SBJ Betting: Fanatics bulks up as it preps to get in the game – Sports Business Journal

Maryland has lived up to the Terrapin moniker of its flagship university as it slogs through its rollout of online sports betting, which voters approved in November 2020. The latest estimates have Baltimore bettors waiting beyond the opening of the football season to place their first legal bets from the comfort of home. But -- there is progress. Bettors will be able to wager into the Preakness pool from OTB sites at the states new casino sportsbooks for the first time this year.

In the event youll be watching from home, I have no tips for you, but I will offer you this. You're welcome.

Last week, the senior VP/engineering at Fanatics sportsbook startup posted a LinkedIn note saying that the companys engineering group would be in Seattle for two days of recruiting for a fleet of open tech positions, beginning yesterday.

Attached was a link with postings for 40 jobs at Fanatics Betting and Gaming, including 17 openings for engineers and three for data scientists. All but five offered the option of working remotely.

It is no secret that Fanatics, which has gone from selling t-shirts and jerseys to minting trading cards and NFTs -- with e-commerce as the common thread -- is prepping to enter the highly competitive, cash-draining joust that is the rapidly emerging U.S. sports betting business.

Founder Michael Rubin, honored as our Sports Executive of the Year this week, has said so loudly and proudly. Rubin hired former FanDuel CEO Matt King last June and then, in February, told our Terry Lefton of his goal to be the No. 1 player in the world in that business in 10 years.

Once on the hunt for a large, pre-cooked acquisition, Rubin said he has since moved on to a build, rather than buy, mode -- at least in the U.S.

While we dont entirely know what Fanatics Betting will look like, or when it will launch, the who behind it is taking shape rapidly, with a head count now approaching 50.

Matt King made his first two hires last July, bringing on former Action Network COO and FanDuel VP/Fantasy Ari Borod as chief commercial officer and former Barstool Sportsbook head Scot McClintic as chief product officer.

Not surprisingly, King and Borod have mined their connections at FanDuel, hiring senior VP Ian Botts as chief technical officer, VP Justin Kerestes -- the poster of the aforementioned LinkedIn note -- as senior VP/engineering, lawyer and lobbyist Alex Smith as VP/regulatory affairs and engineer Amir Rao as director of engineering. Senior VP/Trading Andy Wright came from Sky Bet, which is owned by FanDuel parent Flutter.

Eight of 38 Fanatics Betting employees identified through LinkedIn searches have FanDuel roots. But the rest is a mix. Some have betting backgrounds; some none. The chief information security officer came from a large insurer. The controller came from Meta. The VP/operations was at SoFi and Citi. The VP/data came from an online ad marketplace.

Growth is also accelerating, with 27 hired since January. What you have there are the pieces in place that you can build out a business plan, you can build out product, you can build out tech, you can build out data, you can build out the legal and regulatory side, said Borod, who was at FanDuel for four years. So you have the pieces in place to execute on all these big ticket items.

A complicating factor in staffing a sports betting startup is the uncertainty of any timeline to launch. Online sportsbooks need three things to be competitive in the U.S.:

But the way you put together those pieces, and the time it takes to do so, can vary widely. Acquiring a fully baked sportsbook -- such as oft-rumored targets PointsBet or BetRivers -- can be done in the time it takes to negotiate and close the deal, transfer the licenses and, perhaps, change the branding. Building one can be far more complicated, even if it lives on a platform from another provider at the start.

And the way that takes shape can impact who you need to hire, and when. We do (have a timeline), Borod said. I cant share much about it. But we did pace it out to say This is where we want to be in six, 12, 18 or 24 months. What are the pieces we need in place? ... We needed to bake in a degree of flexibility because we can be patient. Were not going to be first to market in New Jersey. Were not going to be first to market in Illinois. So at that point, whats the right timing from a marketing perspective to go and attack and when is the product going to be in a place that were happy to deliver it to customers.

