PointsBet Holdings Ltd. is going after a certain kind of online sports betting customer in the United States: the ones who like to gamble.
The Australia-based company said on Monday that it is targeting “super users” of online sportsbooks in the U.S., which the bookmaker said were people who bet on average three days per week on a wide variety of sports.
PointsBet said in its latest investor presentation that these "highly engaged users" require a more personal level of service that they may not currently be getting.
“These users want an elite product and user experience; they appreciate the best odds, breadth of markets and being able to place their bets quickly and easily,” the presentation said. “Super users are bettors first, sports watchers second."
Super users are “also not to be confused with professional or sharp players,” added Johnny Aitken, chief executive officer at PointsBet USA, during the company’s earnings call on Monday.
Rather, these users make a majority of their wagers on live-betting markets and parlays, the executive said, and they must have the best technology. And, by targeting and winning over this group, PointsBet thinks it can ratchet up the revenue it can generate through legal sports betting.
“To be clear, this is not a change of strategy, but an evolution of strategy,” Aitken said. “We have spoken consistently about seeking a profitable handle and a focus on net win growth.”
A profitable pivot, perhaps
PointsBet has indeed indicated in the past that its focus has shifted to increasing the amount it wins from customers, as part of a broader trend of showcasing paths to profitability within the online sports betting industry.
Operators have also made live betting and parlays (of the same-game variety and otherwise) a staple of their efforts to achieve positive earnings, as the latter is an especially higher-margin product for sportsbooks (because bettors lose more them more often).
Another lever that operators are pulling in the name of profitability is promotional play. Some bookmakers have tamped down the quality or quantity of free bets and other bonuses they have offered to players to drive down their costs.
PointsBet Group CEO Sam Swanell said in the summer that the operator intended to reduce its historically high levels of promotional spending. Targeting "super users" in the U.S. has allowed the bookmaker to reduce promotions as a percentage of gross revenue from sports betting in the U.S. as well, with Aitken noting it fell to 45% in its most recent quarter from 57% a year earlier.
The combination of targeting "super users” drawn to PointsBet’s technology and a "market-leading" product for live betting will help the operator win in North America, Aitken said.
Do neigh forget about the horsepeople
“This is especially relevant as promotional investment across the sector continues to reduce and an ever-widening group of positive revenue-contributing sports bettors select the best product as the primary consideration point of where they choose to sign up and where they choose to bet,” he added.
PointsBet is also seeking to attract another demographic of gambler: the horseplayer. With that in mind, the company announced earlier this month it had struck a partnership with a business division of the Stronach Group, "North America's dominant Thoroughbred horse racing company.”
As part of the agreement, horse-racing betting products and content will be embedded in the PointsBet sportsbook app, as well as in a standalone platform in states without legal sports betting.
It is expected the PointsBet-branded advance deposit wagering product will launch in early 2023, Swanell said on Monday, giving the company an online-betting presence in more than 30 U.S. states.
BAILEY ZAPPE LIVE PROPS ARE UP
— PointsBet Sportsbook (@PointsBetUSA) October 25, 2022
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and more on site pic.twitter.com/TQUo7A3vzF
PointsBet reported on Monday the financial results for the three months ended September 30, which included that its total sports betting handle for the quarter was approximately $1.16 billion in Australian currency, up 18% from a year earlier.
The company, whose online sportsbook is now live in Australia, 12 U.S. states, and the Canadian province of Ontario, reported that its net win from sports betting (losing wagers minus winning bets and promo costs) was A$70.3 million for the quarter, a 4% increase from a year ago.
In the U.S., meanwhile, PointsBet reported a 50% year-over-year rise in the sports-betting handle, to A$523.8 million, and a 78% jump in the net win, to A$22.3 million. The company's number of active U.S. clients for the year ended September was 272,447, up 47% from a year earlier.
Net win margin from sports betting in the U.S. for the quarter was 4.3%, up from 3.6% a year earlier, and includes the first batch of games for the National Football League’s regular season.
“The first three rounds of the NFL season in September saw favorable outcomes, albeit we were impacted by a large negative variance for our high-staking cohort segment at the end of the month,” Aitken said. “If not for that short-term and negative variance, sportsbook net win margin would have been above 5% for the quarter.”
Overall, PointsBet reported a A$44.9-million cash loss from its operating activities for the quarter. The company's total corporate cash as of the end of the quarter was A$412 million.
“It's clear from our results in the U.S. that we are delivering on our stated aim of growing net win,” Swanell said on Monday. “We have invested in our team and in our technology and products, and that investment is delivering revenue growth. Our marketing is more targeted, and this has allowed us to deliver this revenue growth with a reduced marketing spend compared to last year.”
