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PointsBet will expand to its third state next month when it launches Indiana sports betting before March Madness.
It will be the first of four state launches remaining this year, according to CEO Sam Swanell. Other planned launches beyond Indiana sports betting include Illinois, Colorado, and Michigan.
PointsBet did about $122 million in handle from July through December. That was mostly all from New Jersey, with about $119 million and the remaining around $3 million in Iowa.
The NFL season was big for PointsBet when it came to adding customers as well. Active US customers jumped 83% to 21,141 at the end of December compared to 11,544 at the end of June.
Launching in Indiana has Swanell excited, as there are only three mobile operators with significant market share, so far.
BetRivers was a distant third at $7.8 million. BetAmerica also operates in the state while BetMGM just launched this week.
Indiana also gives PointsBet its first opportunity to use TV as a marketing tool in the US. It’s “basically impossible” to spend money on TV effectively in New Jersey since the state shares a lot of media with both Pennsylvania and New York, Swanell said.
Swanell does not expect PointsBet to be live in Colorado on the state’s launch date of May 1, which is probably the biggest surprise from the company’s investor call.
Instead, Illinois likely could be the next priority once Indiana’s launch is completed.
“I’d say it’s unlikely (in) May, that will probably come around pretty quickly,” he said. “… But we won’t be far behind.”
“Far behind” might be a bit subjective, however. Swanell said Indiana’s launch would be followed by retail and online launches in Illinois, which the company estimated would be September in its earnings presentation.
Most operators target August as a must for new launches to capture market share in the crucial NFL and college football season.
Focusing on Illinois is important because of the state’s in-person registration requirement for the first 18 months, Swanell said.
The company partnered with Hawthorne Race Course, which sits about 8 miles from downtown Chicago. PointsBet will also have retail operations at three branded off-track betting locations throughout the Chicago metropolitan area.
“The ability to gain early market share will be a key indicator of ongoing success,” he said.
Catfish Bend in Iowa, PointsBet’s only retail location in the US, did about $2.3 million in handle in just over a month of operations.
Only about $600,000 in bets were placed on the mobile app, likely because of Iowa’s in-person registration requirement.
New Jersey, meanwhile, had about $118 million in bets, with about $16 million of those from high-staking customers.
It was those high-staking customers that helped drag down net revenue to just $2.6 million for the six months. PointsBet’s whales led to $2.1 million in negative revenue.
The net win percentage was just 1.4%, though the gross win percentage was 5%. The net win is dragged down by promotional bets and marketing costs. Those costs should decline as New Jersey matures.
Current marketing costs are averaging $1 million a month, CFO Andrew Mellor said.
Finding a media partner has been a recent craze for US sports betting operators, and PointsBet is no different.
The company is heightening its focus on finding media partnerships this year, US Chief Commercial Officer Eric Foote said. There are significant opportunities available, he added, with PointsBet laying out nearly 60 examples of networks, tech platforms and streaming services in its presentation.
The company is focusing on three key areas in its search:
PointsBet is building its online casino platform that will be ready to launch by the end of 2020, Swanell said.
Michigan is most likely the first state but it could be any state that allows iGaming at the end of the year, he added.
Swanell pointed to the cross-sell opportunity between sports betting and online casino, which has been evident in New Jersey. Online casino revenue jumped 64% to $55.1 million in January compared to last year thanks to a more robust NJ sports betting market.
He also noted PointsBet is at a bit of a competitive disadvantage in New Jersey right now without casino games.
PointsBet took 67% more bets on the Super Bowl in New Jersey and Iowa than on the Australian Football League’s Grand Final, which is one of the biggest betting events in the country, Swanell said.
Some of those total bets could be attributed to the improved app PointsBet rolled out at the end of January.
It isn’t independently verifiable, but Swanell said he believes the app is now twice as fast as others in New Jersey.