The US CEO of PointsBet has been a very busy man the past few weeks.
First, Johnny Aitken helped the Australian-listed sports betting operator land its first mega-media sponsorship with NBCUniversal.
Now, he’s on the ground in Chicago as PointsBet prepares to launch sports betting in Illinois. That launch will be the fourth state for the brand, but it could be the most important given Illinois’ potential and PointsBet’s prime locations.
One thing’s for sure: it certainly won’t be the last new state launch.
“With the weight of NBC behind us with that deal, we feel extremely confident about our position to win market access in the states we choose to enter,” Aitken said.
PointsBet ready for Illinois, whatever the scenario
PointsBet has been excited about Illinois for a while, primarily because of its retail presence.
The company is partnered with Hawthorne Race Course and three of its OTBs to give it four sportsbooks surrounding Chicago. Considering Illinois requires in-person registration for at least the first year and a half, that could be a strong advantage.
“What we wanted to design was a catchment,” Aitken said about picking which OTBs to fit with a sportsbook. “So if you headed north of Chicago, northwest, southwest or south, chances are you are going to drive past one of our four sportsbooks.”
But how long will remote signup last?
There’s just one catch: that retail presence is being undercut right now by Gov. JB Pritzker allowing remote registration twice this summer, this time through at least Sept. 19.
Aitken is very confident his company will have a “huge competitive advantage” if the market returns to in-person. Of course, there are backup plans.
“We’re a company where we plan for multiple scenarios and we’re planning to execute, be it remote or be it in-person,” he said.
Committed NBC ad spend should be covered
Some of the numbers in the PointsBet-NBC deal are a bit staggering for a company that did about $5 million in US revenue for fiscal 2020.
The five-year agreement includes $393 million in committed marketing spend across NBC properties. That sounds like a lot for a company with about $100 million on its balance sheet, but it won’t feel like a burden, Aitken said.
“It’s money that we would have committed anyway to TV spend or digital spend,” Aitken said. “It doesn’t fall 100% or even 50% of our planned annualized investment in brand and marketing.”
The cash will come from a few different places. PointsBet announced it’s raising about $220 million through retail and institutional stock offerings that should be completed this month.
NBC could provide more cash later as well. Along with the 4.9% stake NBC received in PointsBet, NBC has the option to buy nearly 67 million shares at A$13 each after five years.
Different marketing path for PointsBet
Committing nearly $400 million in ad spend with one mass-media company is a bit different than how PointsBet started off in the New Jersey sports betting market.
New Jersey doesn’t have its own TV market, which means residents either see ads directed at the New York or Philadelphia markets.
“If you aren’t live in either of those markets there’s a huge amount of spillage,” Aitken said. “So we’ve had to grow our brand in New Jersey really on organic PR, technology excellence, being different with pricing and product features and growing the brand on digital, which is very unorthodox.”
Unorthodox or not, Aitken says it’s worked so far. PointsBet took 6.25% of online handle in New Jersey for fiscal 2020 and had 26,235 active US customers as of Aug. 25. That’s up 25% from the end of June.
“Also, we’ve been investing what I would say is a very disciplined amount,” Aitken said. “We’re investing an amount where I actually think to achieve what we’ve achieved, we’re sort of ahead of where we thought we would be.”