PointsBet saw its share price sink 18% on Thursday as the company’s latest financial results revealed declining market share in key US states.
In the quarter to September 30, PointsBet’s share of handle fell sequentially:
- New Jersey: 7.7% to 3.9%
- Michigan: 4.9% to 3.7%
- Indiana: 5.5% to 3.5%
- Illinois: 7.8% to 7.4%
- Colorado: 5% to 4.7%
- Iowa: 3.1% to 2.9%
What drove the downturn?
PointsBet highlighted a “highly competitive” promotional environment in the quarter, with rivals giving away big bonuses.
“I think that saw some share of wallet being taken away from PointsBet and maybe going to someone like an MGM,” CEO Sam Swanell said.
However, he said PointsBet was “not going to get caught up in an arms race on marketing.”
PointsBet promo spend
“We’ll spend an amount we are comfortable with and can return us a positive ROI,” Swanell said.
Instead, the executive stressed a focus on the long term, and specifically, improvements in product.
Banach to the rescue?
The company acquired Banach Technology earlier this year and will start rolling out Banach-powered live betting products “in the coming weeks.”
That will start with NFL betting then expand to the NBA.
What to expect from in-play expansion
Swanell said the new product would feature more live player props and in-play micro markets. As for sides and totals, they will have more uptime and quicker bet acceptance.
“We believe this will drive a clear point of differentiation for PointsBet against our competition and help us to win share of wallet with in-play bettors,” Swanell said. “In-play is the future of sports betting in the US, you will not hear anyone say otherwise.”
Time to reset expectations?
PointsBet also faced analyst questions about its long-term goal to have a 10% share in US states where it is live. Swanell noted that even 5% of a $50 billion market in the next 15 years was a “very strong business.”.
“We were never naïve about the advantage the bigger brands would have with their databases in the early days of the market. But we firmly believe that a product-led strategy will earn that 10% share in the long-term.”
Other key takeaways from PointsBet Q1 2022 call
- Handle was up 112% year on-year to $263 million.
- Gross revenue was up 197% to $22 million.
- Hold rate for the quarter was 8.4%.
- PointsBet is still not live in Arizona after a strange U-turn from the regulator. Swannell said he was “very confident” PointsBet would be in AZ but had no firm timeline.
- NBC and its predictor game has generated 516,000 leads. Analysts asked why that was not having a material impact on customer acquisition costs or rates. Swanell said the 516,000 number was nationwide and the benefit would be seen in new states where customers did not already have a sportsbook app on their phone.