Fanatics Betting and Gaming: The Latest in Sports Betting Space
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00:00 (upbeat music)
00:03 - Okay, let's get the latest on Fanatics.
00:05 And I know that you have a story coming out soon.
00:08 What do you think is the very latest
00:10 in terms of their footprint here
00:12 in the sports betting space?
00:14 - Yeah, Matt King, he is the leader
00:17 of Fanatics Betting and Gaming.
00:19 That's what their sports book business entity
00:22 is officially called.
00:23 And he comes from FanDuel and he knows his stuff.
00:27 And he was on CNBC last week talking about
00:30 a couple of different things that really make you think
00:35 that Fanatics could do something special
00:37 here in the sports betting world.
00:38 You and I, I know, have long agreed and talked a lot
00:42 about that database that Fanatics has.
00:44 And Matt King basically already came out and said,
00:47 "Look, we're paying 80% less per customer
00:52 "because they're pulling from that database
00:55 "than other operators."
00:57 What does that mean?
00:58 Well, we hear a lot during earnings season
01:00 about customer acquisition costs, they call it CAC.
01:03 And it's usually somewhere between 250 and $400
01:08 depending on the operator and the scale that they have
01:12 and all that kind of stuff.
01:14 So if you start talking about 80% better than that,
01:19 that is one that's pretty amazing to just be that low
01:25 because everybody has databases, right?
01:27 So it's amazing that they're able to scrape so much
01:30 off the top this quickly for that cheap.
01:33 And two, that is mainly why he's saying
01:35 they're going to be the sports book that,
01:38 in the long run, when we're looking back on this thing
01:40 in five, 10 years, Fanatics will be the sports book
01:43 that got to profitability fastest.
01:47 And obviously, that's great for Fanatics,
01:50 but it's also not really necessary at this point
01:55 with how big that merchandise arm is
01:57 or maybe not even necessary ever.
02:00 Consider if they just wanted to use a sports book
02:03 as just a marketing arm.
02:05 They could run that in the red
02:06 as long as they're converting people
02:09 into merchandise buyers
02:11 and still getting the money to flow somehow, right?
02:15 Maybe they want NFTs or something, I don't know.
02:18 But everything looks pretty good for Fanatics right now.
02:22 And of course, King is bullish.
02:23 He's supposed to be bullish, right?
02:25 I mean, you're not going to come out and say,
02:27 "Oh, it actually doesn't really look that good."
02:30 But you have to believe Matt King when he says that.
02:35 He knows what he's talking about.
02:36 And you know what?
02:38 He had a really interesting quote about ESPN bet
02:40 because, again, Fanatics knew as they were ramping up
02:44 that they were going to have to compete with the FanDuels
02:46 and the DraftKings and the BetMGMs and the Caesars
02:49 and everything that's baked into that.
02:52 They didn't know that they were going to have to compete
02:54 with ESPN bet.
02:56 But he came out and said,
02:57 "We're focused on serving fans the best we can.
02:59 We want to create the best fan experience out there.
03:02 Starts with product.
03:04 You have to be the best in the marketplace."
03:06 As it relates to ESPN,
03:09 the easy part is getting the deal done.
03:11 The hard part is actually making it work.
03:14 And that's true.
03:15 You look at Penn's last partner, Barstool Sports.
03:18 They came in saying,
03:19 "Oh, we have 66 million average monthly users.
03:24 This is going to be a piece of cake."
03:26 You know what they wound up at the end of that
03:27 when they cut the deal clean?
03:29 They had 1.5 million users from that database
03:33 in Penn's interactive database.
03:36 So, obviously, it's not easy to make those conversions,
03:43 to get people to come over and bet.
03:48 And again, you know, Barstool Sportsbook
03:51 was not even that late to the show,
03:54 but maybe it was because their bettors were already
03:57 with the Fan Duels and the Giraffe Kings,
04:00 and they liked what they had.
04:01 They saw no need to go over to Barstool.
04:03 So, there are a lot of moving parts this football season
04:08 with Sportsbooks and what the competition is going to be,
04:12 how they're going to fare.
04:13 And we really don't know what US sports betting
04:18 will look like at the end of NFL football season.
04:21 You know, you can have Fanatics
04:24 really challenging for a spot.
04:26 You can have ESPN really challenging for a spot.
04:29 But at this point, what we know is Fanatics
04:31 is extremely bullish about what they have.
04:34 They are reportedly converting at incredible rates.
04:40 And we'll just have to see how it goes from there, Craig.
04:43 (upbeat music)
04:46 [MUSIC]