PointsBet cutting marketing spend in quest to break even

The wagering company is now concentrating on Australia and Canada after clinching the sale of its US business and says its local arm can break even by April next year.

Wagering firm PointsBet is slashing its marketing expenses by about $10m in Australia in order for its overall business to finally break even, as point of consumption taxes and a softening betting market start to bite.

But chief executive Sam Swanell said he was still confident PointsBet would “get the same bang for its buck” from its marketing spend during the upcoming Spring Racing Carnival that it did a year ago, and at least maintain and even grow its revenue and customer base.

PointsBet said its Australian business had a revenue fall of about 2 per cent in 2023, but it expects net revenue growth in the current 2024 financial year as it trims marketing expenses, which were about $61m in 2023, by 15-20 per cent.

Mr Swanell said PointsBet can maintain its market share of about 5 per cent in Australia by spending less because this year there would not be a market entrant like Betr, which spent up big a year ago attracting punters with its 100-1 odds offers, it would have to compete with.

“We know we had a bit of unproductive marketing spending last year,” Mr Swanell said.

“We spent heavily in the first half of 2021 when we went hard on growth and then repeated that in 2022. But we found that we were not anywhere as happy as we thought we might have been with that investment.”

PointsBet on Thursday posted an EBITDA loss of $49m for its continuing operations – its Australian business and Canadian arm – for the 2023 financial year, compared with an EBITDA loss of $21.4m in 2022.

The company is selling its US business for $333m to sports merchandise giant Fanatics, a deal that was recently approved by shareholders.

PointsBet intends to return between $1.39 and $1.44 per share to investors from the proceeds of the deal, with the first capital return of $1 per share paid in mid-September.

The company made a statutory net loss of $276m if the US arm is included in its 2023 results, with the Australian and Canadian businesses – which will form the basis of PointsBet after the US business sale is finalised – recording a $107m statutory net loss.

Mr Swanell said with racing imposing more taxes on wagering firms, PointsBet was finding some success with its punters betting more on sports like Australian rules football and rugby league.

PointsBet’s Australian arm had turnover of about $2.6bn, up 4 per cent from a year earlier, for a net win amount of about $211m for the division. Sports turnover was up 47 per cent, offsetting a decline in racing turnover.

Its net win figures for the AFL and NRL were up a combined 86 per cent compared with a year earlier.

Racing is still PointsBet’s biggest betting product though, and Mr Swanell said he was confident the spring carnival would still have strong interest for punters despite inflationary pressures.

“We are comfortable with where we are going and the strength of our products. You read about wider macroeconomic conditions and cost of living pressures, and think that will have an impact on our sector, but so far we are not seeing that.”