PointsBet raises AUS$75m from ASX listing

Australian online sports betting operator PointsBet has raised AUS$75m (£40.9m/€45.9m/US$51.6m) after listing its shares on the Australian Securities Exchange (ASX).

PointsBet began trading this week under the symbol PBH, having sold a total of 37.5m shares at an issue price of AUS$2 each. By the close of the market today (Friday), PBH shares were priced at AUS$2.30.

Funds raised from the listing will be used to support marketing and customer acquisition, software and platform development, business development and costs associated with the listing.

Shares sold through the listing will represent a 34.1% stake in the business, with those held by existing shareholders accounting for 65.9% of the operator's share capital.  

The operator said the listing forms part of its wider growth strategy, which includes pursuing new opportunities in the expanding US sports betting market.

PointsBet launched in the US in January this year when it rolled out its services in New Jersey via a partnership with Meadowlands Racetrack. The operator has also recently struck a deal to go live in Catfish Bend Casino in Burlington, Iowa, when the state’s regulated market launches.

Deals are also in place for PointsBet to begin operating in New York, Colorado and Illinois, subject to legislation passing in each of these states. PointsBet plans reveal the details of these agreements at a later date.

“There is significant market opportunity in the United States for PointsBet, as a result of the Professional and Amateur Sport Protection Act being overturned by the US Supreme Court in May 2018,” PointsBet chairman, Brett Paton, said in the listing prospectus.

“In addition to the Meadowlands agreement for New Jersey, the company has demonstrated an ability to win partnerships in other states in the United States.”

Paton also noted growth opportunities in PointsBet’s native Australia, citing an increase in online wagering at a CAGR rate of 11.7% between 2014 and 2018, according to independent research.

“Since launch, PointsBet has continued to expand its client base, turnover, revenue and net revenue in the Australian market,” he said. “PointsBet’s scalable technology platform and experienced staff means that it is well placed to continue this growth and gain market share.”

The successful listing comes as PointsBet this week reported a significant year-on-year increase in revenue for the six months through to December 31, 2018, but also a huge rise in operating losses.

Half-year revenue totalled AUS$12.1m, up from AUS$3.6m in the corresponding period in 2017. As the operator was not live in the US during the six, this was driven by growth in the Australian market.

Australian trading revenue amounted to AUS$12.1m, compared to AUS$3.6m last year, technology intersegment sales helped generate AUS$384,186 in revenue in the first half.

However, PointsBet also saw a significant rise in certain expenses. Marketing costs alone jumped from AUS$1.6m to ASU$7.6m, while employee benefits hiked from AUS$1.7m to AUS$5.3m.

The operator also noted AUS$1.1m in finance costs, while administration costs climbed from AUS$109,298 to AUS$639,565 and IT costs from AUS$96,922 to AUS$225,925.

Cost of sales for the period stood at AUS$5.2m, leaving PointsBet with a gross profit of AUS$6.9m, but a rise in expenses elsewhere left the operator with a loss before income tax expense AUS$10.3m, almost 10 times the AUS$1.27m posted in the first half of the previous year.

When taking into account additional comprehensive income of AUS$334,858, the operator ended the half with a comprehensive loss of AUS$9.97m, compared to AUS$1.3m at the same point last year.