Fanatics Betting is hiring at a time when the competition for talent is steep and questions about the ability of many U.S. sportsbooks to survive a bloodbath of early losses abound. FanDuel, DraftKings, BetMGM and others have dozens -- and sometimes pages -- of job openings listed on their web sites every day.

Borod said the companys pitch hinges on the prior success of leaders Rubin and King, coupled with the chance to taste -- or return to -- the experience of a startup that he says is well capitalized with a long runway. Theres also the oft-discussed possibility of an IPO that could come next year.

If you want to be part of something new, if you want to be part of something successful, if you want to be part of something where youre going to learn -- we really check all three of those boxes, Borod said. So as long as you can be competitive in terms of compensation and what we offer people, which we are -- for me, that really checks all three boxes of what you look for. And when we talk to candidates, thats what resonates the most. They can get in early. They can learn from great people. And they can be part of something they believe is going to be successful.

The American Gaming Association weighed in yesterday on the latest disputes to gum up passage of sports betting in Massachusetts, where the House and Senate have passed bills that are in conflict in several areas that are of particular interest to sportsbook operators: A ban on wagers on college sports (AGA opposed), tax rate (too high, the AGA says) and advertising restrictions (AGA recommends self-regulation).

In a letter to state legislators, the AGA laid out its position on all three. Here's the full text of the letter.

The handle share lead in the nations largest betting market continued to tick upward for FanDuel, which held a 43% share in April in New York, up from 41% in March. DraftKings (24%), Caesars (16%) and BetMGM (10%) each gave up a point.

During an investors day last week, BetMGM said that it was backing off its marketing and promotion spend in the state, blaming a 51% state tax rate that has sportsbook lobbyists mobilized in Albany. We simply cant apply our capital against an irrational investment thesis, BetMGM CFO Gary Deutsch said in what appeared to be a well-rehearsed explanation typical of investor days. Players would never continue to play if the house always won. The house cannot continue to play if its always going to lose.

Of course, its easy to announce a retrenchment as the NBA Playoffs wind down and summer approaches in a state that has been open for five months. Lets check back in as football season approaches.

Other notable handle figures from April:

Figures from March are in for Illinois, which early that month dropped its requirement that bettors open their sportsbook accounts in person. The result: A record monthly handle of $953.8 million, up 40% over February. While all states get the usual March Madness bump, Illinois was the largest at a whopping 40%.

The impact of the softened restriction was evident in the decline of Chicago-based BetRivers, which fell from $107.7 million to $105.2 million while its competitors saw significant bumps. Late-arriver Caesars more than doubled from $16.5 million to $38.6 million. Barstool was up 46%, FanDuel 45%, DraftKings 35% and PointsBet 32%.

BetRivers was the first sportsbook to launch online in Illinois in June 2020 and benefited from a structure that required Chicagoans to drive hours to open accounts at the dominant national sportsbooks. When COVID outbreaks led the state to temporarily drop the restriction, BetRivers went from its lead position to a handle share in the mid-20% range, and then the mid-teens, where it stabilized -- at least until March, when it dropped to 11%.

Illinois now looks like many other states. FanDuel surpassed DraftKings for the first time in March, taking 34% of handle to DraftKings' 31%. DraftKings led FanDuel 41% to 27% in September. PointsBet was at 8% in March; Barstool 7%. Even after doubling, Caesars was at 4%.

A busy week of financial reports from state gambling regulators shows anticipated April declines. With 14 states in -- including five of the eight largest markets (by handle) -- handle was down a combined 18% from March. That tracks similarly to last year, when handle fell 20% from March to April.

Every state was down by at least 10% , with Pennsylvania, Indiana and Iowa falling by more than 20%. New York and New Jersey were down 15% and 17%, respectively.

Though down compared to last month, growth remained steep compared to last April, with states up a combined 120%.

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SBJ Betting: Fanatics bulks up as it preps to get in the game - Sports Business Journal