PointsBet Eyes Alberta After Success in Ontario
PointsBet Holdings Ltd. is going through a bit of a transition. It recently sold all of its U.S. operations to Fanatics, a global sports industry giant that has recently branched out into the sports betting world as part of a massive expansion drive.
PointsBet admitted that it could no longer compete in the American market. The Chief Executive Officer, Sam Swanell, talked about the possibility of expanding to Alberta when it begins to allow private-sector operators that offer sportsbook betting to launch in the second half of 2024.
Swanwell, during a conference call for investors and analysts, talked about the company’s long-term trajectory in both Canada and Australia, the former of which includes the ultra-competitive Ontario sports betting market that is currently garnering so much attention.
As it stands, Ontario is the only Canadian province that allows private-sector providers of both online casino gambling and legal sports betting to offer services within provincial borders. That official regulatory launch has led to not only billions in wagering each quarter but hundreds of millions of dollars in revenue for the provincial government since the market officially launched in April 2022.
An election in Alberta held earlier this year put the power back in the hands of the United Conservative Party, sparking potential hope that the province could begin the process of opening a market similar to the one operating in Ontario.
Should that happen, then the total addressable market (TAM) in Canada for operators – including PointsBet – would expand outside of Ontario and lead to a significant domino effect. PointsBet is one of the sportsbooks that sees the massive potential, with Swanell expecting the TAM in Canada to grow exponentially.
“We believe that there’s a good chance that Alberta, as an example, gets added to the TAM, let’s call it in the second half of calendar year ,” said Swanell. “And thus, that $2-billion market could become $2.5 billion.”
These comments come in response to reports about PointsBet’s financial results for fiscal 2023, which ended on June 30. It was a busy year, culminating with the decision to sell to Fanatics Betting and Gaming for $225 million USD. There are a few loose ends to tie up, but the shareholders approved the transaction back on June 30, with the “initial” completion of the deal on August 31.
Exiting the U.S. betting market means walking away from a market that has provided more than half of PointsBet’s A$5.7 billion legal sports betting handle during fiscal 2023. PointsBet reported A$391.1 million in total net winnings for the year, $161.1 million of which has been attributed to the U.S. side of business.
By exiting the U.S. betting market, it leaves PointsBet with a presence in Canada, Australia, and India, generating a total net win of A$230 million for the company’s fiscal 2023 but also a loss of A$107.9 million. EBITDA – earnings before interest, taxes, depreciation, and amortization for Canadian business was a negative A$35.8 million for the year ended June 30.
PointsBet hopes to turn its remaining business in a more profitable direction, which includes adding provincial markets throughout Canada (like Alberta). Swanell said that they are expecting revenue from Canadian business to continue to grow, which would shrink the overall losses from this fiscal year, with expectations to achieve a positive EBITDA by fiscal 2025.
“The Canadian business provides shareholders continued exposure to the North American market through a jurisdiction that is more attractive than most U.S. states, with no partner fees, an acceptable tax rate, and iGaming complementing sports betting for the entire market,” Swanell said during the call. “We believe the early stage of the Canadian business complements our more mature Australian business, as well as providing an opportunity to leverage attractive features of our tech stack that aren’t available in the Australian market, such as iGaming and online live betting.”
In Alberta, there is just one authorized online gambling site. That would be the government-owned PlayAlberta. That said, the Alberta Gaming, Liquor and Cannabis Commission (AGLC) issued a negotiated request for proposals (RFP) back in 2021 for sports betting services, though no winner has been announced.
The thought is that the Alberta government would construct a similar system to that of Ontario, though it would take time. The belief from PointsBet is that, when Alberta does launch, they can begin to acquire customers based on the market awareness that the brand is already able to build up.
Conclusion: PointsBet Sets Sights on Canadian Market for Future Growth
It looks like PointsBet is changing course. After selling off its U.S. business, the company is eyeing opportunities in Canada, particularly in Alberta. The CEO, Sam Swanell, is optimistic that if Alberta opens up to sports betting like Ontario did, it could be a big win for PointsBet. This comes at a time when the company is trying to bounce back from losses and sees Canada as a promising market for future growth.More info on Anthony Odiase