PointsBet Holdings, the Australian parent firm of PointsBet US, has published its financials for the quarter ended September 30, 2019. The update reveals considerable activity in the US market, set against heavy cost of investment in the newly regulated space. 

The firm reported customer receipts of US$8m with a net increase in player cash accounts of US$1.23m. US business development cost the company US$5.8m, with an advertising and marketing spend of US$5.4m. Staff costs were US$4.58m, including continued hiring of key US personnel.

During the period, the firm entered into a partnership with Penn National Gaming, securing online market access in the US States of Ohio, Indiana, Missouri, Louisiana and West Virginia (subject to enabling legislation and licensure).

Recorded Q1 online sports wagering turnover market share in New Jersey was 6.7%, based on New Jersey Department of Gaming Enforcement and company data. The company also obtained authorization from the Iowa Racing and Gaming Commission to commence the PointsBet retail operations at Catfish Bend Casino in Burlington, Iowa.

Of note, the US business increased turnover by 34% compared to the previous quarter, while US net win was US$1.9m. The group’s net win margin for the YTD FY2020 was 6.1%, up from 5.0% in FY2019.

In its update, PointsBet stated: “The US sports betting opportunity continues to build momentum with the New Jersey market achieving a record-breaking US$446m wagered on sports in September 2019, following the return of the NFL – an increase of 16% on the previous record month in January 2019, being US$385m. 

“PointsBet is well-positioned to take advantage of the growing opportunity in New Jersey and the wider US as other States go live, with strong leadership, experienced management and scalable cloud-based technology developed in the sophisticated and competitive Australian wagering market. 

“In August 2019, PointsBet and Penn National Gaming entered into a partnership which secured online market access, subject, where relevant, to the passing of enabling legislation and licensure, to Ohio, Indiana, Missouri, Louisiana and West Virginia. The partnership has the potential to expand PointsBet’s US footprint to 10 States, with existing market access agreements in New Jersey, Iowa, Illinois, Colorado and New York, each subject, where relevant, to the passing of enabling legislation and licensure. 

“PointsBet commenced retail operations at Catfish Bend Casino in Iowa on 20 August 2019. This was the Company’s first retail operation which is expected to deliver higher operating margins due to lower promotional costs and a more recreational client demographic compared to online-only markets. This experience will be invaluable as PointsBet rolls-out additional retail operations in the US States, including Illinois and Colorado.” 

The firm went on to confirm that it had commenced actively targeting high staking clients in late August 2019. “This initiative has been developed following an increasing number of higher staking clients being attracted to PointsBet’s leading product suite (including depth of markets and the market-first PointsBettingTM product) and client service,” it said. 

In a separate announcement, the company said that it intends to raise circa US$81m to fund its US expansion plans. The cash will be generated via the placement of new, fully paid ordinary shares and used to fund, inter alia, marketing and client acquisition and technology.