PointsBet, NBC Restructure TV Deal As Sportsbook Lowers Ad Spend

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PointsBet and NBC Universal renegotiated their sports betting partnership, allowing the broadcaster to add more sponsors and the sportsbook to spend less by moving to local broadcasts.

The agreement, announced during the Australia-based sportsbook’s earnings call, adds two years onto PointsBet and NBCU’s original five-year sponsorship agreement.

As part of the restructure, PointsBet’s obligated ad spend drops 42% to $58 million this year, as it looks to leverage regional NBC networks where it is already licensed.

The two sides both benefit from the renegotiation as it allows PointsBet to stretch its marketing dollars while NBC gets another two years of guaranteed marketing spend.

PointsBet focused on local TV

The breadcrumbs of a move like this came in September when PointsBet unexpectedly dropped out as the exclusive odds provider for NBC’s Sunday Night Football and BetMGM swooped in. The move suggests PointsBet was not seeing the same amount of return on national ads compared to its localized strategies, which is since confirmed.

PointsBet thinks a focus on local ads will be a more efficient use of NBC’s broadcasting and its marketing dollars. If the strategy plays out, PointsBet ads should be seen more across local NBC networks in the 14 states it is live.

“We saw the benefits in terms of the impact it could have on brand by being on those national properties around the NFL, et cetera. But when it comes to marketing payback, making sure our marketing dollars are getting us on that path to profitability, it’s far more efficient to focus them locally and regionally where we’re live and making sure we’re getting that right rather than perhaps worrying about when California might go live and the amount of marketing dollars that would be going into that jurisdiction from a – if you’re still spending nationally.”

Pointsbet ceo sam swanell

How regional strategy will play for PointsBet

NBC owns seven regional sports networks, including in Chicago, Philadelphia, and New York, where PointsBet is live. It also is in Boston, where PointsBet is expected to launch in a few months.

In Chicago and Philadelphia NBC runs BetCasts, alternative betting-centric broadcasts for the MLB, NBA and NHL teams for which it holds TV rights. They feature the display and discussion of PointsBet’s live odds.

The renegotiation also gives PointsBet “first-look” rights on the local or regional sports betting and iGaming partnerships opportunities across Comcast, NBC Sports, Peacock Sports and NBC’s other networks.

Profit plan may differ per operator

PointsBet does not have the capital FanDuel, DraftKings, Caesars or BetMGM do, but it does have the same pressure to turn a profit.

PointsBet management repeated the phrases “EBITDA-positive” and “path to profitability” five times during the hour-long call.

FanDuel expects to be profitable in all of 2023, as it became the first online sportsbook in the U.S. to turn a profit in a single-quarter last year. BetMGM recently announced it plans to make sports betting profitable in the latter half of 2023 via additional investments and more targeted promotional spending.

Most US metrics up

PointsBet shows growth in most of its US metrics both sequentially and year-over-year, according to the investor presentation.

Sports betting handle jumped 75% in the fiscal second quarter compared to last year, hitting $743 million. Gross win grew 32% to $39 million while net win climbed 51% to $20 million. Both net win and gross win margins fell, though, to 5.2% and 2.7%, respectively.

PointsBet reported a strong trading performance in both October and November, with VIP play turning negative in December. Trading returned to normal in January with the month’s net win expected to “significantly exceed” the fiscal second quarter’s monthly average net win.

iGaming net win also jumped 128% to $8.6 million.

More customers, lower marketing spend

Supporting that growth was a 39% increase in cash-active clients to 292,470 compared to last year. That customer count is up 7% from the fiscal first quarter.

The growth came despite marketing costs dropping 17.5% to $24.5 million in the quarter. Its marketing investment to net win payback ratio more than doubled in the first half compared to last year, meaning customers are becoming profitable sooner.

PointsBet reported a 2.3% revenue market share for online sports betting across its US operations. Swanell noted the company’s focus is on net win growth and not market share.

As long as the company continues to see the year-over-year growth it saw for the last two quarters, the brand will grow its share and do so at a sustainable rate, he said.

In-play betting now more than half of handle

PointsBet said it significantly reduced live-market suspensions during NFL games compared to the 2020-2021 season. That helped in-play handle become 53% of handle in the quarter, up from 47% last year.

NFL Lightning Bets accounted for a fifth of all cash in-play bets during the quarter.

PointsBet stock plummets

The earnings report and restructured NBC deal led PointsBet’s stock to fall 17.4% to A$1.40.

“We are thrilled to have agreed with NBCU on mutually beneficial adjustments to our agreement that fit perfectly within our more targeted, localized strategy, which is informed by those learnings,” PointsBet CEO Sam Swanell said during the Monday call. “Put simply, we firmly believe a dollar spent in marketing on any other platform does not come close to rivaling the terms and efficacy of the partnership we now have with NBCU.”

The renegotiated agreement leaves $245 million in cash to be spent over the final five years of the deal. NBC has the option to buy nearly 67 million shares at A$13.00 in 2025, but at this time, PointsBet assumes NBC will not buy those shares.

PointsBet shares closed at A$13.02 when the deal was announced in August 2020.

LSR reporter Matthew Waters contributed to this story.