PointsBet Holdings has published its Quarterly Cash Flow Report for the quarter ending December 31 2019 showing strong client growth both in Australia and the US. The US business benefited from the opportunity to operate in a December quarter for the first time, with the NFL (September to February) and NBA (October to June) seasons both live. 

The firm has continued to invest in brand positioning and awareness in the US as more states legalize online wagering and PointsBet accesses additional US States. The vast majority of the US active clients are registered in New Jersey.

During Q2 PointsBet achieved a US net win margin of 3%, marking the firm’s first positive margin quarter for the US business since launch. Whilst the high staking clients segment recorded an outstanding quarter, recording a net win margin of 16.2%, the company expects this to normalize lower in the medium-to-long term. 

Total New Jersey sports betting handle, as reported by the New Jersey Department of Gaming Enforcement, achieved three successive all-time high months to November 2019 with strong momentum continuing into December 2019. 

Using the NJDGE calculation methodology for handle, PointsBet’s turnover market share for online in New Jersey was 5.9%, down from 6.7% in the previous quarter impacted by reduced high staking clients turnover. New Jersey Digital Q2 FY2020 turnover of $99.6m represented an increase of 80.9% on Q1 FY2020 as the NFL and NBA seasons progressed. 

While gross win margin achieved was 6.4%, net win margin was 1.8% reflecting, said the company, an important acquisition and retention period that resulted in higher targeted promotional spend. 

“It should also be noted that gross win margin was lower in Q2 FY2020 (to 6.4% from 8% in Q1 FY2020) reflecting a movement towards more sustainable long-term yields,” it added. 

Iowa retail recorded its first full quarter of operations in Q1 FY2020 after launching on August 20 2019. Iowa retail net win margin was lower than expected reflecting a run of favorable results for clients. This is magnified as a result of the low absolute value of net win. Net win margin is expected to stabilize as retail turnover grows and results normalize. 

During the quarter, the company launched digital operations in Iowa, accepting the first online wagers on November 20 2019. This represents the firm’s second online market to commence operations. “While it is early days for the Iowa digital business, the company is pleased with the progress made,” it noted. 

Pointsbet added that its disciplined and focused approach to marketing and promotions will be leveraged in other states which also require in-person sign up. “PointsBet is well-positioned to take advantage of the growing opportunity in the wider US as other states go live, with strong leadership and experienced management,” said the firm. 

“This has been bolstered by the nomination of Becky Harris, the first ever Chairwoman of the Nevada Gaming Control Board and former Nevada State Senator, to the Board as a Non-Executive Director.”  

PointsBet also told investors that it has been investing in building the brand and free to play database outside of New Jersey. It noted: “Not only does this mean that PointsBet is going into new states with existing brand recognition but it also assists in PointsBet’s market access strategy as we expand across the United States. 

“In January 2020, PointsBet further expanded its US footprint announcing a partnership with Lac Vieux Desert Public Enterprise and Finance Commission, an arm and instrumentality of and organised under the laws of the Lac Vieux Desert Band of Lake Superior Chippewa Indians, to provide online and mobile sports wagering and gaming (casino) in Michigan

“PointsBet is also in exclusive negotiations to operate LVD’s retail operations in the state. This represents the company’s first tribal market access deal and further demonstrates continued confidence in PointsBet’s brand and product offerings,” it stated.

On the outlook for Q3 FY 2020, the firm said it anticipated cash outflows relating to obligations under its market access agreements and a portion of the Illinois retail sportsbook fit out cost to total $7.5m. 

It stated: “We also expect Denver office fit-out costs to be $1.2m. We will continue to grow our staff and build and develop our capabilities in our Denver, Colorado USA headquarters, with our staff and research and development costs expected to be $9.3m and $2.5m respectively for the quarter. In the US, our Q3 FY2020 marketing efforts will see the introduction of an Indiana marketing campaign as we prepare to launch operations in that state.”