Fanatics CEO Michael Rubin spoke at a recent sports business conference about his plans to expand the company’s sports gambling to 15-20 states by the start of the next NFL season.
Video transcript
– Sports apparel retail giant, Fanatics is not satisfied with the $27 billion valuation. The company is betting big on the sports gambling space. Their CEO, Michael Rubin, saying at the Sports Business Journal World Congress of Sports that Fanatics will be in 15 to 20 states by the start of the 2023 NFL season. Listen.
MICHEAL RUBIN: We want to have an integrated gambling experience where someone can have one, kind of– they’re logged into our experience once. They have one loyalty program across all of our businesses– you buy merchandise, you’re incented to game, you gamble, you’re incented to get a collectible– you know, an integrated experience.
So we will be– I’ll tell you this right now. We will be in every major market other than New York by next football season– 15 to 20 states.
– That’s Rubin with executive editor of Sports Business Journal, Abe Madkour. And look, they’re not in New York for two reasons. One is they got denied the permit there, but also a 51% tax on sports gambling revenue. Can you make money in the state of New York? Not entirely clear.
I can’t tell if they can be successful in this field because DraftKings and FanDuel have just been dominant, and they’re not making money. So Michael says to anyone that says to him, hey it’s too late to get in this game. He says, how are these companies doing from a year ago? Well DraftKings is down– let’s see, 72% in the last 12 months. Flutter, which owns FanDuel, down 30%. Penn Gaming is down 60% in the last 12 months.
So yes, it is late. But in this game, it’s still very early– second or third inning. And the bottom line is he’s one of those leaders.
– Yes.
– Michael Rubin– it’s just so damn smart. I can’t bet against him.
– Yeah, exactly. You can’t bet against him. They do have an advantage when it comes to the data on their customers. That of course, will give them maybe the leg up against some of those bigger competitors that you just mentioned. It’s going to be very, very expensive– The customer acquisition costs, the number of estimates out there. But what they’re going to have to spend in order to build up this business, that is going to cost a lot.
It’s interesting that they do want to venture into this side of the sports industry. And then of course, Rochelle, the impact that this could potentially have on some of those publicly traded companies. When we talk about DraftKings performing so poorly over the past year, FanDuel also having a rough time over the last 12 months. If in fact, Michael Rubin is successful with this, that will also push out some of those profitability targets that we’ve heard from some of these bigger companies.
– I mean– and speaking of profitability, he also talked about licensing because he was saying, perhaps people think licensing is an issue when it comes to expanding. But he was saying that prices are actually 30% to 40% cheaper than a year ago. So he was saying that his patience actually paid off. A lot of people who didn’t have– who had the money to spend overpaid.
And now he’s like, well, we’re in a good position, so clearly being strategic about this. So perhaps that could be where the profitability is going to come from– perhaps the profit they’ll end up making from all the licensing.
– Goes back to what Dave said, it’s questionable, I think. But you don’t want to get bet against Rubin.
– Take Michael’s name out of it and I’d say no chance.
– Yeah, but he might make this successful.
– I’m saying there’s a chance.