Aussie-Based PointsBet Launches Public Offering as Sportsbook Seeks Growth in US, Mexico
Posted on: June 17, 2019, 10:00h.
Last updated on: June 17, 2019, 10:04h.
PointsBet Holding Ltd., a sports betting company that has its sights set on an expanded American market, became a public company last week when its stock began trading on the Australian Stock Exchange.
The stock opened at AU$2.61 in trading Tuesday (Monday evening ET). The company, under the stock symbol PBH, released its initial public offering on Wednesday at AU$2 per share.
According to a press release issued on Monday said the Australian-based company will have 37.5 million shares available for trading under the IPO with 110 million shares on issue. The remaining shares would be owned by those who previously invested in the company.
“Similar to the way we allow fans to take part in sporting events, our public offering allows fans to take part in us, as a company and as a platform,” PointsBet Holding CEO Sam Swanell said in a release.
Founded in 2017, the company started its first American sportsbook in January when it started an online service in New Jersey. In April, PointsBet announced it would open its first American retail sportsbook when the company signed a partnership with the Catfish Bend Casino in Burlington, Iowa. PointsBet would also run the Iowa casino’s online platform.
The company offers traditional wagering options along with exotic bets. That includes what the company calls “Pointsbetting” in which a bettor can multiply their winnings – or losses – based on how a team, teams, or an individual fares against the spread. For example, if a bettor gambled US$100 on a favorite with a 10-point spread, they would win US$1,000, or US$100 per point, if their team won by 20 points. They would lose US$900 if the team won by just a point.
More Partnerships in Place
According to the prospectus, the company expects the stock offering to raise AU$75 million. It will use that money to expand into new markets, finance marketing and customer acquisition costs, and pay for its software and platform development.
In addition to the New Jersey and Iowa agreements, PointsBet already has an agreement in place with New York’s Tioga Downs to provide an online sportsbook when the state passes legislation. However, in the last two months, the company has forged ahead with other deals too.
The prospectus revealed the company reached agreements with unnamed properties in Colorado and Illinois to operate “exclusive” retail and online sportsbooks after lawmakers approve sports wagering in each state. Currently, an expanded gaming bill with sports betting provisions sits in Illinois Gov. J.B. Pritzker’s desk.
PointsBet tells potential investors that legalized sports betting is unlikely to occur in all 50 states. It provides a forecast, based off research from Eilers & Krejcik Gaming, that 36 states and Washington, D.C. will allow sports betting by 2023. Under that scenario, the market would generate about US$5.7 billion in revenue.
However, the company isn’t just looking to expand in the United States.
As with the US, Mexico is currently undertaking a process of regulatory change likely to lead to a legal framework for online sports betting,” the company said in its prospectus. “Hence, the Mexican market is likely to represent an attractive opportunity for online wagering service providers, given the large population, increasing levels of Internet access and smartphone use, and growing household wealth levels.”
Last month, PointsBet joined a consortium that intends to build a casino that would offer both land-based and online sportsbook and casino gaming in Mexico. That partnership is subject to Mexican authorities making the necessary changes to its laws and regulations.
Next Big Thing?
Gaming industry stocks can often be as risky as the bets those companies handle on a daily basis. That said, one Australian analyst sees potential in PointsBet.
The Motley Fool’s Lina Lim noted PointsBet represents a “very speculative investment,” but the analyst said the company has shown it can gain market share and secure licenses in numerous states.
“The company is now cashed up to accelerate its marketing strategy, branding, and sponsorships,” Lim wrote. “I am confident that PointsBet is well equipped to fully leverage the new market opportunity in the US and obtain further state licenses going forward.”