Australian-based sports betting provider PointsBet has been busy on its quest to remain one of the elite legal betting brands in the US. Just this week, it was announced that the sportsbook has gained market access to Pennsylvania and Mississippi for online sports betting and iGaming, as well as the acquisition of Banach Technology for $43 million.
The latest moves significantly increase the reach of PointsBet in the bustling US market with the Banach deal aimed at improving upon their exploding live betting abilities. Access to Pennsylvania and Mississippi represents an extension of a strategic partnership between PointsBet and Penn National Gaming, and it gives the Australian-based provider market access to 14 states, seven of which come via Penn National.
About That Relationship With Penn National
PointsBet and Penn National first engaged in a mutually beneficial, multi-year market-access relationship starting in July of 2019 when Penn National extended an olive branch to a host of providers. Since then, Penn has handed out “skin agreements” to various providers, giving brands other than theirs market access in jurisdictions they have an existing land-based license.
On the multiple agreements Penn National currently has, Jon Kaplowitz, the company’s senior vice president of interactive gaming said: “We’re pleased to be providing the top names in sports betting, iGaming and poker access to our Company’s non-primary licenses to conduct these operations in exchange for a combination of upfront cash and equity, one-time market access fees and ongoing revenue sharing.”
Of course, Penn National will get a cut of the profits PointsBet will see in Pennsylvania and Mississippi, but in the end, market access is more important than the impending fees PointsBet faces for the privilege of operating in the two states.
A Few Details of the Agreement
The PointsBet/Penn National expanded partnership, which gives the former market access to Pennsylvania and Mississippi, will span 20 years from the launch date in the prospective markets. From that, PointsBet will pay PNG a portion of the net gaming revenues.
PointsBet will be responsible for all licensing and approval costs in connection with launching and operating the PointsBet services, including those associated with the licensed operator obtaining and maintaining the applicable B2C Operating Licenses required for PointsBet to operate the services in each additional State.
What Else Is in It for Penn National
Penn National will also be released from cumbersome financial “disposal restrictions” born out of the two companies’ prior agreements, which were said to be a rather heavy weight on Penn National’s outlook. The “release” essentially gives Penn National the ability to sell shares it gained in previous deals prior to the agreed-upon 2-year period, although PNG has signaled that they have no impending plans to sell any of their equity shares.
“With the addition of Pennsylvania and Mississippi, we are pleased to expand our market access partnership with PointsBet to seven States. We have a great working relationship with the PointsBet team and are thrilled with the performance of our equity stake in the company since inking the original agreement. While we continue to value our equity stake in the company, the release from the disposal restrictions will provide flexibility as we assess our future capital management plans” Penn National Gaming President and CEO Jay Snowden said of the benefits of such a move.
What PointsBet Brings to the New Markets
PointsBet brings with it a nice basket experience in the US market and with the two additional state add-ons, will have a presence in 14 states across the US. Its “scalable cloud-based wagering Platform” is somewhat unique in the market and “offers its clients innovative sports and racing wagering products.”
PointsBet also brings their five-year agreement to become the official sports betting partner of NBC Sports, which will come in especially handy in Pennsylvania because of the Sports network’s unique ties to the Pennsylvania market.
PointsBet Group Chief Executive Officer Sam Swanell noted that “NBC Sports Philadelphia owns the in-game broadcast rights to the Phillies, 76ers, and Flyers covering over 290 live events per year across 4.1 million households.” It makes for a seamless and obvious relationship between PointsBet and the Philadelphia scene.
Sam Swanell went on to say: “We are very excited about adding another two guaranteed online market access points to our portfolio in Pennsylvania and Mississippi. A mature, total addressable sports betting and iGaming market in Pennsylvania is estimated to be over US $1.75 billion per annum. Further, Pennsylvania is home to Philadelphia, the fourth-largest media market in the United States, inclusive of southern New Jersey and a regional pillar of the Comcast-NBC Universal asset portfolio.”
Live Betting Bolster
Market access isn’t the only thing that PointsBet gained the last week. The company addressed a need to bolster the increasingly popular live betting platform through a $43 million acquisition of trading tech firm Banach Technology.
PointsBet CEO Johnny Aitken said of the in-play betting craze that “The trend in this industry, especially in the U.S., will be all around in-play betting. Within three years, our expectation is roughly 75 percent of bets will be placed in-play. So, the future of the U.S. sports betting opportunity is in-play (bets).”
By acquiring Banach, PointsBet improves its ability to provide top-notch live betting services, while increasing uptime on live betting, meaning more bets and better customer experience. Banach’s proprietary technology will also allow for more in-play markets, including props and micro-markets, and better margin on in-play because of more accurate pricing and reduced third-party costs.
While Mississippi has yet to legislate any sort of online betting (but it’s working toward that end), PointsBet’s products are ready to go in Pennsylvania. They will be the thirteenth book to launch in the Keystone State. Hopes are their late arrival to the scene won’t be a hindrance on their quest for a reasonable market share.
PointsBet’s status as a legal sports betting Heavyweight isn’t going anywhere. In fact, it just took a step forward as the company looks to build on the last two quarters that ended December 31, in which the company’s US handle was $649 million.