Australian bookmaker PointsBet remains hopeful it can secure a sports betting licence in Arizona after losing out in a surprise setback for the group’s ambitious North American growth plans, which involve launching in 11 more US states by the end of 2022.
The ASX-listed outfit – which has soared in value as investors back its strategy to target the exploding US sports betting market – also said on Tuesday it was in a strong position to secure a betting licence in New York while capitalising on the upcoming NFL (American football) season after becoming one of the league’s approved betting partners a fortnight ago.
PointsBet CEO Sam Swanell said he is still hopeful of securing a betting licence in Arizona. Credit: Chris Hopkins
“The pieces are now in place as we look towards [financial year 2022] and beyond,” said chief executive Sam Swanell after handing down a $187 million loss for the 12 months to June 30.
PointsBet currently operates in seven US states (Illinois, Michigan, New Jersey, Indiana, Colorado, West Virginia and Iowa) and said on Tuesday it expects to launch in 11 more (including Pennsylvania, Arizona, Tennessee, Wyoming and Maryland) plus Canada’s most populous state Ontario by the end of calendar 2022.
Turnover – the amount of sports bets received – in the US jumped from $321 million to $1.8 billion in the 2021 financial year, PointsBet announced on Tuesday, as it started operating in new markets.
The US is gradually opening up to online sports betting following a 2018 supreme court ruling legalising the industry, which is projected to be worth $US51 billion ($71 billion) by 2033.
But PointsBet’s expansion plans were dealt a blow on Monday, with the announcement that the local partner in Arizona licence – Cliff Castle Casino, which is owned by the Yavapai-Apache Nation – had missed out on a sports betting licence.
Mr Swanell said Cliff Castle was considering challenging the decision and that PointsBet was looking at other partners it could work with in the state, noting that two out of the 20 licences available were yet to be awarded.
“We fully expected … that we would be holding one of those licences. [So] fair to say it was a bit of a surprise,” he said. “We believed we had the right partner, we’ll now have a look around and see how that plays out.”
PointsBet has also applied for a licence in New York in a consortium with four casinos – Rush Street, WynnBet, Caesars and Resorts World. “Anyone would agree that’s a very strong group to be associated with, so we’re confident and hopeful,” Mr Swanell said.
The company signed a five-year media deal with NBCUniversal in August last year to become the broadcaster’s official sports betting partner.
Meanwhile in Australia – which has been a second-tier priority – PointsBet said betting turnover jumped 140 per cent in the past year to $2 billion, off the back of significant marketing efforts including an advertising campaign featuring American basketball great Shaquille O’Neal, and was now targeting a 10 per cent share of the local online market by 2025.
Group revenue jumped from $75 million to $194 million last financial year, but growing expenses more than offset that, with marketing costs jumping almost four-fold (from $35 million to $170 million), and a doubling of its workforce to 432 employees pushed its wages bill up from $27 million to $45 million.
That drove the company to a $187 million after-tax loss, compared to a $41 million loss a year earlier. The company did not declare a dividend.
Goldman Sachs analyst Desmond Tsao said costs were lower than expected, driving a better earnings before interest, tax, depreciation and amortisation result than forecast (a $156 million loss).
PointsBet raised $353 million in equity in September last year and another $400 million at the start of August this year to fund its US growth plans. Shares were 1.86 per cent higher at $10.40 in late afternoon trading. PointsBet listed on the ASX in June 2019 at $2 per share.
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