In a strategic acquisition that is reshaping the sports betting landscape in the United States, Fanatics Betting and Gaming (FBG) made headlines in August 2023 by acquiring PointsBet US for a whopping $225.0 million. This move has led to a sweeping transformation within the industry as FBG systematically phases out the once highly visible PointsBet brand in the US, with Iowa witnessing the latest transition.
The acquisition by FBG signals the sunsetting of PointsBet’s presence in numerous states. PointsBet’s signature branding has been fully replaced by FBG’s in 12 states online. However, the PointsBet brand has managed to hold on in a few places. It is still operational in selected US states, with retail betting locations remaining in force in Pennsylvania as well as West Virginia.
Despite the shakeup, the divesture provides a silver lining for PointsBet. The company is narrowing its focus on other markets outside the US, continuing its operations in both Canada and its homeland, Australia. From the perspective of financial health, PointsBet seems to have weathered the storm fairly well. Revealing their six-month financials up to 31 December 2023, PointsBet reported a statutory revenue of AU$117.9m from continuing operations, marking a 6.7% increase from the previous year’s $95.3m.
This growth is attributed strongly to PointsBet’s Australian sector which reported a 6.7% surge in revenue to $101.7m, with its core sports betting products for the NBA, NFL, and soccer fueling this expansion. This success is particularly noteworthy given a 4.1% decline in turnover in Australia. More impressive still, the first half of this period also marked Australia’s inaugural EBITDA-positive outcome for PointsBet, with EBTIDA hitting $900,000, a stark contrast to the previous year’s $20.2m loss.
From the perspective of the Canadian market, the figures are equally promising. Canada saw a remarkable 137.3% increase in revenue year-over-year to $15.9m. This was comprised of $9.5m from igaming revenue, up by 126.2%, and $6.3m from sports betting revenue, which skyrocketed by 152.0%. Their sports betting success was bolstered by a 17.4% increase in turnover. On the igaming front, PointsBet enhanced its presence through a strategic partnership with Strive Gaming. Moreover, PointsBet has its sights set on reaching break-even EBITDA by the 2025 fiscal year in the Canadian market, where the H1 EBTIDA loss shrank significantly from $19.4m to $12.0m.
On the cost front, PointsBet had a reason to celebrate. The company was able to cut its total operating expenses by an impressive 29.2% to $72.1m in H1. This was visible across various areas, with major reductions in sales and marketing expenses which dropped by 30.2% to $42.4m.
Their calculated net finance costs amounted to $12.1m, which led to a pre-tax loss of $32.7m, showing a recovery from the previous year’s $53.6m. On the tax front, PointsBet did not pay any; however, they did account for a $3.7m loss from discontinued operations in the US and Europe, a substantial decrease from the previous year’s $124.6m loss.
The net result is telling: PointsBet has managed to reduce its net loss from a concerning $178.2m to a more manageable $36.4m for H1. Additionally, the EBITDA loss was significantly trimmed from $49.9m to $20.6m.
On the corporate leadership side, PointsBet has welcomed a new figure into its rank, appointing Daniel Lucas as the new group chief technology officer, effective 1 September. Lucas, who was previously part of Flutter as global director of trading technology for nearly two years, and held various roles at SportsBet for nine years, brings extensive experience to the company. Sam Swanell, PointsBet group CEO, emphasized that Lucas’ expertise in complex platform operations and leadership skills would bolster the company’s efforts in its Australian and Canadian operations.
Swanell gave commendation to Jerry Bowskill, Lucas’s predecessor, for his significant contribution, particularly during the transition of their US business to Fanatics. Bowskill’s expertise was deemed invaluable and his efforts, as part of the executive team, were given due recognition and appreciation for laying the path ahead for PointsBet’s future.
