When it comes to Michael Rubin, don’t try to bet against him. The CEO of Fanatics’ sports merchandise empire, Rubin is betting his planned launch of Fanatics Sportsbook will succeed despite the competition.
On April 18, Rubin appeared at the CAA World Congress of Sports, one of the top sports business conferences in the U.S.
He spoke about the future success of the app but declined to mention the cost to acquire a new bettor. Rather, Rubin said the measure of success speaks to the customer experience.
“You’ll measure that based on the app score, you’ll measure that based on customer satisfaction,” Rubin told Sports Business Journal editor Abe Madkour. “I think we’ll have a great product by the end of the year. That’s what my team is telling me, and I believe we can.”
For the past year, the proposed entry into the marketplace fueled diverging views on whether Rubin’s proposal will be transformative or a bust.
Fanatics raised $700 million for funding, in large part from private equity firm Clearlake Capital. The deal resulted in a $31 billion valuation for Fanatics. What gives the sportsbook an edge is the ability to leverage its merchandising platform, said Appinvest.
SportsHandle revealed the app is undergoing tests in Tennessee and Ohio and is built with a source code from Amelco.
According to Appinvest, what bettors want most in an app are user interface, promotions, and payment options that expand the experience. Other differentials include bet types, sports coverage, easy usage and quick withdrawals.
With an increased emphasis on in-game betting, speed is at a premium.
When it comes to in-game betting, the best apps depend on sub-second latency, and the three apps that meet the standard include FanDuel, DraftKings, and PointsBet.
“If Fanatics is anywhere close to as fast as those, then that’s a win,” an industry expert told SportsHandle.
Rubin predicts Fanatics will process some 42 million orders in its e-commerce business in 2023, with another 20 million from its ownership of Lids. By next year, the combination should reach 70 million. Fanatics expects to convert between 2 and 2.5 percent of customers from its e-commerce business to bettors without offering any promotions.
An industry expert said it’s not so easy to convert serious sports fans into bettors.
Several years ago, an argument could be made that a sportsbook attained success by converting about 5 percent of season-ticket holders. Last season, the average NBA franchise sold between 8,000 and 9,000 season tickets, the New York Post reported. As top books reset projections, a conversion of 0.5% was something to cheer about, the insider told SportsHandle. At that rate, a sportsbook aligned with an NBA franchise will only convert about 40 to 45 customers.
Fanatics will present a different twist with its “integrated marketplace” model, according to the insider. Unlike other sportsbooks, Fanatics can give a 76ers jersey or discounts on other products to open a betting account. As a result, the company may present an advantage in securing higher conversion rates.
Last year, a gaming stock analyst told SportsHandle he doesn’t see a dramatic lowering of acquisition costs by giving away merchandise.
“Investors are paying particular attention to the conversion rate from Fanatics’ legacy business, as well as the utilization rate of FanCash promotions,” said Lloyd Danzig, founder and managing partner for Sharp Alpha Advisors, a venture capital fund for early-stage sports betting tech companies. “Success for Fanatics will rely on acquiring customers more efficiently and monetizing them more effectively than competitors.”
Rubin has an unusual take on his approach to his business. “You always have to dream big to start,” he said. “It’s always easiest to lay the strategy out. Doing things is always a lot harder. We’re making good progress in the three businesses we’re in today.”
The sportsbook received approval by the Massachusetts Gaming Commission of its house rules on April 25. The last step would be the approval of the certificate of operations which could happen on May 4. The commission would only say that Fanatics hopes to debut sometime in May.
A spokesperson for Fanatics declined comment until it receives the certificate of operations.
The company did not say whether it would go through beta-testing in Massachusetts or whether it would launch in Tennessee or Ohio before the Commonwealth.
The commission issued a certificate of operations for Betr, which did not pick a date to go live yet. Betr will become the seventh operator to join the market. The others include:
- DraftKings
- FanDuel
- BetMGM
- Barstool
- WynnBet
- Caesars
Fanatics, which runs the sportsbook at FedEx Field in Maryland, will likely join the club in May, along with Bally Bet.
Rubin told the World Congress Fanatics will be live in at least 12 states by the first NFL game, set for September 7.
It means Fanatics will have less than five months to wrap up Tennessee, Ohio and Massachusetts, while adding several more jurisdictions to hit its CEO’s target.
