Key Points on PointsBet's Sale of U.S. Operations to Fanatics

Introduction

• Speaker: Sam, Foreign Managing Director and Group CEO of PointsBet
• Interviewer: Tim

Context of the Sale

• PointsBet has been exploring strategic options globally, including Australia and Canada.
• Aim: To maximize shareholder value.
• Competing in the U.S. is expensive due to partner fees, license fees, and market scale requirements.

Deal Structure

• Buyer: Fanatics
• Sale Price: USD 150 million (AUD 222 million)
• Two-Stage Closing Process:
  • Post-shareholder vote (aimed for June 30): PointsBet contributes USD 21 million to the ongoing funding of U.S. operations.
  • Retention of capital on the balance sheet (over USD 250 million reported).
  • Financial year-end (June 30): Expected to retain over USD 200 million.

Strategic Considerations

• Large U.S. commitments such as the NBC deal were challenging.
• PointsBet focused on finding a structure that maximizes shareholder outcomes.
• U.S. business was a major source of financial burn.
• Post-deal: Remaining business to be break-even and move towards profitability, especially in Australia and Canada.

Market Environment and Rationale

• U.S. Market: Highly competitive, dominated by FanDuel and DraftKings.
• Costly due to multiple state regulations and fees.
• Canadian Market (Ontario): More favorable due to a single jurisdiction covering both iGaming and sports betting.
• Lower tax rates and no partner fees in Ontario.
• Australian business profitable and supports the Canadian operations.

Future Focus

• Australian and Canadian Markets:
  • Increased focus on profitable Australian business.
  • Ontario is capital-light, favorable for growth and early-stage investments.
  • Plan to leverage Australian expertise for the Canadian market.

Value and Commitments

• Despite the sale, PointsBet retains significant technology and product ownership alongside Fanatics.
• Acknowledges that Fanatics received valuable assets but also significant commitments and losses.
• Optimistic about energy and focus shifting to Australian and Canadian markets.

Long-Term Commitment

• Intent to remain focused on Australia and Canada for the long term.
• Plans to continue leveraging technology and improving product offerings.
• Anticipates Alberta joining legalized Canadian market, expanding the total addressable market (TAM).

Conclusion

• PointsBet aims to excel in Australia and Canada with a streamlined focus post-U.S. sale.
• The deal with Fanatics is expected to maximize shareholder value and reduce financial strain.

Speaker Closure: Sam thanks Tim and emphasizes focus on celebrating the new phase of operations for PointsBet.