Betr set to make play for Australian arm of PointsBet

The ambitious Betr has made a big splash after launching during racing’s recent Spring Carnival. It is now on the hunt for acquisitions, and is set to go after a local competitor.

PointsBet’s advertising campaign starred Shaquille O’Neal. It now looms as a takeover target

PointsBet is on the verge of being broken up, with suitors circling the wagering business in Australia and potentially the US.

Fast-growing online wagering business Betr is said to be keen to buy PointsBet’s Australian business, in what would be the latest in a series of merger and acquisition moves in the Australian betting industry.

Betr and PointsBet management are understood to have held discussions about a deal that would add PointsBet profitable local arm to a Betr business that attracted a huge amount of new customers when it was launched during horse racing’s recent Spring Carnival.

The deal could be worth $200m to $250m. Betr and PointsBet would not comment.

Should Betr and PointsBet’s Australian business combine forces, the move would put PointsBet’s North American arm in play.

PointsBet has mostly focused on breaking into the emerging and lucrative US betting sector, where states have been opening up their markets to digital betting for the first time.

Its Australian operations have a marketing campaign starring US basketballer Shaquille O’Neal.

PointsBet’s US business could be an attractive bolt-on acquisition to a rival firm in America or one of the global companies also trying to break into the market there. Betr could also have global ambitions once it beds down further acquisitions in Australia.

Betr reportedly held preliminary discussions with PointsBet earlier this year, but then bought TexBet in August in a deal worth about $10m.

TexBet is an online bookmaker based in Tamworth, NSW, formed by Terry (Tex) O’Shea and his son, Wade.

Betr then went close to winning the $1bn race for the Western Australian wagering licence, before withdrawing its bid at the eleventh hour in late October.

Should Betr make a formal play for PointsBet’s Australian business, it would gain a business with about 232,000 cash active clients that had turnover of $611.9m in the most recent September quarter.

Betr gained about 300,000 new customers during spring racing by its well-timed 100/1 promotion for any bet, which attracted punters in their droves to back the likes of Melbourne Cup favourite Deauville Legend and Brazil to win the soccer World Cup.

While its Australian business has been growing, it is the US – where the online betting market has opened up across several states in recent years – that has been a major focus for PointsBet.

Its turnover in the US reached $523.8m in September and the business now has about 272,000 cash active clients, up 50 per cent from a year earlier.

The US move has been expensive though, with PointsBet and other global and local firms spending big to win a share in what is likely to emerge as the biggest sports betting market in the world as more states legalise online gambling.

PointsBet has racked up more than $450m in losses over the last two full financial years as it chases market share via advertising and sponsorship campaigns and betting offers to new customers, but management claim the business has now reached sufficient scale to finally slow its marketing spend.

The wagering firm had almost $240m in sales and marketing expenses in 2022, including about $162m in the US alone as it began operations in new jurisdictions and rolled out offerings and enticements to more customers.

PointsBet said it spent $US22.8m on marketing in the most recent September quarter, concentrating more on regional and local investments in the 12 states it has online sportsbooks in and the four states it is operating iGaming.

Betr is run by digital wagering pioneer Matthew Tripp and chief executive Andrew Menz. It is backed by an ownership group including News Corp Australia – publisher of The Australian – and Las Vegas-based Tekkorp Capital, owned by Australian wagering entrepreneur Matt Davey. Betr’s technology is supplied by BetMakers Technology.

Mr Tripp is a former executive of Australian betting companies Sportsbet, CrownBet and BetEasy, and is also a shareholder in BetMakers.

PointsBet chief executive Sam Swannell told The Australian in late August that his company now has about a 3.7 per cent market share in the US, a country where all the world’s biggest betting firms have piled into in recent years as sports betting becomes increasingly legalised.

“We think people should keep in mind that we are the seventh biggest operator in North America now and that’s where for the next 10 years the growth in the global gaming market is going to be,” he said.

“So we have put in place the building blocks, scaled the team, got the product and learned a lot from marketing. So from our perspective the hardest part has been getting to this point from a few years ago.”

PointsBet shares have fallen more than 80 per cent on the ASX since January 1.