After an extended period of struggle to win a larger US market share, the Australian-based sports betting giant PointsBet has decided to sell its U.S. operations. As Front Office Sports reports, the company has already hired an investment bank to arrange the sale.
The bank that will facilitate the sale of PointsBet’s North American operations is the investment bank Moelis & Company. The company reportedly commented on the expected arrangement: “We believe further industry consolidation is inevitable.”
Unexpected Market Performance:
PointsBet’s decision follows a series of partnerships in the North American market that have recently been terminated, such as those with odds provider NBC Sports and the University of Colorado testifying about the difficulties the company has experienced during its North American expansion. According to the source, the wagering company was ranked as the seventh-largest sportsbook in the country with DraftKings and FanDuel anchored at the leading US market position.
Expensive Marketing Activities:
The Australian company has already pumped $162 million into marketing and sales to try to get hold of the largest possible portion of the US market value estimated at $ 13 billion. Over the previous two years, the operator allocated a total of $ 240 million for promotional purposes and sustained two consecutive years of financial losses as a consequence of these huge investments.
For this reason, PointsBet first considered the sale of the Australian operations to the local sports wagering operator Betr to try to focus on US expansions beyond the 14 US states currently covered. However, the sale was never completed. At the same time, North American expansions seemingly have not brought the financial results expected.
Australian Operations Increased:
On the other side, the Australian business recorded a $600 million handle in Q3 2022 alone, with H2 2022 revenue reaching the level of $ 120 million. These figures may have made the company reconsider its expansion strategy. The operator reportedly increased revenues in Australia following the reduction of marketing costs and the amended deal with the marketing company NBCUniversal. Therefore the company may have decided to exclusively focus on the Australian market.
In fact, it withdrew its license application for the State of Massachusetts before online sports betting was launched in this state in March. This move may have saved the company’s money for further Australian investments with the US operations being announced for sale.
PointsBet has now hired the investment bank Moelis & Company to facilitate the sale of its US business. It is expected that there will be many bids as the subject operations have generated a total sports betting handle of $1.1 billion for the first half of the 2023 fiscal year alone. The result is not in line with the company’s expectations, but companies like Fanatics have reportedly been interested in buying the company for quite some time.