Fanatics Betting & Gaming CEO: Predictions markets 'so much bigger than sports'

Having now officially launched Fanatics Markets, how will you go about competing with the fellow operators involved with predictions?

We'll compete the same way we have in all of our other categories. One, we want to build a great consumer experience. Obviously what markets you offer and the liquidity are one part of it, but there's a lot around the user experience, how smooth it is and how intuitive it is, where we think we can differentiate on. And two is how we activate the Fanatics ecosystem.

Fanatics, as a brand, is something that people know and trust, so that in and of itself we think is a huge asset. The way that we create a loyalty proposition for our users as an extension of what we're already doing in the rest of Fanatics can be a huge differentiator long-term.

Will there be more opportunity for market share given the number of predictions competitors as compared to OSB?

From our perspective, it's so early to tell. Our focus is to build a great product and then build good unit economics that will lead to a good business. I don't think this is kind of a winner-take-all market. I think you'll see a lot of players that are able to build good, high quality businesses here, and so we're just focused on building the best consumer proposition out there.

Does Fanatics see an advantage to being one of the first operators to launch its own prediction markets platform?

It's way too early to worry about early mover advantage or not. Five years from now, nobody's going to remember who launched when. Unlike when we entered the sports betting market, where we were about five years late, if you're within five months of the first person, it's not going to be something that necessarily drives long term success I think.

How will Fanatics go about observing regulation in states where Fanatics Markets is made available?

Our approach to regulation is the same as it's always been. This goes back to the start of sports betting where that was new too. It's about having open and transparent dialogue with all the various regulators and making sure we flag questions and concerns that people have and try to take a proactive approach to addressing them the best way we can. We are always in the mode of talking to our regulators and always want to make sure that nothing we do is a surprise to them.

Are prediction markets a vertical which require a large financial backing, given we haven't seen many small operators or firms become involved?

I think any consumer product these days does, so it's not specific to prediction markets or the sports betting and iGaming market. Honestly, what people are coming to understand more and more is how expensive it is to build a consumer brand in any industry.

I think you tend to see bigger companies being willing to enter new markets because you need a balance sheet to be able to spend the money to build the brand that's necessary to attract the customers.

How can the Fanatics ecosystem help differentiate Fanatics Markets from the competition?

Fanatics is a brand that people know and trust. That's a huge asset. From there, I think we are certainly in a place where people do interact with us on a lot of different things and trust us to help them in a number of different things. It's kind of like Amazon, right? People do see value in being able to work with one company to do a lot of different things because it just brings convenience.

Do you believe more traditional operators such as MGM or Caesars could also integrate prediction markets, especially if profits are substantial?

I think that's a question that you should ask them.

Fair enough. How much of a split could Fanatics see developing between predictions and sports betting revenue generated over the past few years?

We're offering them in different markets, so I think it's too early to tell. This is a nascent enough market, and prediction markets are so much bigger than sports. It's about culture, it's about so many other things, and so I think for how it evolves, it's way too early to start trying to make predictions about how it ultimately will unfold.

Was this seen as necessary expansion for the Fanatics brand or perhaps just a space with too much opportunity to not explore?

We viewed it as something that was necessary for us to do. We want to be a place where sports fans can have a majority of their needs and products met, and this is something that was top of the list for things that sports fans want to start to engage with. We felt it was necessary to make sure we were part of that.

Was there a strategic process for deciding where Fanatics Markets would be made available?

Certainly we saw an opportunity in the markets that we launched in, and you see it in the data for prediction markets. Prediction markets are just more popular in those states and we wanted to go where the biggest pools of demand were.