The ol’ razzle dazzle

‘Shiny’ Fanatics propelled into OSB Tier 2

Jan 27, 2025

The OSB numbers are heading in the right direction for Fanatics.
Coming soon: E+M PRO and Earnings Extra.
In +More: Kero strikes a micro markets deal with Caesars.
Markets watch: Super Group sets the pace.
By the numbers: December’s OSB market shares examined.

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Hitting the heights

This could be the start of something: The data from the last quarter suggests that something has clicked for Fanatics’ OSB operation in the last quarter of 2024. Looking at the GGR market shares in a handful of key states certainly appears to paint a rosy picture.

In New York in Q4, it averaged 6.5% share across the three months, while in Pennsylvania the three-month average was 5.5% and in Michigan it stood at 5.2%.
In New Jersey, where in April last year Fanatics displaced DraftKings in second place on a rumored VIP swing, its quarterly average came in at 4.4%, but in December it notched up an 8% share.
Looking at December data to date, JMP estimates Fanatics’ share at 6.6%

Pound for pound: Such is the company’s relative success in bolstering its Tier 2 claims, the JMP team suggested that last year it had been a "relative winner” by increasing its share, led by what they said were “industry-leading” levels of promotional spending.”

“Fanatics will be the company to watch,” the JMP analysts added.

Direction of travel: Some industry watchers are also keen on Fanatics’ prospects. Chris Grove from EKG said that while the market share isn’t yet “where the company might like it to be,” he believed Fanatics has now “assembled the table-stakes components to become a serious competitor.”

“Fanatics has clearly done something right,” said Leo Gaspar, chief business development officer at Huddle.
He pointed to the acquisition of PointsBet for $225m – and within that, the Banach Technology business – as being crucial.
That deal brought control of pricing, SGPs and “pretty much everything in-house” and “reflects in the quality of the product,” he added.

Tempered: Yet, how much progress has been made is still up for debate. Tom Johnson, founder and CEO at specialist analytics provider HoldCrunch, pointed out that state-by-state GGR numbers can be misleading.

HoldCrunch’s latest NGR+ market share estimate, which takes into account promo spend as well as pricing, suggests that in Q4 Fanatics was closer to 3.4% than 5%.

The current market share percentage is up for debate, but Johnson agreed that Fanatics has managed to establish a foothold among the Tier 2s for the US OSB sector.

This places it in the same broad bracket as BetMGM, Caesars, bet365, Rush Street, Hard Rock and – if you squint hard enough – ESPN Bet.

Can’t you see who this guy is, with his house and his parties and his fancy clothes? To secure its place in the OSB pantheon (second tier), Grove said Fanatics has been able to leverage a “few unique angles,” including the push and pull of its sports merchandise and collectibles arms.

I like large parties, they’re so intimate: Or as one industry marketing source termed the Fanatics appeal, the brand is “shiny.”
“It’s Fanatics, it’s Rubin, it’s the East Hampton parties,” they added. “There is something there in the brand. It’s sheen. That’s kind of unique in the gambling space.”

Second act: Fanatics’ billionaire owner Michael Rubin told the UK’s Sunday Times at the start of this month that the company was, for now, a “challenger” in the gambling space.

He added, though, that an IPO for the $25bn-valued privately held company would only happen once sports betting is profitable.
Rubin was reported to expect the gambling business to “approach” break-even in 2026. A report from Sportico last week suggested that in 2024 Fanatics generated revenues from betting and gaming of $300m from total revenues for the company as a whole of $8.1bn.

Fight among yourselves: The issue is whether Fanatics or any of the Tier 2s can reach escape velocity enough to take on the top two in the market. As one industry source argued, there isn’t the market share among the Tier 2s to gain enough head of steam to challenge the top two.

One investment source suggested there was in effect a glass ceiling. “I genuinely struggle to see how anyone can challenge them,” they added. “The money they can spend dwarfs everyone else.”

Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.

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+More

Kero Gaming has announced a new partnership with Caesars Entertainment to provide live and contextual micro markets to the operators sportsbook app. The pair will also collaborate on Caesars existing FireBets micro markets.

