An Australian-based legal sports betting operator has reportedly hired an investment bank to sell its North American business.
According to the Australian Financial Review, PointsBet has hired New York-based Moelis & Company to facilitate a sale of its North American operations, which have yet to reach profitability due to a market dominated by major sportsbooks like FanDuel and DraftKings.
PointsBet is the seventh-largest sports betting operator in the U.S. in terms of market share.
“We believe further industry consolidation is inevitable,” a PointsBet spokesman told The Australian Financial Review. “We’ll position PointsBet to take advantage of movement in the sector.”
Best for business
PointsBet’s desire to offload a portion of its sports betting business comes as no surprise after the company explored a sale of its Australian operations in 2022 to Melbourne-based Betr in a deal valued between $135 million and $168 million.
Betr — one of Australia’s premier online sports betting sites — considered the purchase as it aimed to expand through mergers and acquisitions.
PointsBet would reject a bid from Betr in December 2022 as it deemed the offer too low. A sale of PointsBet’s Australian business would have provided the company with an influx of cash to allocate toward expansion in the U.S., helping the operator become profitable. The company is now considering a sale of its U.S. sector as it has emerged as an attractive investment.
PointsBet reported $120 million in revenue for the six months leading up to 2023 – a 28% increase year-over-year. The company posted the results behind growth in its U.S. operations, which reported a total sports betting handle of $1.1 billion — up 66% compared to the same period the year prior. PointsBets’ total sports betting handle in H1 FY2023 reached $2.2 billion.
The company has been granted market access in 14 states across the U.S., plus Ontario in Canada. As of April, PointsBet is live in Indiana, Colorado, Illinois, Kansas, Iowa, Louisiana, Michigan, Ohio, Maryland, New Jersey, Pennsylvania, Virginia, New York, and West Virginia.
The company’s encouraging results for the final six months of 2022 follow a pledge to reduce marketing costs. As a result, the company renegotiated its marketing partnership with NBCUniversal, which allows PointsBet to distribute its ad spending over a longer period of time.
PointsBet also reduced costs by withdrawing its application for an online sports betting license in Massachusetts, which legalized mobile wagering back on March 10.
Potential buyers
There are several potential suitors for PointsBet’s North American business.
Bally’s has emerged as a potential acquirer after an unnamed private equity firm pulled out of consideration earlier this week. Bally’s has been expanding its reach in the sports betting market through acquisitions. In 2021, the company closed its acquisition of sports betting platform Bet.Works for $125 million. That same year, Bally’s purchased Gamesys Group for $2.7 billion.
Other potential suitors like Penn Entertainment’s Barstool Sportsbook or another private equity firm could also vie for PointsBet’s North American business as they look to increase their market share in the U.S.
