PointsBet, an Australian-based sports betting operator, has hired Moelis & Company, a New York-based investment bank, to sell its North American business. According to the Australian Financial Review, PointsBet has yet to make a profit in the US market, which is dominated by major sportsbooks like DraftKings and FanDuel. As the seventh-largest sports betting operator in the US in terms of market share, PointsBet is looking to take advantage of the inevitable industry consolidation.
PointsBet's decision to sell its North American business does not come as a surprise, as the company explored a sale of its Australian operations in 2022 to Melbourne-based Betr in a deal valued between $135 million and $168 million. However, the company rejected Betr's offer in December 2022, deeming it too low.
A sale of its Australian business would have provided PointsBet with an influx of cash to allocate toward expansion in the US, helping the operator become profitable. The company is now considering a sale of its US sector as it has emerged as an attractive investment.
PointsBet reported revenue of $120 million for the six months leading up to 2023, a 28% increase year-over-year, with the growth primarily attributed to the company's US operations. PointsBet's total sports betting handle in H1 FY2023 reached $2.2 billion, with market access granted in 14 US states and Ontario, Canada. However, PointsBet's marketing costs remain high, and the company has renegotiated its marketing partnership with NBCUniversal to distribute its ad spending over a longer period of time.
Several potential buyers have emerged for PointsBet's North American business, including Bally's, which has been expanding its reach in the sports betting market through acquisitions. Bally's closed its acquisition of sports betting platform Bet.Works for $125 million in 2021 and purchased Gamesys Group for $2.7 billion the same year. Other potential buyers include Penn Entertainment's Barstool Sportsbook and private equity firms looking to increase their market share in the US sports betting market.