PointsBet Reportedly Seeking to Sell Its Business in the US

PointsBet, one of the smaller players on the US sports betting scene, hired the services of financial advisory services firm Moelis & Co, seeking to explore potential opportunities for the sale of its US arm.

Divesting PointsBet US

The appointment of the agency specialized in providing strategic advice to corporations, governments and financial sponsors is seen as a move to accelerate PointsBet’s effort to divest its business in the US as previous attempts of the operator to sell its domestic business failed.

The online sports betting market in the US is dominated by three operators: Flutter Entertainment’s FanDuel, Boston-based DraftKings and BetMGM, the joint venture of MGM Resorts and Entain, which collectively hold 85% of the market.

The financial might of the major players is pushing up customer acquisition costs beyond the means available to smaller operators like PointsBet, forcing them to seek other alternative ways to acquire a market share or divest their businesses.

“We believe further industry consolidation is inevitable, and we’ll position PointsBet to take advantage of movement in the sector,” a PointsBet spokesman cited by The Australian Financial Review told Street Talk.

Decreasing 2023 Marketing Spend

In the quarterly financial report released in January, PointsBet announced plans to cut its marketing spend by 24% in an effort to maximize earnings for its shareholders amid tough macroeconomic conditions and rising customer acquisition costs that are likely to force further consolidation among the smaller operators. A month later, PointsBet announced its withdrawal from Massachusetts.

Bally’s Corporation expressed an interest in acquiring the US assets of the Australian-based sportsbook operator last year but it is unclear whether the company which has its own online sports betting division still retains an interest in PointsBet US.

Another potential buyer could be Penn Entertainment which also operates its own sportsbook, Barstool Sportsbook, and the acquisition of PointsBet US could increase Barstool Sportsbook’s market share and overall position in the market. And Penn has a 6% stake in the Australian operator as well.

The buyer of the US assets of PointsBet would benefit from the operator’s growing revenue and healthy cash balance, as well as operating licenses in 14 US states: Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan, New Jersey, New York, Pennsylvania, Virginia, West Virginia, and the latest to go live Ohio.

In December, PointsBet refused an offer from Betr for its Australian business according to a filing to the Australian Securities Exchange (ASX). PointsBet deemed the offer below the market valuation and rejected the bid.