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Fanatics, the sports merchandise giant renowned for its wide array of jerseys, apparel, and collectibles, is making a significant leap into the gambling sector by launching its own online casino. This new venture is a strategic move for the company as it seeks to diversify its revenue streams beyond its traditional commerce and collectibles businesses.

On Friday, Fanatics is excited to announce the rollout of a standalone casino app, which will be available in four states. In tandem with this app launch, the company is also introducing a web version of its casino platform, marking its more extensive foray into the gambling industry.

The company first dipped its toes into the gambling waters a few years back when it ventured into sports betting. Since then, it has been steadily expanding its repertoire by adding various online casino games, including popular options like slots, blackjack, and roulette. This progression mirrors a trend observed in the gambling industry, where companies such as FanDuel and DraftKings have transitioned from primarily offering sports betting to also encompassing online casino games.

Industry experts see Fanatics as a potential disruptor to the established dominance of FanDuel and DraftKings. Notably, despite being a latecomer to the U.S. gambling market, which has seen significant growth since 2019, Fanatics is viewed as a formidable challenger.

In the competitive landscape, Fanatics faces stiff competition not only from fantasy sports giants but also from well-established casino brands with deep roots in Las Vegas, such as BetMGM and Caesars Entertainment. Moreover, it must also contend with newer entrants like Bet365 and ESPN Bet.

Conor Grant, the president of gaming for Fanatics' betting and gaming division, shared insights with Business Insider regarding the company's ambitions. He remarked, Weve got a big task on our hands. Were a challenger brand, but the owner of this company loves nothing more than a fight and to prove people wrong.

Leveraging its extensive customer database, which includes over 100 million individuals who have purchased jerseys, apparel, or memorabilia, Fanatics aims to carve out a niche in the online casino realm. Grant describes the company's loyalty program as its secret weapon, providing a direct line to potential bettors.

Interestingly, the demographic of casino players that Fanatics is targeting differs somewhat from the traditional sports bettor, who is typically male and in their mid-to-late 30s. Casino players generally skews towards women in their late 30s or 40s. However, Fanatics reports that its customer database is well-balanced in terms of gender, with a near-even split between men and women, albeit with a slight male preference.

Macquarie analyst Chad Beynon commented on Fanatics unique position in the market, stating, What is unique about Fanatics position is that they have a good product, and they are able to reward people outside of just giving them promotional credits or money to play with.

In an effort to promote the new casino app, Fanatics is hosting a sweepstakes promotion throughout May and June, aiming to give away an impressive $2 million in FanCash. This can be redeemed for various offerings, including casino credits, bonus bets, or merchandise.

Unlike many of its competitors who invest substantial amounts in TV advertising, Fanatics is strategically leveraging its extensive database for marketing. Nevertheless, Grant mentioned that they do plan to promote the casino app through traditional television ads, online advertisements, and audio platforms.

The question on many minds in the gambling industry is: can Fanatics truly disrupt the existing order in this highly competitive landscape?

As Fanatics embarks on expanding its casino business, industry analysts will be closely monitoring its progress to see if it can live up to the expectations set by its initial ambitions.

Data presented at a recent gambling conference by Eilers and Krejcik Gaming indicated that Fanatics had made year-over-year market share gains in online sports betting for 2024 and, to a lesser extent, in online casino offerings. While Fanatics' growth has outpaced some challenger brands in the U.S. like ESPN Bet and Bet365, its overall market share still falls short when compared to established players like FanDuel and DraftKings.

Beynon remarked, At this point, I would say theyre slightly below expectations. I know originally, Michael Rubin had mentioned that he wants a top-three position in the space, which would kind of warrant 10% market share. They havent been able to achieve that this year or any year so far.

Despite these challenges, Fanatics confidently stated that its sportsbook is performing at or near the target market share in states where it operates.

Grant explained that the decision to launch the standalone casino app is part of a broader strategy to enhance brand visibility beyond just sports. We want to be the preferred destination for slot players and U.S. casino patrons, he stated. We want to offer them a truly special experience with compelling rewards and unmatched loyalty.

Steven Ruddock, a gambling industry analyst and consultant, highlighted that Fanatics' biggest challengeand opportunitylies in its ability to not only attract customers away from rivals but also to engage new players who may be gambling for the first time.

To date, Fanatics has primarily focused on cross-selling casino games to sports bettors, a demographic that Grant notes typically shows a preference for table games and live dealers. As such, roughly two-thirds of the amount wagered, known as 'handle', on Fanatics casino games comes from table and live games, with the remainder being predominantly slots.

Looking ahead, the company anticipates that the launch of the new app will shift this ratio as it increasingly targets recreational slot players.

The casino app will feature a diverse array of games, including slots, blackjack, roulette, jackpots, and video poker, encompassing both licensed and original games.

Grant, who previously led Flutters business in the UK and Ireland, expressed surprise at the heightened price sensitivity of U.S. casino players compared to their European counterparts. He acknowledged that the company must be really clever and targeted with its marketing strategies moving forward.

For 2025, Grant outlined his two primary objectives: establishing Fanatics Casino as a genuine alternative to the dominant players in the states where it operates and making the loyalty program particularly appealing to casino players. Were an entertainment business. We want to truly delight customers when they choose to invest their leisure time and money with us, he emphasized. Its crucial for us to ensure they have a positive experience throughout.