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PointsBet has finalised the sale of its US division to Jay-Z-backed merchandise giant Fanatics Betting and Gaming, five years after it broke into the market with heavy advertising spend and aggressive expansion.
The ASX-listed wagerer announced the $US150 million ($225 million) deal on Monday morning. This masthead stated on Sunday that a deal was imminent.
PointsBet chief executive Sam Swanell announced the sale of the US division to Fanatics on Monday, as foreshadowed by this masthead on Sunday.Credit: Chris Hopkins
Under the terms of the sale, Fanatics will acquire PointsBet’s US operations, while PointsBet will retain its Australian and Canadian outfits. PointsBet was advised by Moelis & Co and Flagstaff Partners on the deal. It’s the first major wagering acquisition in Australia since the rapid online betting boom caused by COVID-19 began to ease off, prompting many industry experts to predict a period of rapid consolidation.
PointsBet’s chief executive officer Sam Swanell said the US acquisition will free up the business to concentrate on expanding market share in Australia and Canada.
“We’ve deliberately held on to Canada. America’s state-by-state environment comes with lots of extra costs and your margins get squeezed if you don’t have significant scale ... Canada is a more favourable market, and we can still demonstrate our market-leading technology there when it comes to online live betting and online casino, unlike in Australia,” Swanell told this masthead on Monday.
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Unlike Australia, Canada and the US have legalised online live betting, which has resulted in exponential growth for wagerers – including PointsBet – in an increasingly competitive environment.
“We think this deal allows investors to maintain exposure to the more attractive North American market and importantly, the Australian and Canadian businesses will break even and move into profitability from FY25 when it closes,” Swanell continued.
The deal means Fanatics will be able to meet its growth targets of operating in 15 US states by 2023. PointsBet operates in 14 states, including Michigan and New York, and will also give the aspiring wagering group access to PointsBet’s established technology.