PointsBet Shareholders Strike It Rich from US Assets Sale to Fanatics

Shareholders in the Australia-based company will receive up to $296.9 million across two payments, the first of which is scheduled for mid-September.
PointsBet Shareholders Strike It Rich from US Assets Sale to Fanatics
September 01, 2023

Shareholders of Australia-based PointsBet Holdings Limited overwhelmingly backed a two-step plan to sell the company’s US assets to Fanatics Betting and Gaming (FBG) for $225 million — but the shareholders stand to make millions more from the sale.

The Sydney-based company reported that a near totality of its shareholders had voted in favor of a resolution to return capital in aggregate across two payments at an extraordinary general meeting on Tuesday.

Under the deal, the two tranches would not exceed $296.9 million.

Specifically, the shareholders would receive about $204.3 million after the first part of the two-part sale to FBG is completed. That part of the deal is currently scheduled to close in mid-September. A second payment of between $81.1 million and $92.7 million would follow completion of the second part of the sale, which is expected in March 2024.

Tuesday’s vote was lopsided, with about 197.6 million votes in favor (99.95%) and less than 91k opposed (0.05%). But it aligns with support that shareholders gave for the deal at a separate meeting on June 30.

“The sale of the US business to Fanatics marks the beginning of an exciting new chapter for our company,” CEO Sam Swanell said during an earnings call Thursday to discuss the full-year (FY) 2023.

“The new PointsBet 2.0 will build on our strong market position in Australia and Canada, driven by our in-house technology and led by our experienced PointsBet team and deliver an expedited path to profitability.”

PointsBet Kept Its Tech

PointsBet retained its businesses in Australia, Canada, and India, as well as its proprietary iGaming platform. It will also issue FBG a license to use its software in the US. Florida-based FBG will deploy its new BetFanatics brand.

“We are so excited about our future in Australia and Canada,” Swanell said. “Our proprietary tech stack is a global market leader as validated by the sale of the platform to Fanatics. While we have sold a copy of the technology to Fanatics, we importantly get to keep the technology. That means we can develop and exploit it in a manner that creates the most value for PointsBet shareholders.”

PointsBet had struggled to attract customers in the US. It had operations in big iGaming markets (Michigan, New Jersey, New York, and Pennsylvania) and was also live in Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Virginia, and West Virginia.

“As we look toward our exit from the US market later in FY 2024, our strategy will be to double down and reinforce existing regulatory relationships in Australia and Canada to influence a reform agenda that is effective, evidence-based and meets the unique needs of customers in each jurisdiction within which we operate,” Swanell said.

During Thursday’s earnings call, PointsBet reported net revenue of $11.8 million for its first full year of operations in Ontario. Online casino gaming grossed $7.5 million while sports betting made about $4.4 million. The company’s Canadian segment reported an EBITDA [earnings before interest, taxes, depreciation, and amortization] loss of $23.3 million, which PointsBet expects will be the maximum EBITDA loss for the division.

Note: All figures are in USD. A rate of AUD $1 = USD 64.8 cents was used for monetary conversion purposes.

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