Australian-based sports betting provider PointsBet last week detailed the state of their business in a third quarter conference call headed by the company’s executives. While citing their global reach, those same executives pointed to an increased presence in the exploding US legal sports betting scene for their impressive third-quarter growth.
It has been a marketing push and the ability to infiltrate new US betting jurisdictions that has led the charge toward PointsBet’s growing third quarter handles. Despite actually ending the quarter with a net loss due to the cost of expansion, the company is reporting a positive cash balance as the world emerges out of the COVID-19 crisis and sports betting becomes more mainstream globally.
About Those Earnings
PointsBet reported Thursday in the earnings call that their global handle reached $704.2 million, and a net win off of those figures of $50.5 million. Their overall handle represents a 236% year-over-year increase while the net win is 246% higher than the same period a year before. The company’s net win-rate was about 7% which is average for the global sports betting scene.
As mentioned, PointsBet came out of the quarter with a net loss of $21.3 million, largely due to the costs of their rapid expansion within the US scene specifically. But on a positive note, the company did emerge with a reported $255.1 million cash on hand with zero outstanding debt.
PointsBet’s US Presence
PointsBet’s strong moves within the US legal sports betting market the last quarter significantly contributed to the company’s elevation into a new tier of legal sports betting providers. Live in six states, and with market access in 16, PointsBet’s 6.9% market share in New Jersey and 7.5% share in Illinois helped the company reach new heights.
Their US handle for Q3 was $375 million, which represents a 431% year-over-year increase. Their net win over the period was $20.8 million which is a whopping 716% higher than Q3 of the previous year.
Active users in the US market grew to 127,470, a 461% year-over-year spike and an 87% growth since just last quarter. That growth was largely due to PointsBet gaining market access in Mississippi and Pennsylvania thanks to their existing , valuable, and mutually beneficial relationship with Penn National.
Not Finished with Expansion Plans
PointsBet has been aggressive and largely successful with their global expansion plans but in the investors’ call on Thursday, company brass laid out their desires to become an even bigger factor in the US market.
While live in six states, PointsBet does have market access in 16 – some of which have launched their own legal sports betting platform, and some haven’t. The goal laid out Thursday was for PointsBet to be live in 18 states by the end of 2022 and to gain market access into the potential $5.9 billion Canadian market, which hasn’t even been legalized as of yet.
The company’s $43 million acquisition of Banach Technology on March 16 is also aimed at not only expanding their reach withing the US scene but growing PointsBet’s in-play betting offerings to their customers around the world. In-play is widely considered the future of the betting industry and could eventually make up 75% of PointsBet’s business. It is just 20% right now.
The Challenges Ahead
PointsBet faces a number of challenges ahead. One is the sheer volume of competition within the market, particularly in the US. Much of the competition have strong existing customer bases, and a couple have built-in bases thanks to DFS platforms that existed prior to the US Supreme Court’s overturning of its blanket ban on sports betting in 2018. The two DFS providers-turned sports betting providers in that case have a serious leg up.
Customer acquisition costs are another huge roadblock for PointsBet, and they are indirectly tied to its competition. PointsBet’s recent statistics have their acquisition costs slipping under $500 per new user – others such as the DFS brands are rumored to be in the $200 range for acquisition costs.
But PointsBet’s partnership deal with NBC Sports, their presence in all of the Heavyweight betting states of New Jersey, Illinois, Indiana, Colorado Michigan and Iowa puts the company in a good position going forward. An impending launch in Pennsylvania also gives the betting provider industry-cred.
PointsBet has experienced exponential growth the last 12 months. Their net loss can be chalked up to “the cost of doing business”. With expansion looking as though it may slow for the betting provider in the immediate future, we may be talking about huge gains, not net losses for the company at this time next year.