PointsBet stock jumped 18% on Monday as the company announced a multi-pronged partnership with financial trading giant Susquehanna.
SIG Sports, a Susquehanna subsidiary, acquired a 12.8% stake in PointsBet for $66 million. That instantly makes it PointsBet’s single largest shareholder.
But perhaps more importantly for bettors, PointsBet will partner with SIG subsidiary Nellie Analytics to develop its in-play product.
Trial balloon
Per a release, the two will “scope and develop the terms for Nellie to provide sports analytics and quantitative modelling services” to PointsBet’s trading arm, Banach Technology.
Nellie will provide its services for free during an initial nine-month trial period.
If the trial works out, the two could reach a further three-year deal.
Who is Nellie Analytics?
SIG founded Nellie Analytics in 2016 as its sports betting/trading arm. Like Banach, Nellie is based in Ireland.
The team “trades sports with the same quantitative approach that drives SIG’s success in the financial markets,” a release said.
What’s in it for PointsBet?
PointsBet CEO Sam Swanell said the deal would give PointsBet more accurate lines and sharper risk management, particularly in-play.
“This will flow through to our customers in the form of higher wagering limits, less price suspension, faster bet placements and improved value for bettors,” Swanell said. “In Nellie Analytics we have found another like-minded team of technologists whose services we believe can accelerate our product led strategy and thus our right to win in the USA, Canada and Australia.”
PointsBet has been investing heavily in its in-play product in recent years, powered by the acquisition of Banach Technology. As one example, the company is aiming for 100% up-time for NFL live betting markets.
What’s in it for SIG?
SIG co-founder Jeff Yass said the financial giant spent several years evaluating the US sports betting space before finding the right partner in PointsBet.
“We have been following their journey for some time and have developed a very positive view of the overall business operations and the capability of the PointsBet leadership team,” Yass said. “We believe PointsBet has great potential for future growth and success in the North American sports betting market and SIG has both the analytics and capital to help realize that potential.”
Financializing sports betting?
Yass has spoken before about the crossover between betting and finance.
“The skills it takes to be a good options trader are the same skills it takes to be a good bookmaker,” Yass told the Sydney Morning Herald on Monday.
He also said the PointsBet investment was “just the start” for SIG in US sports betting.
SIG’s venture capital arm has previously invested in sportsbook/exchange operator Smarkets.
Financial terms of Susquehanna deal
As for the investment, SIG paid A$2.43 per share, a 15% premium to the 5-day weighted share price to June 17.
PointsBet will issue new shares this week to fulfill the sale, under its existing placement capacity. The new cash will go a long way to assuaging concerns about PointsBet’s liquidity position.
PointsBet stock was last up 18% to A$2.55.
