PointsBet encouraged by early stage of Canadian operations despite FY2023 losses

The firm is also keeping a close eye on developments in Alberta

PointsBet made several notable observations on its operations in Canada in its latest quarterly report, reporting a total net win of A$5.5m (CAD$4.9m) for the jurisdiction in Q4FY2023 despite an overall loss for the year.

The Australian-owned betting and gaming group recorded A$102.3m (CAD$90.6m) in overall revenue for the three months ended June 30, marking global growth of 19% year-over-year.

Sports betting handle dropped 18% YoY to A$1.07bn (CAD$950m), but this was offset by 122% growth in igaming revenue, which stood at A$16.2m (CAD$14.4bn) in the last quarter. Sports betting revenue also grew 10% to A$86.1m (CAD$76.3m).

Play-off push

Significantly, PointsBet highlighted “momentum” in its Canadian sportsbook and online casino offerings in the quarter.

Canada net win was up 3052% YoY to A$5.5m (CAD$4.9m) with a total sportsbook handle of A$42.5m (CAD$37.7m) as the NBA and NHL playoffs, combined with the opening of the MLB season, generated “strong interest”. This represented a 166% rise on the same period last year.

Furthermore, sports book gross win was A$3.3m (CAD$2.9m) at a gross win margin of 7.7% while sports betting net win came in at A$1.9m (CAD$1.7m) at a 4.4% net win margin.

Net win for the casino sector, meanwhile, came in at A$3.5m (CAD$3.2m), up 453% YoY on A$0.7m (CAD$0.62m). The corresponding period last year was, of course, the first few months of Ontario’s newly regulated igaming market, which explains the substantial YoY growth.

However, despite a strong performance in April and May, net win was flat QoQ due to volatility in June on table games, with some partial offset to this driven by growth in slots.

PointsBet did, though, finish the financial year with a net win of A$18.3m (CAD$16.2m) in its first full year of operation.

Speaking to investors, CEO Sam Swannell noted: “The strength and quality of the customers that are making the choice to play on PointsBet demonstrates the effectiveness of our strategy.

“Cash active clients grew to over 30,000, up 8% from Q3. Total marketing spend was CAD$5.5m in Q4, down 22% versus the PCP as we continue to get more efficient in acquiring our target customer.

“We also delivered key operational and technological enhancements aimed at reducing customer friction throughout the onboarding journey, which resulted in significantly improved performance of our conversion funnel in Q4.

“As we look ahead to FY24, we’re looking forward to delivering growth in Canada.”

Attractiveness of Canadian market

Swannell later added: “The Canadian business provides shareholders continued exposure to the North American market through a jurisdiction that is more attractive than most US states, no partner fees and acceptable tax rate and eye gaming complementing sports betting for the entire market.

“We believe the early stage of the Canadian business complements our more mature Australian business, as well as providing an opportunity to leverage attractive features of our tech stack that aren’t available in the Australian market, such as igaming, and online live betting.”

He continued: “The company currently expects the positive EBITDA of the Australian trading business to significantly offset EBITDA losses of the Canadian trading business in FY24 as Canada builds scale.”

While PointsBet expects Australia to offset Canada’s losses in FY24, the firm doesn’t envisage positive EBITDA in Canada being too far away, with FY25 earmarked as a possible point to break profitability.

Alberta on the agenda?

Alberta has been heavily tipped as the next Canadian province to follow in Ontario’s footsteps, and Swannell confirmed that PointsBet is “keeping a close eye” on developments there, and is primed to act accordingly.

“I think that the difference is that in America we were live in 14 states, and only four of the 14 had igaming. In Canada, you have one state that’s live and it has igaming, so your path to profitability, and the efficient monetization that you get, is stronger.

“Plus, we’re getting better every quarter, our product is getting better. That’s been seen in the American results, and we’ll see that in the Canadian results.

“As it relates to the potential expansion of Alberta, unlike here in America, we don’t anticipate that that comes with a whole round of additional costs. When you open a new state in America, it’s its own country, basically. And so Canada will be province by province, but the expectation is that the synergy benefits are far higher.

“And as it relates to some of our marketing spend, performance marketing is very targeted. So you’re only targeting people in the province of Ontario at the moment.

“But as it relates to above the line, there’s certainly some spend that we’re making that floats into other jurisdictions of Canada. So, if an Alberta was to open up, you naturally get some marketing efficiencies there.”

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