New York, NY. – December 7th. Portrait for a profile on Fanatics founder & CEO Michael Rubin at his office in downtown NYC.
The Washington Post | Getty Images

Fanatics is in discussions to acquire the BetParx sportsbook, as the sports merchandising company looks to take a bigger position in sports betting, according to people familiar with the matter.

A deal hasn’t been reached, although Fanatics signed a letter of intent to buy the sportsbook, said the people, who weren’t authorized to speak publicly on the matter. A deal price couldn’t yet be learned, and the discussions may not result in an agreement, the people added.

Representatives for Fanatics and BetParx declined to comment.

The BetParx app was launched last year by Greenwood Gaming & Entertainment, the parent company of Parx Casino in Pennsylvania, and Playtech, an online gambling software supplier. BetParx is also available in New Jersey, Pennsylvania, Maryland, Michigan and Ohio.

Fanatics has considered an initial public offering, but has been looking to complete an acquisition in the gambling space, among other possible deals, ahead of going public, the people said.

The company would be entering a crowded marketplace. Dozens of sports-betting operators have emerged in recent years, including Flutter-owned FanDuel, DraftKings, Caesars and BetMGM, which is co-owned by MGM Resorts and Entain. As the space has grown more competitive, smaller players have struggled, with some, like MaximBet, ceasing operations recently.

Fanatics has been seeking a deal in the sports betting space for some time. Last year, it had been in discussions with small gambling operator Tipico, CNBC previously reported.

The company is opening Fanatics Sportsbook at FedExField, the stadium of the NFL’s Washington Commanders. Fanatics also said it received a temporary license to operate in Massachusetts, and plans to partner with Plainridge Park Casino, which is owned by Penn National.

In October, Fanatics said it hired Andrea Ellis as chief financial officer of its betting and gaming division.

Last year, Fanatics’ billionaire executive chairman Michael Rubin sold his 10% stake in Harris Blitzer Sports Entertainment, the owner of the Philadelphia 76ers and New Jersey Devils, allowing Fanatics to enter the gambling space. NBA rules prohibit team owners from operating a gambling platform.

Fanatics raised $700 million in capital late last year, which the company planned to use toward potential mergers and acquisitions across the collectibles, betting and gaming businesses, CNBC previously reported.

The fresh round of capital brought Fanatics’ valuation to $31 billion.

Rubin’s company has been rapidly growing recently, pushing past solely being an online sports merchandise business. The company estimates its revenue for Fanatics, including its Lids segment, will be approximately $8 billion in 2023.

The company has been growing through acquisitions. Last year, it expanded its footprint in the collectibles business with a $500 million acquisition of Topps. It also bought clothing brand Mitchell & Ness in partnership with LeBron James and Kevin Durant.

–CNBC’s Jessica Golden contributed to this article.

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