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One of the biggest sources of intrigue in the U.S. sports-betting industry for 2023 is the emergence of a new well-capitalized competitor in the form of sports merchandise giant Fanatics, whose top gaming executive spoke Wednesday (May 10) about the company’s forthcoming launch in several states.

The process of the Fanatics Sportsbook launch has been a quiet one, as after several rumors of potential acquisitions, the company elected to build its own sportsbook product using source code from Amelco.

During an appearance at the SBC Summit North America in New Jersey, Fanatics Betting and Gaming CEO Matt King touted the advantages the company has as a second mover in the U.S. sports-betting space.

“Because the industry opened so quickly, you ended up very much in like the traditional land grab [where] the value maximizing thing was to invest a lot of money today and earn it back later,” King said.

“But what that does is it kind of locks you, I think, into a relatively high cost, upfront CPA model,” he continued.

“You’re not going to see us do big marketing deals. You’re not going to see us try to drive share early because ultimately, it’s that push for share early that pulls forward marketing spend, and it ends up with a lot of pressure on the whole model.

“We’re in this for ten years, so our view is, build great products, activate the ecosystem, and ultimately we’ll scale up in a very sustainable way.”

Part of activating that ecosystem, King said, is a rewards program utilizing the Fanatics FanCash program that rewards players for each bet with credit toward purchases on Fanatics’ other verticals. The company boasts a database of about 95m customers, which King compared with the roughly 8m customers in FanDuel’s database when the company launched its sports-betting product in 2018.

“We believe FanCash is the currency of sport and it's a singular loyalty currency,” he said. “It means a lot throughout the system and that will be a huge differentiator for us, you know, relative to what other people can offer that only operate on one vertical.

“Yes, there’s no moat around sports betting and there never really will be, but the reality is because we’re part of the Fanatics platform, we think we can offer a consumer experience that is differentiated and very hard to replicate based on building and operating different business models,” King said.

Another second-mover advantage the company enjoys is a far less competitive environment for market-access rights than early-stage entrants faced.

King said that market-access costs today are about 40 to 50 percent cheaper than they were three to five years ago, in part because there are companies that have since departed the market, but also because share is so concentrated in a few leading operators that it drives down the price for other licenses.

“The reality is there are very few material states that have less than ten [market] access points, and once you have ten in a market where the top three or four guys have almost all the share, really licenses five through ten can’t demand that much value in today’s market,” King said.

“So we've seen the market-access costs in general on the way down, and then what I think people have seen in us is obviously we’re the best capitalized new entrant coming in and given the team that we’ve built, our approach to the market has really resonated with market-access partners.”

Fanatics is currently beta testing its mobile product in Tennessee and Ohio, but has yet to announce a full launch date in any market.

Fanatics CEO Michael Rubin said last month that the company does intend to launch sports betting in between 12 and 15 states by the start of the NFL season.

“Our priority is to get it right, not get it fast,” King said Wednesday. “Ultimately, whether we’re live in a market today or 90 days from now isn’t going to matter.”

“In that rush to move fast, you just build more tech debt, you build more debt in other parts of the organization that you then later have to fix,” he continued.

“And so what we’ve focused on is from day one, I told the team that it’s a ten-year journey, and we’re going to move very methodical through that ten-year journey.”