Australian online sportsbook operator, PointsBet, is in preliminary discussions to sell its Australian business to the new-founded wagering operator, Betr. A sale of the Australian business would free up the $411 million company to focus on its US expansion, while the start-up would take over about 232,000 of PointsBet’s Australian customers.
In the Wednesday morning statement to ASX, PointsBet confirmed in a press release it is considering selling its Australian business to the News Corp-supported wagering start-up: “PointsBet confirms that it is currently in discussions with [the] owners and operators of Australian wagering operator Betr, regarding a potential transaction involving the sale of its Australian trading business and notes that any potential transaction will be assessed in the context of PointsBet’s global strategy and opportunities,” said the statement.
The statement added that there is no certainty that these discussions will lead to the closure of a deal.
Access to technology and greater market share:
Betr is owned by News Corp, Las Vegas-based Tekkorp Capital, and ASX-listed BetMakers Technology Group, which provides its technology. The sale would give Betr access to that technology to help it speed up its growth.
PointsBet currently holds a five-percent share of the Australian online sports betting market with the goal set to double the share by 2025. The company operates in the United States and Canada as well, being the seventh-largest operator in America with a 3.7 percent market share in this $13 billion-in-turnover market.
PointsBet and Betr held preliminary discussions earlier this year but the former rejected the offer and Betr ended up buying online sportsbook TextBet for $10 million soon after. According to industry sources, the bid was worth between $220 million and $300 million. This time, the deal announcement caused a surge in PointsBet’s share price by more than 7 percent, but PointsBet and Betr did not comment on the price negotiations.
If the latest negotiations are successful, Betr would take over about 232,000 of PointsBet’s Australian customers, who generated more than $600 million in turnover in the 2022 Q3. At the same time, a sale of the Australian business would enable PointsBet to completely focus on its expansion in the US market, where it currently covers 13 US states including Colorado, New York, Pennsylvania, and Illinois.
PointsBet has recorded two straight years of losses as it spent $240 million on sales and marketing, with $162 million pumped into the US alone. It is certain that the potential sale of its Australian business would be invested into the attempts to get hold of a larger slice of America’s $13 billion cake, but the result of negotiations also depends on Betr’s cost-efficiency calculations referring to the Australian market.