PointsBet, a betting operator based in Australia, is one of the top brands for US bettors. This betting site can be found in multiple states and has attracted thousands of loyal bettors. The company has started to look at the options for selling the US sports betting business and has recently hired a New York firm to facilitate the sale. Moelis & Company is the investment bank that will sell assets in the United States.
Though a popular betting site, PointsBet has struggled to obtain a large market in the US and as a result, plans to sell all US operations. The company has suffered from poor market performance. The decision to sell is also tied to terminated partnerships in the US, including deals with the University of Colorado and NBC Sports. Oversaturation of the US market is another reason PointsBet is looking for a buyer. States with legal sports betting offer multiple websites and new sites are always emerging, making it difficult for any one company to expand successfully.
Reasons for the Sale
Bettors in the United States have become familiar with PointsBet; but the company has still not been able to compete with larger sportsbooks. Even after entering multiple markets and offering amazing promotions; PointsBet has not even come close to being one of the top five websites for sports betting. In 2022, the company tried to sell of the Australian part with no success. Since this sale fell through, PointsBet is now seeking a buyer for the US business.
There are various reasons for the sale. In the US, there were delays with states legalizing sportsbooks and issuing licenses to PointsBet This prevented further industry growth. The company also feels that the US market is very crowded. With many bettors already loyal to other sportsbooks, it has been difficult for PointsBet to build a larger customer base.
“Larger companies like FanDuel and DraftKings have been hugely successful in US states and neither company has any reason or desire to acquire PointsBet. Despite both companies being able to afford it, there is no direct benefit for either business. These larger businesses, including DraftKings, BetMGM, and FanDuel, control over 85% of the betting market in the US, making things very difficult for the smaller operators’ – said spokesperson of Agamble.com, website about online gambling in the US.
As the company still searches for a buyer, operations will continue as normal. States, where PointsBet is legal, will still offer access to the website and mobile platforms. Experts do not expect a final sale to be any time soon and based on past attempts to sell; it appears that PointsBet will have a difficult time unloading the US business.
Possible Buyers
Penn Entertainment is one possible buyer for PointsBet. Currently, Penn owns and operates the Barstool Sportsbook, which is also a smaller player in the huge US market. It will all come down to the price and if it is right. Penn may be able to complete the purchase which would lead to an increase in market share for Barstool. One thing that makes the PointsBet deal appealing is that the company holds multiple US licenses. It currently operates in 14 different states, including New York, Ohio, Michigan, and Pennsylvania.
Bally’s has expressed some interest in acquiring PointsBet, though no offers have been made. Bally’s is trying to rally in the sports betting market after the company made some poor investments in the past few years. In 2021, Monkey Knife Fight was purchased by Bally’s for a sum of $125 million. Just 2 years later, the site was closed down. Both Bally’s and PointsBet have struggled in the US market, so making the purchase would make sense as it would allow Bally’s to provide a known brand to bettors and take back some of the lost market shares. As a likely candidate, Bally’s has spent a lot of money in the past few years to gain traction in the sports betting market. The company recently completed a purchase of Bet.Works that cost $125 million, as well as the Gamesys Group at a price of $2.7 billion.
The Value in PointsBet
Even though PointsBet has struggled and is one of the smaller online sportsbooks in the United States; it does offer some value to possible purchasers. The betting site is the seventh largest in the US and since its licensed in multiple states; this can be a benefit for investing companies. The latest fiscal report has shown that profits have been made; and the first quarter did indicate growth for the company. There was a 66% increase in activity on PointsBet from last year’s first quarter report; and the company has $1.1 billion in bets that were placed. Revenue also increased 28% from the previous year.
PointsBet has implemented many measures that have cut operating costs, allowing the company to generate revenue. This will appealing to any buyer and if further costs cut, the profit margins will only increase. As PointsBet continues to search for a suitable buyer, the company will take additional steps to reduce operating costs. Recently, the company pulled out of the scheduled launch in Massachusetts, saving over $50 million; stating the existing 14 licenses will give the company plenty to focus on and room for expansion. The increase in market costs, advertising, and lower profit margins are all reasons for cutting costs where possible.
Conclusion:
The partnership between PointsBet and The University of Colorado has been mutually terminated; which can lead to additional savings for the betting company. The University initially received $1.6 million for the deal when it started in 2020; and PointsBet also paid $30 when new users downloaded the app and entered the promotional code. Ending this partnership will trim some operating costs as PointsBet continues operating in US states until an acquisition deal is struck.