PointsBet is in the thick of it as a multi-state US sports betting operator.
The company saw US handle jump 130% to about $117 million in its fiscal first quarter ending Sept. 30. That didn’t lead to a whole lot of revenue, though, with just more than $2 million for the entire US, according to the company’s earnings presentation.
That low hold is for two main reasons, CEO Sam Swanell said.
What next’s for PointsBet?
PointsBet launched in Illinois Sept. 12 as the fourth online operator, so there was a lot of marketing done there and Indiana, he explained. The other part is due to bettor-friendly results in September, Swanell added.
The company is now active in four states but two more are coming fast. PointsBet is “very close” to offering sports betting in Colorado, Swanell said, with that launch coming next month.
Michigan sports betting will follow next. PointsBet will likely launch in January with its sports betting and iGaming platform, even if the market launches before that.
Low margins part of PointsBet plan, company says
PointsBet might not have a lot of revenue to show for its first three months of fiscal 2021 but it does have plenty of customers.
The company nearly doubled its active US customers from the prior quarter with 39,816 active customers from July through September.
PointsBet spent $11.8 million on marketing in the US during the quarter. That’s an average of $625 to acquire each new customer from that period.
The plan is to spend 30% of the revenue the sportsbook would get from holding 10% market share in the state. Based on an $800 million annual operator revenue opportunity in Illinois, that breaks down to $80 million in PointsBet revenue and $24 million in marketing costs.
Marketing will ramp up in Iowa once sports bettors are allowed to register for accounts remotely beginning Jan. 1, Swanell said.
Main focus on IL sports betting
PointsBet is treating Indiana as a new state like Illinois, since sports shut down soon after the company launched in Indiana because of the coronavirus pandemic.
But with the Illinois revenue opportunity about 2.5 times higher than Indiana according to Swanell, the focus was largely on those Illinois sports betting customers.
“You can assume a big chunk of them [new customers] came from Illinois,” Swanell said.
PointsBet took about $10 million in handle from Indiana for the quarter and about $7 million in Illinois handle in its three weeks live.
“Everyone’s pretty happy with what they’re seeing out of Illinois,” Swanell said. “Illinois, I think, was always a state that we thought would have the strong DNA for sports betting and get out of the gate strong, and we’re certainly seeing that that’s the case.”
Swanell added he expects remote registration to be extended again next month because of the state’s current coronavirus situation.
Spending to hold market share in NJ
Online market share for New Jersey sports betting slipped to 6.5% from 8.7% the prior quarter. But that’s OK, Swanell said.
That 8.7% share came from a lower handle base considering there weren’t many major sports taking place from April through June. Swanell warned last quarter not to put too much credit into that growth based on the circumstances.
PointsBet is also spending just enough to maintain that 6% to 7% market share until its iGaming platform launches in the state, he added.
Expect that launch in the second half of PointsBet’s fiscal year, which begins in April.
Boosting margins through in-play and parlay products
One of the ways PointsBet is improving its margins while laying out so much on marketing is through its in-play and parlay products.
The sportsbook is one of three in the US to offer single-game parlays. Parlay boosts and in-game parlays are also part of PointsBet’s offerings.
So far, in-play numbers are approaching 50% of handle, Swanell said. In-play should go “well above” that over the long term, he added.
Parlays, meanwhile, give PointsBet an opportunity to increase customer engagement and produce larger margins, Swanell said.
MA, VA among other states PointsBet is watching
Swanell is bullish on the company’s prospects in both Virginia and Massachusetts.
He called out Massachusetts as a state that’s moving toward legalization. The company is working hard to make sure it’s included in Massachusetts sports betting and is confident it will be, Swanell added.
One senator recently told LSR he expects legalization by next year.
The company also expects to get one of the up to 12 Virginia sports betting licenses. Swanell mentioned the company has secured market access there and expects to be operating when the state goes live despite no official partnerships being announced.
A spokesperson for PointsBet clarified Swanell meant access to the state through the NBC agreement and the NBC Sports Washington regional sports network, which is available throughout Virginia.
“Given that partnership and our continued, most recent results record, PointsBet feels confident on prospective market access in the state via the Lottery,” the spokesperson said.
PointsBet aiming to be at starting line for state launches
One of the top goals moving forward is for PointsBet to be among the sports betting operators that go live on the first day of new markets, Swanell said.
The technology team focused on improving the efficiency and speed PointsBet can roll out its infrastructure in new states. By April, the brand should be ready to go live on day 1 in new markets, he added.
The marketing agreement with NBCUniversal will be important to “warming those states up” on the PointsBet brand before apps can even go live.
That five-year agreement has gotten off to a positive start with PointsBet taking care of the low-hanging fruit like banners, logos and digital content first.
Deeper integrations into programming is coming, though, with someone from PointsBet and NBC talking every day, Swanell said.