Full House Resorts scored a legal victory last week after the Supreme Court of Illinois ruled the Forest County Potawatomi does not have standing to challenge the awarding of Full House’s Waukegan license.

The analysts at CBRE noted the reversal of a previous appellate court’s ruling removes a long-standing hurdle that inhibited the company from proceeding with construction on its proposed permanent casino.

Virtual horse racing game Photo Finish Live has teamed up with Blockasset’s BlockBet to enable wagering with the game’s Crown token.

As part of the deal BlockBet becomes the first official simulcast partner of Photo Finish from developer Third Time Games and users will be able to watch and wager via BlockBet.gg.

What we’re reading: Owner Len Blavatnik has pumped a further $800m into DAZN, taking his investment to an eye-popping $6.7bn. In the FT.

Einar Roosileht: E+M would like to clarify that, as opposed to what we wrote on Friday, Einar Roosileht has not left Rush Street Interactive with immediate effect but will be staying with the company to lead its product and engineering organization until December this year or until a successor is found. We apologise for any confusion caused.

The week ahead

Evolution steps up to the plate on Thursday and it is likely the company will face a lot of questions. Foremost among them will be how the land lies in the UK with the Gambling Commission licensing review presumably still ongoing.

Recall, in a note issued late last week, the team at Deutsche Bank downgraded Evolution to a sell.
The DB team argued its troubles could encourage operator clients to “diversify their supplier base” away from the company.
That said, looking back at ICE last week, analysts at Jefferies noted that despite new entrants competition in the North American market “remains subdued.”

The day before Las Vegas Sands will report its earnings. In a note last week, the team at Macquarie said they expect 2025 to be a “turnaround year” for LVS as it stashes away the dust sheets after recent renovations.

Of the Londoner in Macau, the Macquarie team said disruption will have peaked in Q324 and that means more rooms will be coming on stream in the next three quarters.

Markets watch

My way or the Betway: After pre-reporting guidance busting Q4 numbers last Thursday, Super Group topped off an already positive week with a 16% leap on the Friday, leaving the share price up over 37% for the week.

One hundred and eighty: The shares are up over 180% since its nadir this time last year when the shares hit their all-time low of $2.73.
It marks a strong turnaround for the operator of the Betway and Spin brands since its shift in strategy towards Africa and away from US OSB.

Bragg Gaming continued to enjoy a boost from the enhanced deal with Caesars Entertainment announced the week before with a further 7.5% uplift.

Two of the big beasts of games supply enjoyed so-so weeks despite ICE, with Light & Wonder down 4% and Aristocrat off by 3%.

Evoke topped the chart last week but the gloss was knocked off this week as the shares gave up 6%. This came despite a supportive note from the analysts at Investec, who suggested the recent trading statement pointed to operational trends that were “encouraging.”

But they added that deleveraging from here was “key,” although noting the debt ratio would only fall to 3.7x by 2026.

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By the numbers – OSB leaders

Itchy and scratchy: Taking the data available for December, the team at JMP estimates FanDuel led the market with nearly 46% of total GGR, followed by DraftKings at close to 33%. As noted above, JMP estimates Fanatics grabbed 6.6%, up from 1.4% in the prior year.

Scratching an itch, the JMP team said ESPN Bet “underperformed” the analysts’ expectations in year 1 of its existence.
They added that they “saw some momentum build” in Q4 in terms of handle, up to 2.8% in December compared to the 1.7% low point mid-year, which they attributed to account linking and product enhancements.

But, as is clear from the table above, the customer-friendly outcomes in December “weighed on” its GGR share, down to less than 1% for the month after registering the worst margins in the sector.

Rather hopefully, JMP said they expect the focus during 2025 to be on the tech stack to “protect the business model in downside scenarios.”

Toughing it out

The team at Deutsche Bank made the point that in their OSB focal subset of states, GGR was down over 37% YoY, a fall “entirely related” to hold of 5.7% vs. 9.6% in Dec23.

However, the team noted the handle increase of 5.3% YoY was “somewhat weaker than expected.”
They added that “net-net, it was a tough Q4” across the subset of states with OSB GGR up less than 1% on a 30 bps decline in hold across the three months.

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