-
Casinos for you
Fanatics Takes Over From Rush Street as Connecticut’s Exclusive Sports Betting Provider
By Jeff Osienya Dec 06, 2023 IndustryFanatics becomes Connecticut lottery’s official sports betting provider after a premature end of the 10-year contract awarded to Rush Street International in 2021. Meanwhile, Fanatics continues to expand its US footprint following its PointsBet buyout.Connecticut has officially ushered in Fanatics Betting and Gaming (FBG) as its sports wagering partner after parting ways with Rush Street Interactive (RSl). The Connecticut Lottery Corporation (CLC), the state lottery of Constitution State, recently announced this news to the public following a competitive bidding process where Fanatics Betting emerged as the winner. Greg Smith, the President and CEO of the CLC opined:
Quote“Fanatics is the only true sports brand in the gaming space and has established itself as an innovator in the industry. We have been impressed with the Fanatics team their aggressive entry into the US sports betting market, and we are excited to see how they redefine the sports betting customer experience here in Connecticut.”
The Nutmeg State becomes the latest US jurisdiction to welcome Fanatics Betting and Gaming (FBG) after the sportsbook operator entered Tennessee, Ohio, Maryland, Massachusetts, and Kentucky. Additionally, following the acquisition of US sports betting juggernaut PointsBet earlier in the year, Fanatics also has a presence in over a dozen other US jurisdictions. These include New York, Michigan, Louisiana, Indiana, Illinois, New Jersey, West Virginia, Virginia, and Pennsylvania.
This Fanatics-PointsBet deal was so lucrative that it nearly collapsed with the entry of industry giant DraftKings, which was willing to part with a higher price tag of $195 million against Fanatics’ 150 million. As such, Fanatics had to bump its offer to 225 million to complete the PointsBet acquisition. Going toe to toe with the heavyweights was a clear indication of just how far FBG has come over the years, especially now that it has a commanding footprint across the United States.
RSI Had a 10-Year Contract With the Connecticut Lottery
Fanatics’ entry into the Land of Steady Habits came after Rush Street Interactive’s exit from the market, a move formally announced on the eve of the Final Four. Before the winding of the partnership, RSI operated one of the three online betting skins in the Connecticut market. FanDuel and DraftKings, the definitive industry trendsetters nationwide, manage the two other state skins through partnerships with the state’s two big tribal casinos.
Thus, the departure of RSI prompted an intense competitive bidding process that pitted many of the industry’s heavy hitters in a quest to hold the right to power the lottery’s sports betting operations.
RSI’s stint commenced in August 2021 when it edged heavyweights like Unibet Sportsbook, BetMGM, and Caesars to take the honors. From there, its tenure at the helm of Connecticut’s sports betting realm has been commendable, going as far as getting lauded for its maintenance of cost discipline over the years. According to JMP securities analyst Jordan Bender, this has been spurred by Rush’s decision to spend less on marketing and promotions as a percentage of revenue compared to many other players.
The transition process was smooth, owing to Rush’s previous commitment to the process. As Rush winded down its operations, it continued to pay out any wins, working hand in hand with the CLC to minimize any potential disruptions to the players or business partners involved. The firm’s departure from its previous role is expected to free it in the future to perhaps pursue an online casino license in the state. It can do so now that it no longer has a partnership with the lottery, a position that previously hindered it from providing online casino games to the state. As it stands, Rush and the CLC are yet to explain why the firm chose to axe its 10-year agreement with the state.
Overall, the sports gaming landscape in the state has been profitable for operators. The SugarHouse Sportsbook, for instance, has generated online sports wagering revenue north of the $9 million mark from December 2022 to October 2023. Meanwhile, the retail locations of the SugarHouse Sportsbook brought in $11.6 million in the same period.
Moreover, from the look of things, it appears that RSI highly overestimated the performance of the Connecticut market when it came to tax collections. While inking its original 10-year deal with the Connecticut lottery in 2021, the sports betting operator had guaranteed a minimum annual revenue share of $17 million from retail and online sports wagering activity.
However, paltry sports betting margins, alongside hefty marketing costs such as pricey player promotions sent the Rush’s shares plummeting since the firm had its IPO in 2020. Ultimately, RSI paid taxes worth a mere $1 million from online sports betting and about $1.3 million for retail sports wagering in the 2022 calendar year. This is a far cry from the annual $17 million in tax revenue that it had guaranteed the state each year, with RSI reporting an adjusted EBITDA loss of $91.8 million. Rush’s inability to bring in money for Connecticut likely led to the premature end of their initial 10-year contract.
The Sports Betting Landscape in The Provisions State
As pointed out, FBG joins heavy hitters DraftKings and FanDuel, two of the country’s biggest industry players, as the prominent stakeholders in the Connecticut sports wagering landscape. The state’s recently released industry numbers for October show it is posting impressive record-breaking stats.
Recently, the Connecticut State Department for Consumer Protection showed that in October, iGaming operators generated record revenue figures of $46.2 million. This performance was a 34.7% year-on-year jump and a 5.2% uptick compared to September.
Looking at the sports betting realm, the report disclosed that FanDuel and its Mohegan Sun tribal partner are the leaders, with a revenue of $7.6 million in October. DraftKings and its partner, the Mashantucket Pequot tribe, came in second place, generating $6.3 million. Besides the big two and FBG, the ESPN Bet sportsbook brand operated by PENN Entertainment has its headquarters in the state, although the brand has yet to launch in Connecticut.
As is the norm with many new entries, Fanatics is ambitious and bullish as it enters the Connecticut sports betting scene. The company, which is the world’s leading provider of sports merchandise, hopes to utilize its agreements with the NFL, NASCAR, MLB, Formula 1, NBA, and the NHL to improve Connecticut’s fortunes. Here’s to hoping that Fanatics’ fortunes will be better, especially after the struggles of its predecessor’s profitability woes in The Nutmeg State.
You might also like