Pointsbet on track to deliver revenue forecast

Finance News

Brett Paton, Chairman, Ponitsbet 2023 AGM, speech to shareholders at the Annual General Meeting today.

A lot has happened since I addressed you at our 2022 Annual General Meeting. The pivotal event during the year was the approval by shareholders on 30 June 2023 of the sale of the US business to Fanatics Betting and Gaming for a headline purchase price of US$225 million.

As previously detailed, the US Business became exposed to an increasing number of risks, requiring significant capital to execute on our US sports betting and iGaming strategy. This reflects the structurally high cost of operating in a state-by-state regulated environment, the requirement to pay partner fees in most US States and continued competition from well capitalised operators.

In view of the significant capital requirements associated with the US Business, the Company explored a range of strategic alternatives to alleviate the demands on PointsBet’s balance sheet.

Ultimately, the Board formed the view that the sale to Fanatics delivered the most attractive risk-adjusted value outcome for PointsBet Shareholders, compared to the risks and benefits of PointsBet pursuing other potential options including the status quo.

The sale also realises significant and certain value for the US Business and results in PointsBet receiving significant cash proceeds from a low-risk counterparty.

Completion of the sale is taking place over a multi-stage process. Initial Completion successfully occurred on 30 August with the Company receiving US$175 million (plus agreed adjustments), being the initial purchase price instalment and transferring the operating businesses in 8 US states to Fanatics. Ownership of a further two States was transferred on 4 October.

Subsequent sale completion is on track as anticipated for completion in Q3 FY24.

Another key milestone was approval by shareholder on 29 August for the two-tranche capital distribution of up to $458 million.

As previously detailed, following the sale of the US Business, the Company will not have the same funding requirements and as such the Board intends to distribute to shareholders the net sale proceeds – after applicable taxes and transaction costs – together with the majority of the Company’s corporate cash reserves that will be surplus to the needs of the remaining business.

I believe the sale of our US business to Fanatics marks the beginning of an exciting new chapter for our company. PointsBet Holdings Limited will continue as an ASX listed company, owning the Australian and Canadian businesses and retaining ownership of our proprietary sports wagering and iGaming technology platform that is currently used in both the Australian and North American markets.

PointsBet’s Australian Trading Business has a strategically important place in the Australian wagering market, a point that has been validated by previous unsolicited third-party approaches expressing interest in the business. The Company intends to continue to grow its market share in the Australian market, with the benefit of a more focused approach given the streamlined business that will remain.