The fast-growing US sports betting market is providing huge opportunities for betting companies, and operator PointsBet is one of the leading contenders focused on cross-state growth.
The company recorded an impressive rise in the handle of 130% to a total of $117 million during its first fiscal quarter to the end of September, although revenue remained low, at around $2 million across the whole of the US, according to a recent earnings presentation.
That low revenue figure is partly due to the effort of expanding into new markets, where the company has focused heavily on marketing. PointsBet started operations in Illinois during the month of September, where it was the fourth operator to launch, and has invested heavily in marketing, as it also did in the state of Indiana. A series of bettor-friendly sports results during the month of September also played a role in the relatively low returns.
The expansion to Illinois means that the PointsBet is now operating in four states, but according to their CEO Sam Swanell, two more states are soon to be added to their area of operations. Colorado is due to see a PointsBet launch in the short term, while Michigan is next on the agenda. It is expected that PointsBet will start operations in the state in January 2021 through its iGaming and sports betting platform, although the market will likely launch before then.
Swanell has also explained that the low margins currently experienced by the company are part of the long term plan of expansion. Although the company doesn’t have a great deal of money to show for its first three months during the fiscal 2021 year, they have succeeded in gathering a wide customer base. In fact, PointsBet almost doubled its number of active customers in the US on the figure for the previous quarter, reporting 39,816 between July and September.
During that period, the company spent a total of $11.8 million on marketing, which equates to a significant $625 for each new customer they acquired during the period. Going forward, Swanell says that they intend to spend around 30% of the revenue that they earn from their 10% market share in the state of Illinois on marketing and promotions.
Although the company has significant plans for both Iowa and Indiana, which effectively represents a new market, given that professional sports shut down shortly after their launch in the state, it is clear that PointsBet sees the biggest opportunities in Illinois.
The estimated revenue opportunity in Illinois is believed to be around 2.5 times larger than that in Indiana, and sports betting in that state remained their focus, according to Swanell:
“Illinois, I think, was always a state that we thought would have the strong DNA for sports betting and get out of the gate strong, and we certainly see that that’s the case.”
Another focus for the operator is the fast-growing in-play markets. PointsBet is one of only three operators in the US that offers in-play betting, and to date, the numbers show that in-play betting has already reached around 50% of the total handle as sports bettors in the US adjust to the possibilities of being able to bet on sports events while they are in play.
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