Pointsbet on a winner as sports re-emerge

The only thing that makes Pointsbet chief executive Sam Swanell happier than the footy returning is horse racing continuing during the COVID-19 shutdown.

Pointsbet CEO Sam Swanell. Picture: Stuart McEvoy.

The only thing that makes Pointsbet chief executive Sam Swanell happier than the footy returning is horse racing continuing during the COVID-19 shutdown — and the prospect of American basketball coming back next month.

Pointsbet has become a market darling during the virus pandemic, with its share price more than trebling since March as punters were forced to stay home and just about the only thing they could bet on was Australian horse racing.

The online betting company’s advertising during Seven West Media’s popular Saturday racing coverage was well-timed, with bookmakers usually finding a direct correlation between marketing spending and the signing up of new customers.

Pointsbet recorded its best quarter yet for its Australian business, becoming profitable for the first time since inception two years ago and pushing its share price to a record high on Wednesday. Its market capitalisation also surged past $1bn for the first time since its ASX float last June, even though the big sports in the US — a vital market for Pointsbet — have been shut.

But the AFL is back on Thursday with the big clash between rivals Collingwood and Richmond, adding to local racing and two weeks’ worth of NRL, and Swanell intends to use the return of Australia’s biggest sport as another way to acquire customers.

Pointsbet has bought the rights to become the official wagering partner for AFL coverage on Fox Sports for the first time, and the hope is that punters will bet more on Aussie rules but also stay with the company as the lucrative spring racing carnival looms in late August.

“Racing is still a dominant revenue part of the business in Australia. As much as NRL and AFL (advertising) are a great way to acquire clients, racing still generates 50 per cent of the revenue so you have to respect the spring carnival,” says Swanell.

He also believes an AFL deal with Fox Sports could provide a blueprint for other advertising deals which could become available in the market, and act as a springboard for Pointsbet to further increase its marketing spend
The deal for AFL on Fox Sports was previously held by BetEasy, which is merging locally with online betting leader Sportsbet.

That opens up space in the Australian market for Pointsbet, Swanell believes, to spend more to acquire more punters who have also drifted online while betting outlets and pubs have been shut around Australia.

“The side benefit of that (merger) for us is the media assets they had may not have come on to the market without that happening,” says Swanell, who forecasts Pointsbet’s advertising spend rising from about $17m to $23m-$24m to win market share as the bigger brands consolidate.

Pointsbet’s point of differentiation is a spread (or points) betting product where the bookmaker offers a margin on a game and the punter then bets if the final outcome will be higher or lower, though it also has more common betting offers.

But even more important is its exposure to the US, where online gambling on sport is still a fledgling industry and only beginning to open up in the states.

Hence Swanell’s interest in the National Basketball Association and its planned return in late July.

The NBA, which schedules up to 15 games per day, has become the biggest sports betting product in Australia and a vital way for Pointsbet to break into the US.

It already has market share of more than 5 per cent in New Jersey, which has 9 million people, and Swanell has high hopes for Pointsbet in states like Colorado, Indiana and Illinois — where punters are required to sign up in person and Pointsbet has clinched a partnership with the local Hawthorne racetrack to launch online sports betting to almost 12 million residents.

“Illinois is a massive market and we are going to be on the starting line,” says Swanell.

“We’re able to have more and better located sign-up facilities than any of our competitors.

“So Pointsbet has an opportunity to be one of the market leaders in Illinois.

“It’s not often you get on the starting line with such a big opportunity. The macro opportunities are great in the US and there are also opportunities in Australia. So we think we are well-placed to move forward.”