Fanatics CEO eyes $1 billion ad spend to challenge sports betting duopoly
The company aims to double its marketing budget next year as it seeks to become the top U.S. sportsbook operator.
Fanatics could boost its sports betting advertising expenditures to $1 billion next year, more than double its planned 2024 spend, as it aims to become the top U.S. sportsbook operator.
Chief executive officer Michael Rubin told Bloomberg Fanatics could boost its sports betting advertising expenditures to $1 billion next year, or more than double the $350 million the company is planning to shell out this year.
Fanatics, which entered the internet sports betting realm in 2023 and is now live in 19 states, could generate $14 billion in sales this year with $2 billion of that sum attributable to its betting and gaming arm, Rubin told Bloomberg.
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He adds that his company has a 10% share in the U.S. sports wagering market.
"His goal is to raise Fanatics to the top spot among domestic sportsbook operators, positioning the company holds today in the sports apparel and collectibles industries," the report noted.
The DraftKings/FanDuel duopoly has been hard to crack, but Fanatics is widely viewed as one of the names to watch among Tier 2 operators.
Importantly, Fanatics has the financial firepower needed to add sports betting market share.
The closely held company carries no debt and is on pace to generate $2 billion in free cash flow and $1 billion in net cash this year, according to Bloomberg.
In private markets, Fanatics is valued at $31 billion, a valuation exceeded by just 15 other “unicorns,” or those closely held corporations valued at least $1 billion.
While there’s been plenty of chatter about Fanatics potentially going public, that talk has waned of late, but that could be to the company’s advantage because publicly traded rivals have been punished for revealing marketing expenditures significantly less than $1 billion.
Public companies often operate on 90-day windows in an effort to satisfy quarterly earnings demands, but outside of Wall Street’s prying eyes, Fanatics can redirect capital from its profitable units to sports betting in an effort to gain market share.
Fanatics is already showing a willingness to spend big on acquiring sports betting customers, recently joining its two larger rivals as an official sportsbook partner of the NFL.
Having beaten rivals DraftKings and FanDuel to the punch, Fanatics is a player in the prediction market industry and recently acquired a regulated exchange and clearinghouse to vertically integrate its yes/no exchange platform.
Rubin told Bloomberg that prediction markets represent new competition for traditional sportsbook operators, adding that he anticipates regulatory changes in the future.
He didn’t elaborate on how those alterations could shape up, but it’s widely believed that the Supreme Court could soon hear a prediction market case, resulting in legal and regulatory clarity for purveyors of sports event contracts.