Fanatics, ESPN Beginning To Make Sports-Betting Moves

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Sports retail giant Fanatics and premier American sports media brand ESPN have long been regarded as sleeping giants in the U.S. sports-betting landscape but recent moves and public statements indicate the two are beginning to wake from their slumber.

Last month, Fanatics CEO Michael Rubin divested his 10 percent ownership stake in Harris Blitzer Sports & Entertainment, the company that owns the NBA’s Philadelphia 76ers and NHL’s New Jersey Devils.

In a statement, Rubin said that his ownership stake in the two teams was beginning to present conflicts with several aspects of the Fanatics business, including the company’s sports-betting plans.

“With the launch of our trading cards and collectibles business, and a soon-to-launch sports-betting operation, these new businesses will directly conflict with the ownership rules of sports leagues,” Rubin said.

“When we first bought the Sixers, Fanatics was only in the merchandise business. Now we have the trading card business and the gambling business,” he added in an interview with Fox Sports. “By the end of the year, we'll have individual contracts with thousands of players, and I'll be taking bets on the Sixers.”

Rubin added that he envisions “a super sports app” under the Fanatics brand that includes options to purchase merchandise and place bets.

“I think we can create potentially the most valuable company in sports long-term,” he told Fox.

In the sports-betting world, the Fanatics battle plan still remains uncertain.

The company hired former FanDuel CEO Matt King as head of “Fanatics Betting and Gaming” last June, but has yet to truly show its hand as to what the brand will be offering.

In its unsuccessful application last year to operate mobile sports betting in New York, the company said it would utilize Kambi technology with a differentiated player account management system. Earlier this year, Fanatics denied reports that it had purchased source code from technology provider Amelco.

The company also received its first state regulator approval last week, as the Maryland Lottery and Gaming Control Commission found the company qualified to receive a sports wagering license in the state, although several more steps remain before the company would be able to operate there.

Potential acquisitions have also been touted as part of Fanatics' game plan, with reports circulating around PointsBet and Rush Street Interactive at various points over the last year as potential targets.

Last week, CNBC reported that Fanatics was “in talks” to acquire Malta-based sportsbook operator Tipico, which has market access in several U.S. states, as well as a leading position in Germany, although the report added that the two sides were at an impasse over the sale price.

Meanwhile, ESPN and parent company Disney have also spoken recently about the need for ESPN to take a more active role in the sports-betting landscape than it has to date.

The company offers some betting content on its various platforms, and has partnerships with Caesars Entertainment, DraftKings and FanDuel that each include various rewards, including odds presentation and branded segments, but has yet to venture into a more direct offering using the powerful ESPN brand.

Disney CEO Bob Chapek reiterated earlier this year that the company was interested in adding sports betting to its offerings, a far cry from years past where the company considered sports betting as a knock on its family-friendly brand.

ESPN CEO Jimmy Pitaro told the Athletic last month that its research indicated that sports betting is “a must-have” for the company.

“We have done the research, and it wasn’t too long ago where folks were really concerned about what us being more aggressive in this space would mean for our brands,” Pitaro said.

“I will tell you that the research has come back and said it’s somewhat neutral on the Disney brand — it’s not going to help, it’s not going to hurt — but on the ESPN brand, it’s not just OK; it’s important. It’s something we need to be doing. It’s something our fans are expecting from us.

“It’s not a nice-to-have; it’s pretty much at this point a must-have,” he continued. “That means we need to be serving the sports fan with what they’re expecting and taking the friction out of the process.

“In terms of what that means for us and what’s the next step, I can’t tell you, but I will tell you we have opportunities to partner with different folks and be a bit more aggressive in the space, but we’re just not there yet,” Pitaro said. “We are being very thoughtful here; we have to get this right.”