After U.S. Exit, PointsBet Concentrates on Canada

After abandoning its operations in the United States, PointsBet Holdings Limited is now focused on expanding in other regulated markets. On Tuesday, the CEO of the company, Sam Swanell elaborated that one of those territories is Canada. The country has witnessed tremendous growth in the last few years, with the legalization of single-event wagering on sports.

A few months ago, PointsBet inked a deal to sell its U.S. assets to Fanatics Gaming. It left the country due to being not cost-effective to operate in it. However, the company is part of Ontario’s regulated iGaming sector, which debuted on April 4, 2022. Canada’s most populous province touts a competitive market which ranks in the top five in North America.

Leveraging Brand to Boost Future Operations

Mr. Swanell noted it was important to remember that sports betting and iGaming is a rapidly expanding business and that companies like PointsBet with the experience, tech assets, and ability to work in highly regulated markets are rare. In his words, this means that the firm can leverage what it has built to deliver shareholder value now, and increasingly into the future.

The gambling company will now focus on the Australian and Canadian markets, where it is confident that will reach its current guidance in 2024. Operations in those two markets have expanded in the last five years from US$26 million of revenue in 2019 to an anticipated return of between US$230 million and US$250 million for the fiscal year 2024.

The sale of its U.S. division to Fanatics is worth US$225 million and the acquisition has been greenlit by regulators in eight states, including New York. The company has already bagged US$175 million from the sale and the rest of the transaction should be done by Q3 2024. Meanwhile, its migration to Fanatics Sportsbook was recently finalized in Virginia.

Turning Focus to Canadian Jurisdictions

Additionally, Mr. Swanell noted that in Canada, the operator is offering sports betting and iGaming in Ontario. He said the provincial market structure is attractive for betting operators, including no partner revenue share deal, nominal license fees and an appropriate effective tax rate of 18% on gaming revenue. Making the market one of strong potential in the future.

However, Ontario is not the only Canadian jurisdiction, the company has set its sights on, as it demonstrated interest in Alberta as well. The Western province may be the next one to follow Ontario’s open and competitive market model and introduce one on its own. Thus, allowing private operators such as PointsBet to obtain licenses and operate legally in the province.

Mr. Swanell believes that Alberta could be added to the total addressable market in the second half of 2024, transforming a CA$2-billion market to a CA$2.5-billion. He also noted that launching a similar market in the province will not affect the company’s finances, as its marketing in Ontario already bleeds into the Western province.

Source: Senkiw, Brad “PointsBet Turns Focus to Future in Australia, Canada” Covers, November 29, 2023