data big players had built up. They did not have the promotional infrastructure either, which big players had already put in place across dozens of states.
What Fanatics had was name recognition. A lot of sports fans had already bought something through Fanatics – a jersey, a piece of memorabilia, a card. Those people already had accounts.
Getting them to also place a bet through the same company is a different conversation than trying to convince someone who has never heard of you. That existing familiarity was a real asset in a market where finding new customers costs a lot of money. Whether it translates into long-term market share against operators who have been at this longer is the question the next few years will answer.
