PointsBet doubles down on US strategy, flags new Australian racing investment

PointsBet has defended the marketing and sales cost of its US expansion, arguing North America has grown into the key market for wagering because of its population size, sports structure and technological investment.

The $872 million wagering group recorded its second straight year of losses on Wednesday, as the Melbourne-born business spent $240 million in sales and marketing, with $162 million pumped into the US alone.

PointsBet group chief executive Sam Swanell has bet aggressively on US expansion.Credit: Chris Hopkins

Chief executive Sam Swanell said the marketing and sales spend would not continue in 2023, but was a “necessary” set-up cost to become the seventh-biggest operator in North America’s $13 billion market, with 3.7 per cent of market share.

“Their sports are set up for betting, there are more breaks in play, more sports and a sizeable population. All the logic indicates this is a once-in-a-lifetime opportunity for this billion-dollar industry. It’s up to $13 billion on the existing states, just wait till states like California and Texas with big populations legalise,” he said.

“We’ve got the right partnerships, we’ve got the licences in the states you need to have them, which are hard to get. It’s taken investment, but we’re there now, and we have an opportunity to capitalise.” Although its marketing spend would not increase in 2023, he said PointsBet would continue to expand into new markets.

“We had to spend to go from the bookmaker no one’s heard of to being the seventh biggest in North America.”

The group’s losses improved by 43 per cent on 2021 to $267.7 million in 2022. While revenue increased by 52 per cent to $296.5 million, normalised earnings before interest, tax, depreciation and amortisation – the metric closely watched by investors – worsened by 56 per cent to a loss of $243.6 million.

PointsBet’s cash position is robust following the completion of a $400 million capital raise in August 2021 and a $94 million capital raise from SIG Sports in June – one arm of market billionaire Jeff Yass’s global trading firm Susquehanna International Group.

PointsBet lost 12 per cent on Wednesday morning, trading at $2.90 after opening at $3.29.

Swanell said PointsBet has customised their offering for major North American sports including NFL, NBA, baseball and hockey and is hoping to capitalise accordingly.

“No one’s really customised an in-play live betting product for these sports. That’s where our right to win is,” he said.

He said PointsBet’s US growth would begin with its New Jersey arm, which was expected to turn a profit by the end of this year.

With racing season right around the corner, PointsBet is ready to refocus on Australia, which doesn’t allow online in-play betting.

“I think you can expect us to do some things around racing, I don’t want to give too much away right now but that’s where the most of Australian revenue is earned.” Swanell said.

The group announced it has extended its brand partnership with Shaquille O’Neale, the NBA giant’s only commercial partner in Australia.

PointsBet also announced the appointment of sports media executive Edward Hartman asgroup chief strategy officer who will come into the role from September.

PointsBet shares have more than halved since January 1 and fell more than 12 per cent on Wednesday to $2.89 at 3pm.

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