Legal sports betting operator PointsBet has confirmed that it is in discussions to sell its Australian sportsbook unit to fellow Aussie operator betr.
While financial terms remain undisclosed, media reports have estimated that the takeover price is in the range of AUS $200 million and AUS $250 million ($135 million to $168 million American).
One of Australia's premier sports betting sites, betr was founded by Matthew Tripp, formerly the owner Sportsbet and BetEasy brands in Australia, along with CEO Andrew Menz.
It is also part of a partnership with Tekkorp and News Corp — in which CEO Rupert Murdoch's son, Lachlan Murdoch, was behind the launch of U.S.-based operator FOX Bet.
"We want to grow sensibly through M&A and organically with the partnerships that we forged with everyone," said Tripp in October. "We believe we will be certainly a tier one operator very quickly, but in time the most prominent brand in the country."
Unsurprisingly, the breaking news concerning ongoing negotiations between PointsBet and betr (no relation to Jake Paul's American-based microbetting sportsbook Betr) was first reported by newspaper The Australian on Friday — which happens to be owned by News Corp.
The story obliged PointsBet, headquartered in Melbourne, to issue a statement prior to the start of trading Wednesday on the ASX where PointsBet shares are listed, that characterized the new discussions as "preliminary in nature."
"PointsBet confirms that it is currently in discussions with [the] owners and operators of Australian wagering operator betr, regarding a potential transaction involving the sale of its Australian trading business and notes that any potential transaction will be assessed in the context of PointsBet’s global strategy and opportunities," read the official corporate statement.
Boosting the cash reserves
The sale of its Australian sportsbook would provide PointsBet with additional capital reserves to bolster its aggressive expansion into the U.S. legal sports betting market. PointsBet's mobile sports wagering app is currently available in 13 states and is about to go live in Ohio when that state finally launches on January 1.
PointsBet CEO Sam Swanell avowed ambition to expand aggressively into the U.S. market and, at the end of September, its cash reserves stood at $300 million.
The company's U.S. sportsbook division saw its handle grow by 50% YoY in Q1 FY23 to $331.6 million, while net earnings more than doubled to $18.7 million, as compared to $9.3 million in the same period in 2022.
During the company's Q1 2023 earnings call in October, Swanell noted that PointsBet's sportsbook app had been ranked third best in the U.S. by Eilers & Krejcik, the independent U.S. research firm, trailing only FanDuel and DraftKings ahead.
Should the takeover of PointBet's Australian unit succeed, betr would immediately gain access to that prized tech platform.
A change of heart
The prospective acquisition of PointsBet's Australian arm comes six months after The Sydney Morning Herald published a story indicating that a consortium led by Rupert Murdoch's News Corp had made a previous takeover attempt in June.
The reported purchase price at the time was between $155 million and $211 million, a figure that was summarily rejected by PointsBet as being too low.
But the newly reported takeover bid of between $135 million to $168 million means that PointsBet is now willing to accept substantially less money.
By divesting itself of its Australian sportsbook, PointsBet is positioning itself to make further inroads into the U.S. market, as well as increase its market share in Ontario, Canada.
Looking for leverage
Betr has an ambitious founder in Tripp, who has been waiting in the wings for several years to launch a new sportsbook in his native Australia. He had previously attempted to partner with News Corp on a sportsbook venture, but those plans were scuttled with the $12.3 billion May 2020 merger of Flutter and Stars Group.
Now, betr is poised to become a major player in the Aussie sports betting industry based on the evolving strategic concept of integrating media titans with sportsbooks.
"The genesis (of betr) is the wagering company, media organization partnership," betr’s CEO Andrew Menz said in an interview in October. "We’ve seen that model work so spectacularly well with Sky BET in the UK and we saw that model as the one that could supercharge the growth of an existing company... and the way to launch a start-up."
