PointsBet CEO Sam Swanell has acknowledged reports of a potential sale of the company’s U.S. business, saying that some negotiations are at an advanced stage.
Reports have circulated for several weeks across various media outlets that the company has hired investment bank Moelis & Company as an advisor to look into potential sale opportunities for its North American business.
PointsBet continues to engage in discussions regarding strategic transactions that offer the potential to add value for shareholders, Swanell said on a third-quarter earnings call Thursday (April 27).
“The company is currently in discussion with multiple parties in respect of potential transactions that would involve part or all of our North American business,” Swanell said. “Certain negotiations are well advanced.”.
The reason for considering the sale, Swanell said when pressed by analysts, was about maximizing shareholder value in light of challenging capital market conditions.
“We've built a valuable business, as I've said consistently,” he said. “We're pleased with our market conditioning. We clearly have a growth plan that we're delivering on.
“But at the same time, we're conscious we operate in a rapidly evolving market,” he continued. “We've got a strong balance sheet, but we acknowledge that at some point, we're going to need some additional capital.
“So, we continue to assess all of these sort of credible strategic opportunities really carefully, but ultimately, in determining which of these opportunities would be pursued, we answer one key question, which is what will be most value-accretive for shareholders.”
The talks of selling the U.S. side of the Australian-based business comes after an aborted attempt to sell the Australian bookmaking business to the News Corp-backed Betr earlier this year.
Those discussions have since been terminated, Swanell said, although he added that the company remains in talks with other companies interested in acquiring the Australian business.
In the U.S, PointsBet was an early success story, drawing a respectable high single-digit market share in the competitive New Jersey market despite having virtually no history or brand recognition in the market prior to launch and an advertising budget that paled in comparison to the biggest rivals.
However, as the market has grown only more competitive and marketing spend has continued to increase, the company recently altered its strategy to focus more on existing markets, particularly states that capitalize on its marketing partnership with NBCUniversal, rather than pursuing growth in new markets.
PointsBet and NBCUniversal agreed to a modified agreement earlier this year to extend its partnership through August 2027 but reduce the overall annual marketing spend PointsBet is committed to over that time.
The previous deal, signed in 2020, required PointsBet to spend more than $90m in advertising on NBC networks, and included a coveted marketing spot on NBC’s Sunday Night Football broadcast.
Since then, however, PointsBet abdicated that marketing spot and allowed a marketing relationship with the NFL to expire. The new NBC deal calls for $58m in annual spending and reallocates a big part of that spending to regional networks rather than national spending.
The company also abruptly withdrew its application for a mobile betting license in Massachusetts just weeks before the market was set to go live, and Swanell said the company does not expect any new state launches in the short term.
“That total addressable market that we've got with 35 percent of the population is extremely large,” he said. “We want to keep improving the growth in net win and keep managing that relationship with cost.”