Financial giant Susquehanna bought 12.76% of PointsBet, making it the gambling operator’s largest shareholder.
PointsBet will issue 38.75 million new shares to SIG Sports, a division of Susquehanna International Group, or SIG, at a price of $ 1.68 ($ 2.43 AUS) per share, the company said Sunday in a statement to the Australian Stock Exchange. This is approximately a 13% increase over the price of PointsBet shares at Friday’s close.
In addition to the $ 65.2 million investment ($ 94.16 million), PointsBet announced that Nellie Analytics, which was founded by SIG, has entered into an agreement to provide technology and data to the company.
The investment is a guarantee that despite the early return of the fast-growing sports betting industry in North America, where aggressive marketing and expensive bonuses are the main way companies gain customers, bettors will eventually switch to best-value sports betting. . And that’s where SIG’s experience is most valuable, according to co-founder and managing director Jeff Yass.
“When we combine [PointsBet’s] analysis with our analysis, we believe we can make the best price in business, “Yas said in an interview. “This is our bet that the best price will win. If this is a marketing contest, then, frankly, Susquehanna doesn’t add much value.
The money should help PointsBet continue to grow its business in North America, as the new jurisdictions legalize betting in both the United States and Canada. Although PointsBet is based in Melbourne, it has given North America priority for business growth and not necessarily in the same way as DraftKings and FanDuel have. While these companies are spending in order to possibly control huge parts of the market, PointsBet executives are preaching a more conservative marketing approach with the stated goal of eventually having about 10% market share. (Currently it is about 4%, according to estimates from Eilers & Krejcik).
Ias said that if his pricing thesis was correct, there was no reason PointsBet could not exceed that 10% target. “If it’s 10% that you don’t have to spend crazy amounts on advertising to get started, I think that’s a reasonable goal,” Yass said. “I hope that if we have the best prices in the long run, we can have much more than 10%.”
According to the documentation, there are no changes to the PointsBet board as a result of the SIG investment.
The partnership with Nellie Analytics will be through Banach Technology, a company that PointsBet bought last year for $ 43 million in cash and shares. Under an initial exploration agreement, Nellie will provide exclusive data services free of charge to PointsBet for a period of nine months, according to the documentation. The plan is ultimately to enter into a long-term partnership.
PointsBet hopes Nellie’s technology in areas such as live betting and micro markets will improve its offering. While most major sports betting outsource many of these services to other companies, PointsBet often discusses the benefits of owning its own technology. This has allowed the sports bookmaker, according to executives, to be more flexible in its proposals and to ensure that its product is sufficiently differentiated from its competitors. Working with an outside company, although owned by PointsBet’s largest shareholder, is at least a partial departure from this approach.
Overall, it was a rough 12 months for publicly traded sports betting stocks, especially in the United States. The wider market shift from growing companies has highlighted the huge costs operators incur in retaining customers and attracting new ones. Heavy tax requirements in states such as New York, a critical market and other market contractions further stress business.
PointsBet, which currently operates in 10 US states, has not escaped these concerns. The company’s shares have fallen by about 70% this year. It ended on Friday with a market capitalization of 374 million dollars (540.33 million Australian dollars).
Headquartered in Pennsylvania, Susquehanna is one of the largest commercial companies in the world. It has additional business verticals that include institutional intermediation, private capital and venture capital, structured capital and sports analysis. The company has more than 2,300 employees worldwide.
The new shares will be issued at the existing PointsBet placement capacity, according to the documentation. They are expected to be quoted “on or around” June 17. SIG’s shares include a voluntary blockade period of 24 months, which can be shortened if the long-term partnership with Nellie does not materialize.
(This article was changed to paragraphs 4, 5 and 7 to add citations from Jas.)