PointsBet has secured a mobile sports wagering licence in the highly sought after New York market amidst hot competition. This adds to PBH's credibility as a serious player in the nascent US sportsbetting market with licences already gained in six other US states.
The New York State Gaming Commission has granted a sports wagering licence to a consortium including PBH. New York is expected to be one of the most lucrative markets for sportsbetting in the country and represents an important moment for the development of PBH's business in the USA.
The PBH consortium includes Caesars, WynnBet, BetRivers, Resorts World (Genting) and Kambi. Among a total of nine successful licence winners were industry heavyweights
FanDuel/DraftKings/BetMGM/BallyBet consortium while others such as Penn National/Fanatics consortium, Bet365, FOX Bet and theScore missed out.
Apart from being arguably more sports mad than Victorians, the NY licence completes a tri-state benefit for PBH as it can gain marketing and promotional benefits from its adjoining licences in New Jersey and Pennsylvania. It will also negate any potential cannibalisation impacts on NJ/PA once NY goes live. The combined tri-state market could generate positive EBITDA by FY26f once all the early development expenditure is completed.
The NY licence clearly strengthens PBH's US position where it is already among the top five sportsbook providers by revenue share. PBH also has its big NBCUniversal media partnership to leverage and it is also one of seven preferred sportsbook partners to the NFL. The latter will provide another key moment for PBH as it will be at the starting line on day one of a US 'big four' state go-live in early 2022 just ahead of the Super Bowl.
Investment view
Progress on building its US business has been impressive so far, particularly nailing the NY licence. PBH is already live in six states and is quickly adding to its credentials with licence wins such as New York.
We maintain our long term view that PBH can achieve 5% market share of a US$25 billion North American sportsbetting market by FY30f. Together with iGaming, which is beginning to ramp up so that PBH will be live in five states in early 2022, the scope to be a meaningful player in two large and growing markets in the US is evident.
PBH is targeting live operations in 19 North American states by the end of 2022 with new product launches and in-play betting innovations to enhance the appeal of its product suite.
The risks continue to be any adverse changes to regulations and legislation, competitive threats, technological changes and potential financial issues.
PBH has a strong cash position with approximately $627 million as at September 2021 and this is sufficient to fund its growth initiatives.
We continue to recommend PBH as a Buy.
