PointsBet Seeks To Cut Losses By Focusing On Existing US Markets In 2023


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PointsBet plans to reduce losses from its US sports betting business in 2023 by skipping out on state launches, bolstering existing markets and acquiring more valuable customers for less.

The company expects a normalized EBITDA loss of between $52 million and $55.3 million for the second half of fiscal year 2023, That would be a significant decrease from the $100.6 million loss PointsBet incurred during the previous half of July 1 to Dec. 31 last year, executives said during PointsBet’s fiscal first-half earnings call Monday.

The market was not in love with the PointsBet report, though. The stock fell 10.31% to a 52-week low of A$1.31 with a volume of 11.9 million, more than six times its average volume.

Why did PointsBet pull out of Massachusetts?

The call came less than a week after company opted to pull out of Massachusetts just before the state’s March 10 online betting launch. Massachusetts is the second-largest state to launch sports betting since 2021. CEO Sam Swanell provided some color during the call:

“We’ve got enough of total addressable market to focus on. We need to prove as we are the unit economics and the path to profitability. And so that’s a sort of a prudent decision, a prudent balanced decision,” said Swanell, who did not rule out launching at a later date.

It is not entirely clear how much PointsBet expects to save from not launching, but it could mean anywhere from $25 million to $50 million in EBITDA, based on DraftKings‘ spending estimates for recent state launches in Ohio and Maryland.

“Maryland and Massachusetts have similar population sizes, but MA will be more competitive with the amount of sports teams, wealthier population base, hometown operators, Barstool and DraftKings, operators with land-based casinos — Wynn, MGM, Penn — and of course FanDuel,” said Jordan Bender, Senior Equity Research Analyst at JMP Securities.

NBC deal gave ‘discounted’ access

Swanell discussed the company’s restructured deal with NBC Universal, which saw the company lower its obligated ad spending for this year by 42% to $58 million. While the move gave up the rights as Sunday Night Football’s exclusive odds provider, it gave PointsBet access to NBC’s local markets at a “discount.”

“During the half, we executed on our locally focused U.S. advertising strategy, utilizing our exclusive and heavily discounted access to the powerful media properties of NBCU,” Swanell said.

Swanell outlined the deal as a key to optimizing marketing spend to the target customers most likely to convert and generate long-term value for the company.

The company has also been in talks to sell its Australian business to News Corp-backed Betr, though Swanell declined to comment on the negotiation.

PointsBet sees betting increase across the board

PointsBet took $2.17 billion in US sports betting handle for the half, nearly a 40% increase year over year, according to its investor presentation. At the same time hold, including the cost of promotional credits, dropped to 4.9% from 6%.

Live betting accounted for 56% of handle, while their in-house tech Odds Factory drove more than 80% of handle by the end of the half.

iGaming contributed to 31% of net win during the half, growing over 200% over the previous reporting period, while PointsBet trimmed marketing expenses by 17%.

“These results were driven by ongoing improvement in our ability to convert and retain cross-sold sports bettors and by the growth of the casino-only cohort,” Swanell said.

PointsBet targeting ‘Super Users’

Overall North American revenue went up 98% as the company targeted a more sustainable customer base of “Super Users” that spend more at a lower acquisition cost and more easily convert to iGaming.

PointsBet saw a 199% revenue increase in target segments, which led to an increase in bet count and an increase in multi-product usage.

The increase in active clients and revenue per active client, combined with increased promotional spend efficiency, led to an overall 124% increase in online sportsbook net revenue.



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